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

Luxury stocks tanked early Wednesday after Gucci-owner Kering and Hermes reported first-quarter earnings that disappointed investors amid a conflict in the Middle East that is hitting luxury sales.

Shares of Hermes plummeted 8.2%, while Kering closed 9.3% lower. The companies’ updates also weighed on the broader luxury sector, with Burberry, Christian Dior, and Moncler all finishing Wednesday’s session lower.

“Despite the slowdown in tourist flows linked to the situation in the Middle East, sales in the group’s stores increased by 7%,” Hermes said Wednesday as it reported sales of 4.1 billion euros ($4.8 billion) in the first quarter, as total sales grew 5.6% year-on-year. Analysts had expected growth of 7.1%.

“Wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports,” the company added.

Hermes shares’ move lower reflects two fears, said Jefferies analyst James Grzinic: a heavily challenged Middle East exposure and concerns around a slowing Chinese momentum.

Meanwhile, Kering reported sales below expectations late Tuesday, as the luxury conglomerate’s biggest brand, Gucci, remained a drag despite efforts by new CEO Luca de Meo to turn the company’s fortunes around.

Gucci sales drop as Kering eyes turnaround

Kering reported first-quarter revenue of 3.57 billion euros, down 6% year-on-year on a reported basis, and flat on a comparable basis at constant exchange rates. 

Gucci’s organic sales fell by 8%, a bigger drop than the 6% decline seen in a sell-side consensus cited by analysts. 

Kering, which also owns brands Yves Saint Laurent, Bottega Veneta and Balenciaga, also said retail revenue in the Middle East declined by 11% in the first quarter, following growth over the first two months of the year.

With 79 stores in the region, the Middle East represents around 5% of retail revenue.

While results underwhelmed, investors’ attention is firmly on the company’s Capital Markets Day on Thursday, where de Meo will present Kering’s strategic roadmap “ReconKering.”

“Gucci remains our top priority. A comprehensive turnaround is underway, with decisive actions across client, distribution and, above all, the offer,” de Meo said in a statement after the bell on Tuesday.

Bernstein analyst Luca Solca described the results as a “reality check.”

“The 1Q26E update shows what we have observed several times over with self-help stories: it is easier and faster for the market to believe in a revival, than it is for management to produce it,” the analyst said.

It comes as Kering, like many of its luxury peers, has seen years of contraction following a boom that ended in 2022. Demand spiked during the Covid-19 pandemic, leading to price hikes that eventually alienated customers. Coupled with weak demand in China, formerly one of the sector’s main growth drivers, businesses suffered.

Last year, Kering appointed de Meo to get the company back on a growth track. While he was a surprising choice for many, given his background in the auto industry, the stock is up about 10% since he officially took on the role on Sept. 15, outperforming most peers as investors become increasingly optimistic about his turnaround plans.

Middle East impact

While the Middle East region accounts for a relatively small share of big luxury companies’ top lines — typically around mid-single digits — it has been a bright spot in an otherwise mostly sluggish sector where many have struggled to return to growth.

Even so, stocks have fallen markedly since the U.S. and Israel first struck Iran on Feb. 28. Global markets remain volatile as an energy crisis unfolds with the effective closure of the Strait of Hormuz.

“Elevated global uncertainty has generated significant investor anxiety, particularly among those who had been anticipating a long-awaited recovery in luxury demand this year,” said UBS analyst Zuzanna Pusz in late March.

On Monday, industry bellwether LVMH said that the Middle East conflict had a 1% negative impact on organic growth in the quarter.

“When the conflict started, and in the month of March, there was a shortfall and a deterioration of demand between 30% and 70%, depending on the malls, depending on the businesses,” LVMH CFO Cécile Cabanis said.

Analysts, however, noted underlying improvements, including strong spending by customers in the U.S. and China.

CNBC

Keeping supermarket shelves stocked has become a logistics exercise playing out across ports, highways and international corridors, with operators reworking supply chains to ensure food and essential goods continue to reach the UAE without disruption.

