BYD Labor Scandal in Brazil: Contractor Rejects Claims of Worker Exploitation

After Jinjiang Group, a contractor for Chinese automaker BYD (BYDDY, Financial), strongly denied accusations that there had been mistreatment at the automaker's electric vehicle (EV) factory in Brazil, a labor controversy has escalated. Last month, Brazilian labor authorities said they uncovered 163 Chinese nationals working at BYD's plant in Bahia in what they called 'slavery-like conditions.' Jinjiang dismissed the accusations as baseless in response, saying the misunderstandings were the result of translation errors and cultural differences.

The 'enslaved' label is outrageous; it violates the dignity of our workers, said Jinjiang Group, which did, however, express outrage. The company also took to social media in China, using Weibo, to defend the workers' treatment and say claims against it were unfairly tarnishing the reputation of Chinese brands and relations between China and Brazil. 'External forces are trying to smear China and BYD,' echoed BYD's general manager of branding, Li Yunfei.

But the plight of Chinese employees of Jinjiang was just part of the controversy, which also revolved around the company's labor practices in Brazil particularly about workers who had handed over their passports to the company for a temporary ID certificate, with some fearing that they could easily fall prey to exploitation. But Jinjiang disagrees, saying that employees are treated well, and even posted a video showing workers saying how happy they are to have a job.

However, it is part of a broader fight after BYD continues its push of strategic interest into Brazil, where it intends to make 150,000 vehicles a year. However, as tensions mount, both BYD and Jinjiang say they are determined to resolve the problem, while diplomatic channels open between the Brazilian and Chinese governments.

This article first appeared on GuruFocus.