Brazil has added Chinese automaker BYD to a government registry of employers linked to slavery-like labor conditions after an investigation into the treatment of Chinese workers hired to help build the company’s factory in Bahia state, according to a Reuters report.

The move adds reputational pressure for BYD in Brazil, its biggest market outside China, and also restricts its access to some types of financing from Brazilian banks, Reuters reported. It does not affect operations at the company’s only auto plant in the country, which has already produced more than 25,000 vehicles.

The decision stems from a 2024 scandal involving 163 Chinese workers hired by contractor Jinjiang Group. Labor inspectors found workers who claimed to have been trafficked living in overcrowded housing without mattresses, with 31 people sharing a single house and only one bathroom. Food was piled on the floor alongside personal belongings, conditions inspectors described as degrading, Reuters said.

According to Reuters, labor contracts showed the workers had to surrender their passports, send most of their wages directly to China and pay a deposit of nearly $900 that could only be recovered after six months of work.

The case triggered outrage in Brazil and abroad, including in China, and delayed construction of the Bahia plant for months. Still, BYD appeared to have moved past the episode when President Luiz Inacio Lula da Silva attended the plant’s inauguration in October, underscoring closer ties between Brazil and China, the news outlet reported.

Companies can avoid inclusion on the registry by signing an agreement with the government to change labor practices and compensate affected workers. BYD signed an agreement with labor prosecutors, but not with labor inspectors, according to Reuters.

Under Brazilian rules, companies remain on the list for two years once all administrative appeals have been exhausted, unless a court orders their removal.

Read more at Reuters