BYD's (SHE:002594, HKG:1211) new electric car factory in Brazil is facing serious allegations of forced labor after authorities rescued 163 Chinese workers from what they described as "slavery-like conditions," Reuters reported Jan. 31.

The workers, recruited to build the factory, were promised wages double China's minimum, approximately $70 per 10-hour shift. However, the reality was far different, according to the report.

Workers were allegedly forced to surrender their passports, had the majority of their earnings sent back to China, and were required to pay a nearly $900 deposit, refundable only after six months, the report said.

The contract also allegedly included illegal clauses such as unilateral contract extensions and fines for minor infractions like swearing or walking shirtless, Reuters wrote.

Aaron Halegua, a labor rights lawyer at New York University, said these practices are clear indicators of forced labor, according to the report. He added that withholding passports and demanding security deposits violate Chinese labor laws.

BYD contractor Jinjiang disputed the allegations, saying the findings were factually inconsistent and stem from translation misunderstandings, Reuters wrote.

Alexandre Baldy, senior vice president for BYD Brasil, told Reuters the carmaker was unaware of any violations until late November 2024, when the first reports were made by the Brazilian media.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)