Business

BYD faces EU probe over alleged labor abuses at Hungary plant

Electric car giant BYD has become the first Chinese business to be raised in the European Parliament over allegations of labor abuses in Hungary, CNBC has learned, following a watchdog’s investigation into working conditions at the site.

Contractors hired to build BYD’s factory in Hungary allegedly kept thousands of employees working seven days a week, with shifts lasting more than 12 hours a day, according to a report published on April 14 by New York-based watchdog China Labor Watch (CLW). The group said it interviewed 50 workers and visited the factory site three times since October 2025.

China Labor Watch, a U.S.-based nonprofit organization that has tracked worker conditions since its founding in 2000, shared the report’s findings with EU government representatives. Earlier this month, three members of the European Parliament formally asked the European Commission about the alleged labor abuses in Hungary.

The allegations by China Labor Watch mark the first time claims of labor abuses linked to a Chinese-owned auto business manufacturing in the European Union have been brought to the attention of the European Commission, according to checks by CNBC.

In February, a worker reportedly died on-site during a crane operation. Citing conversations with workers, CLW founder Qiang Li told CNBC there had been more deaths on site.

He added that, based on conversations with workers, broader medical support was inadequate as individuals were not always employed on work visas with corresponding medical insurance.

Hungary’s National Ambulance Service told CNBC Thursday that since Feb. 1, emergency medical services were called to the factory site 12 times, with one death.

The latest allegations come as BYD has expanded into an automotive powerhouse, surpassing Tesla as the world’s largest electric car manufacturer in 2025. BYD is among a wave of Chinese companies expanding overseas, aiming to sell more than a million cars outside China this year as sales in its home market slump.

One contractor named in the report, AIM Construction Hungary, is a subsidiary of Jinjiang Construction Group — the same firm linked to a 2024 scandal at BYD’s factory in Brazil that national labor authorities said, following investigations, involved conditions “analogous to slavery.”

BYD claimed in December 2024 that it stopped working with Jinjiang Construction’s Brazilian subsidiary in the wake of the scandal. But the CLW report allegations indicate BYD hired another subsidiary of the same Jinjiang group to build the factory in Hungary. The report said CLW reviewed a sample labor contract for jobs at BYD’s Hungary factory, which included the option of being sent to Brazil and Turkey, where BYD is also building a factory.

AIM Construction Hungary was previously known as China Jinjiang Construction Hungary, according to company records from Hungary’s Ministry of Justice, accessed through an authorized data provider.

BYD and the Jinjiang entities did not respond to CNBC’s requests for comment. Authorities in the EU also did not respond.

The facility in the southern Hungarian city of Szeged is one of five BYD sites in Hungary, where the automaker established its European headquarters nearly a year ago during a visit by chairman Wang Chuanfu.

Forced to stay

The EU raised tariffs on China-made electric cars in 2024, in a bid to localize production. But China-made vehicles still climbed to a record 9.3% of new cars sold in the bloc in December, according to Rhodium Group.

BYD is rapidly growing its market share. New BYD cars registered in the EU more than doubled in the first two months of the year to 29,291, exceeding Tesla and gaining 1.8% of the market, according to the European Automobile Manufacturers’ Association.

By model, BYD’s Seal U ranked third in January registrations, behind models from Renault and Skoda, according to European Commission data. More than two-thirds of new passenger cars sold in Europe in January were electric.

Hungary received the bulk of China’s growing automotive investment in Europe over the last three years, according to Rhodium Group data.

BYD’s Szeged factory is slated to produce 300,000 cars per year at full capacity, though the timeline to reach that target is unclear.

As construction of the factory progressed, workers, mostly from China, were allowed to rest only when inclement weather halted work, according to CLW.

Managers “wanted to begin production of cars in January [2026], so they were rushing the project’s timeline — they weren’t letting workers leave,” Li said in Mandarin remarks translated by CNBC.

The Szeged facility manufactures BYD’s Dolphin Surf model, according to a company statement citing BYD Executive Vice President Stella Li. Local media reported in January that trial production had begun.

CLW’s Li said the contractors used a range of financial levers to keep workers on-site. Some were promised free plane tickets home if they worked for more than six months; others had wages withheld until their contracts were fulfilled, or incurred miscellaneous charges such as recruitment fees even before arriving on-site, according to the report.

Employees were directed to tell labor inspectors that they only worked “five days per week, eight hours per day, with one hour of overtime,” the report said. CLW alleged their actual working hours directly violated Hungary’s Labor Code — which limits working hours to eight per day, and no more than 48 hours a week — and that their conditions resemble the International Labor Organization’s definition of forced labor.