At the centre of that effort is DP World, which has been prioritising critical cargo from the outset, working closely with government entities, traders and manufacturers to keep imports moving even as traditional shipping patterns face pressure.

In an exclusive interview with Gulf News, Ahmad Yousef Al Hassan, CEO and Managing Director of DP World GCC, said the approach has been structured around a clear hierarchy of needs, starting with food, pharma and agricultural inputs before moving to industrial supply chains that keep local production running.

“We work very closely with the government, especially a lot of the ministries, on the essential goods for the UAE. They fall into food and beverages, along with categories like milk, rice, animal feed and pharma,” he said.

Jebel Ali alone handled about 750,000 TEUs of essential goods last year, with roughly two-thirds tied to food and beverage shipments, providing a baseline for how much cargo needs to be protected during periods of disruption.

Mapping supply, not stockpiling

Instead of stockpiling, the focus has been on mapping demand and ensuring continuity of supply. Traders and manufacturers are being asked to identify their most critical imports, allowing DP World to prioritise cargo and route it through the fastest available channels.

“There’s enough essential goods, there’s no panic,” Al Hassan said, adding that the emphasis remains on keeping trade moving rather than building excess inventory.

That approach extends to sourcing as well. Where traditional suppliers face delays, alternative markets in India and Pakistan are being lined up, with feeder vessels used to move goods quickly into UAE ports. Other feeder operators have also been encouraged to follow the same prioritisation model to ease congestion and speed up turnaround times.

Cold chain gets added support

The fresh food supply has required additional intervention, particularly along longer inland routes. DP World has expanded refrigerated container capacity and introduced stopover solutions to maintain temperature control.

For instance, a dedicated inland facility has been introduced that allows refrigerated containers to plug in and stabilise before continuing their journey, reducing the risk of spoilage during extended transit.

“We have this reefer pit stop that will help out as well,” Al Hassan said, pointing to a broader push to reassure traders that temperature-sensitive cargo can be handled reliably.

Additional generator units have also been deployed to power refrigerated containers on trucks, giving logistics teams more flexibility across different corridors.

Global network steps in

The company’s international footprint is playing a central role in rerouting cargo flows. Ports in India and Pakistan are being used as staging points for transshipment, helping to keep eastern Gulf ports from becoming congested. For F&B alone, India and Pakistan together account for nearly 30% of the imports through Jebel Ali.

DP World is also using its integrated shipping and logistics solutions to design alternative routes and keep critical cargo moving efficiently across markets.

“This global network is what really pushes people to call us right away,” Al Hassan said, describing how customers are seeking real-time solutions to move construction materials, raw materials and food-related agricultural products.

Corridors expand across the region

Closer to home, multiple corridors are being activated to keep trade flowing. Routes through Fujairah and Khorfakkan are already operational, while discussions continue with Sohar Port in Oman to expand capacity and streamline processes.

Further north, DP World’s terminal in Jeddah is being used to absorb additional cargo, supported by ongoing talks between UAE and Saudi authorities to establish a bonded corridor that would allow smoother movement of goods between the two markets.

Each additional route adds flexibility for traders, reducing reliance on any single port or shipping lane.

Managing congestion to control costs

Even with supply holding steady, shipping and logistics costs have come under broader market pressure as diesel prices, insurance premiums, freight rates and other cost drivers evolve.

Al Hassan said that DP World’s focus is on keeping trade flowing efficiently and reducing congestion.

Faster clearance, better routing and coordinated planning help to ease pressures across the wider supply chain and limit the knock-on effect on end consumers.

Authorities are also closely monitoring prices, drawing on mechanisms developed during previous disruptions to maintain oversight across key categories.

Keeping the system balanced

The challenge is not only about moving food. Industrial supply chains must also remain active, from raw materials for manufacturing to equipment needed for ongoing projects.

Balancing these competing demands has required constant coordination among regulators, port operators, and private-sector players, ensuring that essential goods move first while maintaining sufficient capacity for broader trade.

The system has held so far, supported by a combination of planning, infrastructure and rapid decision-making.

That, according to Al Hassan, is what keeps shelves stocked without tipping into panic or shortage, even in a strained operating environment.

GN