BYD is blacklisted in Brazil due to labor scandal

Brazil has added BYD (01211) to a “blacklist,” which includes employers deemed to have subjected workers to conditions similar to slavery. The move stems from a scandal in 2024, when reports said that Chinese workers became victims of human trafficking and unfair labor contracts.

Reuters reports that the list was published by Brazil’s Ministry of Labor. The blacklist also bars BYD from obtaining certain types of loans from Brazilian banks, but it does not affect the operation of the company’s only car plant in the country. That plant was where the workers were originally hired to build.

The contractor that recruited the 163 workers involved for BYD, Jinjiang Group, denied the allegations. BYD previously said that before reports in Brazilian media, the company was not aware of any wrongdoing. Brazilian officials believe BYD should have supervised its contractors and therefore bears final responsibility for the workers’ working conditions.

Labor contracts seen by Reuters show that the Chinese workers Jinjiang Group hired in Brazil were required to turn over their passports to their new employer, most of their wages were sent directly back to China, and they had to pay a deposit of nearly $900, which would be refunded only after they had worked for 6 months.

A surprise inspection by labor supervisors also found that the living conditions for these workers were extremely overcrowded and that there were no mattresses. Thirty-one workers were squeezed into one room, with only one bathroom, and food and personal items piled on the floor. Inspectors said this amounted to “humiliating conditions.”

The scandal sparked strong outrage in the international community, including China, and led to the factory’s construction being delayed by several months. Last October, Brazilian President Lula attended the factory’s inauguration ceremony, seen as a symbol of continuously warming China–Brazil relations.

The reports say companies can avoid being listed by signing agreements with the government, pledging to change their operating practices and compensate workers whose rights were violated. BYD has signed an agreement on this matter with Brazil’s labor prosecutors, but it has not reached an agreement with the labor inspection authorities.

Companies are only officially added to the list after all appeal channels at the government level are exhausted. Once listed, the company will remain on the list for two years unless a court rules to remove it.