When CNBC contacted Hungary’s National Directorate-General for Aliens Policing about the allegations, the government department said it “took the necessary measures within the scope of its authority to conduct examinations of the matters described in the [CLW’s] submissions.”

Political fallout

In Brazil, BYD’s labor issues have led to political ripple effects.

Luiz Felipe Brandao de Mello, head of Brazil’s agency tasked with enforcing national labor standards, was removed from his post, according to an official government gazette. Reuters reported, citing two sources close to the matter, that de Mello lost his position due to a decision to add BYD to a blacklist restricting its access to loans.

Brazil’s labor ministry had added BYD to the list days earlier — only to have a Brazilian court reverse that decision until a final ruling was made.

Brazil’s national association of labor inspectors did not respond to CNBC’s requests for comment.

CNBC

Business

France fines Shein $26 million

(Reuters) – France has fined fast-fashion firm Shein about €22 million ($26 million) over issues ‌with returns, product information and order confirmations, a penalty the company described as disproportionate and vowed to challenge.

The Directorate General for Competition, Consumer Affairs, and Fraud Control said on Wednesday it had fined Shein €16.7 million for the order confirmation issues ⁠and €5.8 million for issues with returns and environmental quality information.

“Technical issues, with no impact on consumers and already addressed where necessary, have been used as the basis for an exceptional penalty,” a Shein spokesperson said in a statement. “We therefore intend to strongly contest both sanctions in their entirety.”

France fined Shein €40 million for misleading discounts in July. Authorities also sought to suspend its marketplace, but Paris’ ‌Court ⁠of Appeals rejected that move in March.

Shein, which has won over millions of cash-strapped shoppers around the world with rock-bottom prices on clothes, gadgets and accessories, has faced heightened scrutiny in France since November, when the ⁠consumer watchdog found sex dolls resembling children and banned weapons for sale on its site.

Since the discovery, “we have decided not to leave these platforms alone, ⁠and we will continue to take action until they completely change their practices – or leave our market,” Serge Papin, minister ⁠for small and medium-sized businesses, said in a post on X.

($1 = 0.8615 euros)

CNBC

Business

Middle East airlines face $4.3 billion loss in 2026, says IATA

Rio de Janeiro: Middle East airlines are expected to plunge into a collective $4.3 billion loss in 2026, with profit per passenger dropping from $31.50 last year to a loss of $21.40, International Air Transport Association (IATA) said in its latest financial outlook for the global airline industry.

The report, released at IATA’s annual general meeting in Rio de Janeiro, said global airlines are expected to achieve a combined total net profit of $23.0 billion in 2026, roughly half the previously projected $41 billion.

The Middle East is the only region globally expected to slip into the red as airlines battle the fallout from the US-Israel-Iran war, which has severely disrupted operations across key Gulf hubs.

Passenger demand in the region is forecast to fall 11.4 per cent, while airline capacity is expected to decline 4.4 per cent. Net margins are projected to tumble to minus 6.1 per cent, compared to a positive 9.4 per cent in 2025.

“Sitting at the centre of the shock from the war in the Middle East, the region is expected to generate a net loss in 2026,” IATA said.

Gulf carriers hit by airspace closures

IATA said Gulf airlines are facing operational uncertainty after widespread airspace restrictions and flight disruptions linked to the conflict.

“The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war,” said Willie Walsh, IATA Director General. “These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable,” said Walsh.

The industry body said flight cancellations, rerouting, reduced transfer traffic and elevated operating costs are all weighing heavily on profitability.

Middle Eastern airlines, particularly major Gulf hubs, depend heavily on transit passengers connecting between Asia, Europe and Africa. The loss of this transfer traffic is reducing load factors and increasing unit costs.

Global airline profits set to halve in 2026

The wider global airline industry is also heading into a significantly weaker year.

IATA forecasts global airline profits will fall from $45 billion in 2025 to $23 billion in 2026, while net profit margins will shrink from 4.2 per cent to 2.0 per cent. “War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” Walsh said.

“Globally, airlines are expected to see profitability halve compared to 2025.” Net profit per passenger globally is expected to drop to $4.50, compared to $9.10 last year.

“Under the circumstances, that shows resilience,” Walsh said. “But it won’t even buy you a hot dog at most of the FIFA World Cup venues and it does not leave much of buffer should other costs or taxes start rising,” said Walsh.

