Labor abuses at BYD’s Hungary factory mirror patterns from Chinese domestic manufacturing: Report

BYD’s planned electric-vehicle manufacturing complex in Szeged, Hungary, which represents the Chinese automaker’s first passenger-vehicle production base in Europe and a US$4.5 billion investment, is the subject of a new investigation that documents widespread labor rights violations affecting Chinese migrant workers employed through the project’s subcontracting network. China Labor Watch, a New York-based labor rights organization with more than two decades of experience investigating conditions in Chinese manufacturing operations, conducted three field visits to the Szeged construction site beginning in October 2025, ultimately engaging with more than 60 workers before publishing its findings in April 2026.

The investigation identifies eleven distinct labor violations that China Labor Watch says may run contrary to Hungarian law and align with the International Labour Organization’s indicators of forced labor. The findings span excessive working hours, debt-creating recruitment fees, improper use of business visas, delayed wage payments, falsified inspection records, inadequate medical coverage, and systematic intimidation of workers who attempt to raise concerns.

BYD announced the Szeged facility in December 2024 as its strategic entry point into the EU market. When complete, the factory is expected to create 10,000 jobs and produce approximately 300,000 vehicles per year. The facility reflects Hungary’s outsized role in Europe’s EV supply chain: in 2024, the country absorbed approximately 62 percent of all Chinese EV-related investment in Europe, including major projects by BYD and Contemporary Amperex Technology Co. Limited (CATL). As Chinese EV makers have been expanding aggressively into European markets amid growing geopolitical friction and EU tariff pressures, Hungary has emerged as a preferred destination for that capital. BYD has simultaneously pursued expansion on multiple continents, with new market entries announced as recently as early 2026, including a planned entry into Japan’s kei segment.

At the time of the investigation, China Labor Watch estimated the total construction workforce at approximately 4,000 workers. Multiple dormitory buildings are located on-site, with six fully occupied buildings housing approximately 450 residents each. An additional 1,000 workers live off-site. Workers were hired through a range of employment arrangements, including direct employment by BYD and its primary construction contractors, as well as employment through third-party subcontracting structures involving labor intermediaries operating in both China and Hungary. One company specifically identified by China Labor Watch as employing Chinese migrant workers at the site is AIM Construction Hungary Kft., a subsidiary of Jinjiang Construction Group Co., Ltd.

China Labor Watch’s findings indicate that the most severe violations were concentrated among workers employed through subcontracted labor teams rather than those hired directly by BYD or its primary contractors. Workers directly employed by BYD generally experienced clearer contractual terms and greater employment stability. This distinction is significant, as it suggests that the subcontracting structure itself functions as a mechanism for diffusing legal accountability while shifting the burden of risk onto the most economically vulnerable workers in the supply chain.

Excessive hours and systematic overtime abuse

Among the most extensively documented violations are those related to working hours. China Labor Watch found that workers routinely labored seven days per week for full monthly cycles, with weather interruptions serving as the only reliable source of rest. One worker told investigators that he had been in Hungary for more than a year and had received fewer than 10 total rest days, excluding weather-related stoppages. The standard daily schedule reported by workers was 9 to 10 hours, with only a 30-minute lunch break. Summer shifts reportedly extended to 12 hours or more, with some workers reporting shifts as long as 14 hours. Winter hours were only marginally reduced.

These schedules may violate multiple provisions of the Hungarian Labor Code (Act I of 2012), which sets an eight-hour standard working day, caps annual overtime at 400 hours, requires a minimum of 48 consecutive hours of weekly rest after no more than six consecutive working days, and mandates premium pay of 50 percent on regular workdays and 100 percent on weekly rest days and public holidays for any overtime worked. China Labor Watch says that even by conservative calculation, the hours worked exceed the legal annual overtime ceiling and the 48-hour weekly legal limit, and that no corresponding legal compensation mechanisms were found to be in place.

Compounding this problem is a wage structure that China Labor Watch describes as deliberately structured to obscure overtime obligations. Most workers earned approximately 500 to 600 RMB (approximately $70 to $85 USD) per day. Rather than calculating hours beyond the standard workday as overtime and compensating workers at the legally required premium rate, employers rolled excess hours into the following day’s tally and paid them at standard rates. Workers also described a lack of transparent wage documentation and a reliance on team leaders to mediate pay disputes, leaving them without a clear understanding of what they were legally owed. China Labor Watch notes that this normalization of a nine-hour “standard” day may constitute a direct attempt to circumvent overtime obligations and could violate the wage transparency requirements of Article 155 of the Hungarian Labor Code.

Recruitment fees and debt-driven retention

Workers employed through subcontracted labor teams reported paying recruitment fees ranging from RMB 8,000 to nearly RMB 20,000 (approximately $1,100 to $2,780 USD at the time of publishing, as exchange rates fluctuate) prior to departure from China, a burden not reported by workers hired directly by BYD or primary contractors. For workers originating from low-income regions who financed those fees through family borrowing or informal lending, China Labor Watch describes the result as effective debt bondage, since resigning or switching employers would mean forfeiting money they could not afford to lose. Workers described feeling financially unable to exercise their right to leave employment freely, which China Labor Watch characterizes as a mechanism of economic coercion.

