BYD Brazil scandal exposes flaws in Chinese investment – DW – 01/08/2025

The thermometer read over 30 degrees Celsius in the early hours of December 23 when agents from a task force led by the Brazilian Labor Prosecutor’s Office (MPT) rescued 163 Chinese workers from the construction site of car giant BYD’s new factory in Camacari, in the northern state of Bahia.

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MPT investigators speaking to DW said “slavery-like” working conditions were found on the site.

In the dormitories of the Jinjiang Group, the company hired by BYD to carry out the work, there were no mattresses on the beds, and the few toilets served hundreds of workers in extremely unhygienic conditions. The workers also had food stored without refrigeration.

The MTP also accused the companies of withholding the workers’ passports and keeping 60% of their wages; the remaining 40% would be paid in Chinese currency.

After authorities claimed that the workers were victims of international human trafficking, the site was shut down. The factory had been due to open in 2025.

The 163 rescued workers were sent to hotels. A few days later, the Brazilian government stopped issuing temporary work visas to BYD. The carmaker said it was cooperating with the Brazilian authorities and that it would not tolerate disrespect for Brazilian law and human dignity.

Experts told DW that the case pits the importance of Chinese investment against upholding local standards.

“This action was all the more significant because it took place in a company that enjoys strong political support, both in the federal government and in Bahia, due to the importance of its investments in Brazil for President Lula’s reindustrialization projects,” said Mauricio Santoro, a political scientist and professor of international relations at the State University of Rio de Janeiro.

China’s overseas production in focus

On Tuesday, MPT investigators met with representatives of BYD and the companies involved in the construction.

All of the rescued workers have already received their termination payments and returned to China. A report on the inspection of the site will be completed next week, and compensation for the workers will be discussed at a subsequent meeting.

Using Chinese workers to build the BYD plant is similar to how Chinese multinationals operate in Africa and other Latin American countries, said Paulo Feldmann, an economist and professor at the FIA Business School in Sao Paulo.

The practice brings little benefit to the countries that receive the investment, he told DW.

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“For Brazil, it would have been better if these workers had been local, because of the income they would have generated for themselves and their families, the positive impact on their communities and the professional training they would have acquired. It would also be easier to monitor their working conditions,” he said.

Brazil’s reindustrialization project

Camacari, a city of 300,000 near the state capital of Salvador da Bahia, had been home to a Ford car factory for 20 years, but the plant was shut down in 2021, and the US carmaker ceased production in Brazil.

The shutdown came along with a slump in Brazilian industrial production, which in 2021, accounted for only 11% of GDP.

When Lula da Silva was elected president in 2022 with the promise of reindustrializing Brazil, his administration sought out partner companies interested in setting up shop.

In 2023, Chinese electric carmaker BYD announced a $484 million investment in a new factory to produce its electric vehicles on part of the grounds that once belonged to Ford.

“These are huge investments that show that the brand has arrived to fight in a structured way in the Brazilian automotive market. They’re not the adventurers we sometimes see,” Milad Kalume Neto, an automotive consultant, told DW.

BYD’s arrival also brought hope to the local economy.

“Ford set up a number of companies to support its operations. Not just suppliers, but small companies to provide services. With the company’s departure, these companies had to reduce their activities and now they have another chance to work for a major carmaker,” he added.

China alleges smear campaign

Public reaction in China to the BYD case has been divided between skepticism about foreign allegations and debate about labor rights in the country.

In the aftermath of the scandal, BYD and its contractor, Jinjiang Group, denied the allegations, calling them part of a smear campaign against Chinese brands; a narrative supported by many Chinese nationalists.

“When someone wants to accuse you, there’s no shortage of excuses,” Li Yunfei, General Manager of BYD Group’s Brand and Public Relations Department, posted on Weibo, a popular microblogging platform in China.

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Li went on to accuse foreign forces of deliberately tarnishing China’s image and trying to damage its relations with Brazil.

Jinjiang Group also released a video in which Chinese workers read a statement, signed with their fingerprints, stating that “being unjustly labeled as ‘enslaved’ has left their employees feeling deeply insulted… the dignity of Chinese people severely harmed.”

This narrative was echoed by state media and many Chinese internet users, who characterized the scandal as a challenge to national companies expanding overseas.

But not everyone in China has accepted the idea of blaming “foreign forces.”

Some Weibo users wrote that working conditions at BYD factory in Brazil were similar to those of construction workers in China. This sparked online discussions about how many workers in China could be living in conditions that are slavery-like by international standards.

The Chinese labor market is notorious for its so-called “996” work culture, which involves working from 9 a.m. to 9 p.m. six days a week, in violation of labor laws. This phenomenon is particularly prevalent in the technology sector.

“I stand with Brazil. Chinese workers are being ruthlessly exploited,” one comment stated under a Weibo post paralleling the working conditions at BYD’s Brazilian factory with those at local construction sites.

“I feel that domestic factories often don’t treat people as humans, but rather as machines,” another comment said.

Brazil remains an attractive market for China

Despite the international repercussions of the case, the actions of the Brazilian authorities in the BYD case should not deter more Chinese investment in Brazil, said economist Feldmann.

“The Brazilian market is very attractive for Chinese companies. They come to Brazil mainly because of this market. I don’t think the relationship between Brazil and China is at risk because of this episode,” he said.

Political scientist Mauricio Santoro told DW he hopes the incident will will serve as a lesson to Chinese investors about the independence of powers in Brazil.

“They have learned that regardless of agreements with political leaders, prosecutors and the judiciary will act in their own way and enforce labor laws. Optimistically, this could prevent further abuses,” he said.

Edited by: Wesley Rahn