According to a report by Reuters, Chinese workers who have come to the northeast region of Brazil to build a new factory for the electric car manufacturer BYD are earning about $70 for a 10-hour shift, which is more than double the minimum wage per hour in many regions of China. For many, this may seem like an easy decision, but leaving is much more difficult.
These Chinese workers, as per a labor contract obtained by Reuters, have been hired by BYD’s contractor Jinjiang Company during their work in Brazil. While working, they are required to surrender their passports, most of their earnings are directly wired back to China, and they have to pay a deposit of nearly $900, which can only be retrieved after six months of work.
The Brazilian labor monitoring department and three Chinese labor law experts have pointed out that this three-page contract contains several clauses that violate labor laws in both Brazil and China. Among them, the contract allows the company to unilaterally extend the labor contract for six months and impose a fine of 200 yuan on behaviors such as cursing, arguing, or walking shirtless on the work site or dormitories.
Aaron Halegua, a researcher at New York University Law School and a lawyer who has fought for compensation for Chinese workers subjected to forced labor in the Northern Mariana Islands, stated that these clauses are “typical warning signs of forced labor.” He added that Chinese law prohibits employers from withholding workers’ passports or requiring any form of performance bonds or deposits.
Jinjiang Company is involved in the construction of BYD factories in several cities in China, such as Changzhou, Yangzhou, and Hefei. The company denies the allegations and claims that the findings by the Brazilian labor monitoring department are “inconsistent with facts,” blaming mistranslations for misunderstandings.
Alexandre Baldy, Senior Vice President of BYD Brazil, told Reuters that BYD only learned about the violations last November after the Brazilian media first reported on the matter. They immediately inquired about the allegations with Jinjiang Company.
Two informed sources disclosed that Baldy and Tyler Li, President of BYD Brazil, met with Brazilian President Luiz Inácio Lula da Silva on December 2 last year to inform him that BYD was addressing the issue. However, the President’s office has not yet responded to these claims.
Two weeks later, the Brazilian labor monitoring department conducted a surprise inspection at the site and found workers housed in cramped dormitories, some without mattresses. One dormitory accommodated 31 workers with only one bathroom, food stored directly on the floor alongside personal belongings. Inspectors described the conditions as “appalling and unbearable.”
Baldy denied discussing the matter with President Lula during the meeting, claiming the company was unaware of the labor contracts with Jinjiang beforehand. He assured Reuters that BYD is taking measures to ensure that “similar situations do not occur again.”
While the labor monitoring department has not provided evidence that BYD was aware of these violations, Matheus Viana, the head of the Brazilian Anti-Slavery Labor Monitoring Department, pointed out that as the main employer, BYD is responsible for the actions of its contractors, thus still carrying “direct responsibility.”
The exposure of this labor contract has tarnished the image of the BYD factory, once considered a model of China-Brazil economic cooperation.
At the end of 2023, BYD reached an agreement with the Brazilian government to take over a factory near Salvador, the capital of Bahia state in Brazil, at the Camaçari Industrial Park, planning to invest heavily in electric vehicle production. This factory had been a production base for Ford Motor Co. for 20 years, but Ford closed down the facility in 2021, laying off around 5,000 employees, ending its manufacturing operations in Brazil.
For Luiz Inácio Lula da Silva, the former president who once served as the Chairman of the São Paulo Metalworkers’ Union, BYD’s investment was initially seen as a significant step in the industrial revitalization of Brazil, expected to create numerous job opportunities in modern manufacturing. This investment plan sparked hopes among the local population, with many anticipating that this Chinese company could bring more job opportunities than Ford did when it closed its operations. Given the local unemployment rate that is close to 10%, this was undoubtedly appealing.
However, when BYD introduced Chinese contractors to oversee the construction of the factory, Antonio Ubirajara Santos Souza, a coordinator from the local construction workers’ union, labeled this as an “unfair practice,” as it could potentially displace local workers.
In a statement to Reuters, BYD expressed its commitment to creating local employment opportunities, pledging to hire 20,000 employees, including Brazilian workers, once the factory is fully operational.
During the surprise inspection in December, inspectors found 10 documents similar to the labor contracts obtained by Reuters at the site. Some workers informed inspectors that they had never signed any contracts, while others stated that they only signed contracts months after working in Brazil.
Daniel Santana, a labor inspector, mentioned that BYD and Jinjiang failed to promptly provide the dormitory addresses to inspectors, hindering the investigation, which could lead to fines for these companies.
Local union leaders informed Reuters that there are still hundreds of Chinese workers working alongside Brazilian workers on the site. However, Brazilian workers recently reported ongoing irregularities at the site, including a lack of potable water.
BYD shared photos with Reuters of newly constructed dormitories and dining facilities to showcase efforts in improving the workers’ accommodation conditions. Nevertheless, the local construction workers’ union has decided to file lawsuits against BYD and Jinjiang, alleging past labor law violations.
Some local political figures have raised concerns about other Chinese construction projects in Bahia state, including a bridge project with a budget as high as 7.6 billion reais (approximately $1.28 billion). Some residents worry that this could lead to another project heavily reliant on foreign labor.
“We cannot promote Brazil’s development at the cost of slave labor,” stated Alan Sanches, a state deputy of Bahia.
Jeronimo Rodrigues, the governor of Bahia, told Reuters that they still anticipate BYD to create at least 10,000 jobs locally but emphasized that BYD must ensure that the workers’ conditions meet the standards.
Julio Bonfim, President of the Metalworkers’ Union of Camaçari, warned BYD, stating that if they find Chinese workers taking away local job opportunities, there could be a strike at the factory before it officially commences operations.