The retention mechanism is reinforced by a policy of conditional fee refunds. Several subcontractors reportedly promised to refund recruitment fees only upon completion of one full year of uninterrupted employment at the Szeged construction site. Workers who attempted to leave early would forfeit those refunds and, in many cases, be required to repay airfare to Hungary and visa processing costs. These conditions were communicated informally through team leaders rather than in any written agreement, yet workers widely understood them as binding. China Labor Watch notes that linking reimbursement to a fixed work term may constitute debt bondage under the ILO Forced Labor Indicators framework, regardless of whether workers initially consented to the arrangement when signing their contracts.

Delayed wage payments compounded this dynamic among workers employed by smaller subcontracting teams. While BYD and its main contractors reportedly paid on time, China Labor Watch found evidence of wage delays of up to three months among smaller subcontractors. Additionally, wages were commonly paid in two installments: a monthly payment in Hungary covering approximately 70 to 80 percent of the total, with the remaining 20 to 30 percent withheld until the worker returned to China and deposited into a Chinese bank account denominated in RMB. One worker described being told he would have to wait three months after returning to China before receiving the withheld balance in full. China Labor Watch says this structure operates as both a wage violation and a de facto mechanism of worker control.

Visa misuse and its consequences

China Labor Watch also found evidence that some workers were deployed to the Szeged site on business visas despite being recruited for full-time, manual industrial labor. Workers consistently stated that they began working immediately upon arrival without obtaining legal work authorization. Two workers provided detailed accounts: one spent three months working under a business visa, returned to China for two months solely to obtain a new visa, and then resumed the exact same job in Hungary. China Labor Watch characterizes this pattern as a deliberate strategy by labor intermediaries to accelerate deployment while bypassing the legal employment screening and worker protections attached to proper work visa processing.

The consequences for workers are severe. Operating under a non-work-authorized immigration status strips workers of access to lawful employment contracts, formal wage protections, and legal recourse in disputes. One worker described being unable to seek hospital treatment after a workplace injury because of his business visa status, explaining that he could only rest in the dormitory to recover. Precarious immigration status also increases workers’ vulnerability to threats of deportation, which deters them from reporting abuses or seeking alternative employment.

Falsified records and intimidation

China Labor Watch further documented that workers received pre-departure instructions directing them to misrepresent their working hours during any government inspection. Workers were told to tell inspectors they worked 5 days per week, 8 hours per day, with 1 hour of overtime. In reality, Chinese workers regularly worked 12 hours per day, seven days per week, particularly during the summer months. China Labor Watch says this constitutes an intentional effort to conceal unlawful working conditions and may violate employers’ statutory record-keeping obligations under Article 134 of the Hungarian Labor Code.

Many workers also expressed fear of retaliation. Workers told investigators that if their employer discovered they had spoken to outsiders, they risked dismissal, wage withholding, or negative consequences after returning to China. China Labor Watch notes that intimidation and threats constitute recognized indicators of forced labor under the ILO framework and may also violate workers’ rights to freedom of association protected under Articles 271 and 272 of the Hungarian Labor Code.

Regulatory and policy implications

China Labor Watch situates these findings within the broader context of Chinese overseas investment and the ongoing debate over whether Chinese EV manufacturers will come to dominate global markets. The patterns documented at Szeged, the organization says, mirror practices long observed in parts of China’s domestic manufacturing sector, where legal protections exist on paper but enforcement gaps allow abusive conditions to persist. The concern, as China Labor Watch frames it, is that such models are now being replicated within the European Union.

The BYD Szeged project is among the first major Chinese EV manufacturing investments to operate under the EU Corporate Sustainability Due Diligence Directive (EUCSDDD), which came into force in July 2024 and requires companies to identify, prevent, mitigate, and remediate adverse human rights impacts in their operations and value chains. China Labor Watch argues that the labor practices observed at Szeged represent significant gaps in risk identification and management under that framework, and that subcontracting arrangements as currently structured systematically dilute employer responsibility and weaken compliance with labor and human rights obligations.

The organization calls on Hungarian labor authorities to conduct independent inspections of subcontracted labor at BYD and other Chinese-backed industrial projects, with particular focus on working hours, overtime pay, and visa compliance. It also urges BYD and its contractors to implement transparent recruitment and wage policies, ban upfront recruitment fees and conditional refunds, establish anonymous grievance mechanisms accessible to workers in their native language, and publicly report on labor conditions and corrective actions. Cross-border coordination between Hungarian authorities and EU agencies is also recommended, with China Labor Watch noting that lessons from documented labor abuses at BYD operations in Brazil should inform proactive risk mitigation in Europe.

BYD did not immediately respond to a request for comment. China Labor Watch acknowledges that its findings are based primarily on worker testimonies rather than employer-controlled documentary records, and that some workers may have withheld information due to fear of retaliation. The organization states that the report does not constitute a legal determination or judicial finding, and that its purpose is to assist regulators, policymakers, and companies in identifying potential compliance risks and determining appropriate remedial action.