Jet fuel prices soar

Still, the biggest pressure point for airlines remains fuel. Jet fuel prices are expected to average $152 per barrel in 2026, almost 70 per cent higher than the $90 average seen in 2025. Fuel costs are forecast to jump from $252 billion to $350 billion globally this year, pushing fuel’s share of airline operating expenses to more than 31 per cent.

“No sooner did we put COVID behind us than we faced aerospace supply chain failures, war in Ukraine, geopolitical tensions, and tectonic shifts in trade policies. And, when war broke out in the Middle East in March, oil prices jumped, and jet fuel prices skyrocketed,” said Walsh.

“As a result, we expect average jet fuel prices to be 70 per cent higher year-on-year. That will add $100 billion to our collective fuel bill this year,” he said.

IATA said many airlines remain exposed because they hedge crude oil rather than jet fuel directly, leaving them vulnerable to widening refining margins, known as the crack spread.

Demand stays resilient, for now

Despite rising costs, passenger demand continues to hold up globally. Airline revenues are expected to rise 9.4 per cent to $1.165 trillion in 2026, supported by higher ticket prices, strong travel demand and growing ancillary revenues.

Passenger ticket revenues alone are forecast to hit $839 billion, up 9.2 per cent year-on-year. Passenger load factors are also expected to reach another record high of 84 per cent. “The positive however, is that demand is holding up, even as airlines are raising fares and rates to cope,” Walsh said.

IATA polling showed that 49 per cent of travellers expect to spend more on travel this year, while another 43 per cent plan to spend the same as last year.

Aircraft shortages, engine delays add billions in costs

The report also stated that airline industry is also struggling with persistent aerospace supply chain failures.

IATA said aircraft order backlogs have climbed beyond 18,000 jets, while the average age of the global fleet has reached a record 15.2 years.

“Supply chain failures cost airlines at least $11 billion in 2025.” Airlines are increasingly being forced to keep older aircraft in service longer, resulting in higher maintenance costs, increased lease rates and reduced fuel efficiency.

The shortage of newer aircraft has also halted fuel-efficiency gains for the first time in history during 2024 and 2025, according to IATA.

The outgoing IATA chief blasted engine makers. Without mincing words, Walsh said, “My message to the engine OEMs is simple – stop gouging us and get back to making great engines that work and that last. Allowing these failures to extend into the next decade is totally unacceptable to the customers.”

Business

Oman’s explosion hit oil terminal resumes operations

Oil prices fall after Oman says Mina al Fahal operations proceeding normally

Oil prices fell on Friday after Oman said operations at its Mina al Fahal port ‌were proceeding normally, following a Reuters report of disruption after an explosion.

Petroleum Development Oman said operations at Mina al Fahal port were unaffected, after three sources told Reuters that oil loading had been suspended following an explosion near its mooring berths.

Oman exports 800,000 to 900,000 barrels per day of crude from the terminal.

Brent crude futures were down 84 cents, or 0.9%, at $94.19 a barrel by 1318 GMT, after settling down 2.84% ⁠in the previous session.

U.S. West Texas Intermediate crude was at $91.91 a barrel, down $1.13, or 1.2%, following a 3.1% loss on Thursday.

Both contracts still looked set to post their first weekly gains in three weeks, with Brent up 2.4% and WTI around 5.1%.

The contracts rose after fighting flared in the Middle East as U.S.-Iran war peace talks dragged on while traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited.

“As hopes for an agreement between the U.S. and Iran were dashed once again, the price of Brent crude and European natural gas rose slightly this week,” Commerzbank analysts said on Friday.

However, Brent’s gains have ‌been capped ⁠by oil inventories lasting longer than expected, rerouted exports and falling demand, Commerzbank added.

Hezbollah leader Naim Qassem rejected on Thursday a U.S.-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with Washington.

U.S. President Donald Trump said on Thursday he believed progress was being made ⁠between Israel and Lebanon and that Lebanon deserved to have peace.

“Any optimism remains heavily clouded by a tangled web of headlines and counter-headlines,” IG market analyst Tony Sycamore said in a note.

OPEC is sticking to its oil demand growth forecast of ⁠1.2 million barrels per day for this year, Secretary General Haitham Al Ghais said on Thursday, despite the Middle East conflict and closure of the Strait of Hormuz.

Iranian oil exports have fallen to their lowest level ⁠in six years mainly due to the U.S. naval blockade, according to shipping data, although weak demand in China has depressed prices for the oil.

Reuters