Author: Fabio Teixeira

RIO DE JANEIRO (Reuters) – Chinese workers found at the construction site of a factory owned by Chinese electric vehicle maker BYD (SZ:) in the Brazilian state of Bahia are victims of human trafficking, Brazilian labor authorities said on Thursday.

BYD and contractor Jinjiang Group have agreed to assist and house 163 workers in hotels until they reach an agreement to terminate their contracts, Brazil’s labor prosecutor’s office said in a statement after a meeting with representatives of both companies.

BYD did not immediately respond to a request for comment. Reuters was unable to reach Jinjiang for comment outside normal business hours.

But the companies dispute the authorities’ assessment, first announced on December 23, that workers were working in “slavery-like conditions.”

The statement shows that the parties are scheduled to meet again on January 7. The proposed agreement by labor prosecutors will be presented to both companies.

The agreement could clear BYD and Jinjiang from investigation by labor prosecutors, but they could still be subject to scrutiny by labor inspectors and federal prosecutors, who have asked for evidence so that “measures can be applied in the criminal sphere,” the statement said.

BYD is building a plant in Bahia that will initially produce 150,000 cars as part of plans to start production in Brazil, the Chinese EV company’s largest overseas market, in early 2025.

The factory has become an critical symbol of China’s growing influence in Brazil and an example of strengthening relations between the two countries. BYD invested approximately $620 million in the creation of the Bahia factory intricate alone.

Reports of irregularities in Bahia may prove to be a major point of contention in their relations.

Brazil has long sought more Chinese investment. However, China’s model of bringing Chinese workers to countries where it invests poses a challenge to creating local jobs, which is a priority of President Luiz Inacio Lula da Silva.