Chinese workers at a construction site in Brazil for a factory owned by China's electric vehicle producer BYD are victims of human trafficking, Brazilian labour authorities said on Thursday (December 26).

They also said there was "forced labor" at the site in Bahia state, in what its a growing controversy in BYD's biggest overseas market.

Brazil's labor ministry released video and photos that appeared to show an overcrowded sleeping area, a bed next to a kitchen table and dirty walls.

After meeting with representatives from BYD and contractor Jinjiang Group, Brazil's Labor Prosecutor's Office said that both parties had agreed to assist and house 163 workers in hotels until a deal to end their contracts is reached.

On Friday (December 27) China's foreign ministry said it has maintained communication with the Brazilian side to verify the situation.

And says it protects workers' rights and requires Chinese companies to operate in compliance with the law.

BYD and Jinjiang did not immediately respond to requests for comment on Friday.

However, Jinjiang rejected the Brazilian authorities' assessment on Monday that workers at the site were operating under "slavery like conditions" as inaccurate.

A BYD executive previously accused "foreign forces" and some Chinese media of "deliberately smearing Chinese brands.

BYD has been building the factory with an annual capacity of producing 150,000 cars in Brazil.

It's part of plans to start production there in 2024 or early 2025.

The factory has become a symbol of China's growing influence in Brazil.

And BYD has invested $620 million to set up the Bahia factory complex alone.

The investigation brings unwelcome attention to BYD when it is seeking to expand globally, having already gained dominance in China.

Brazilian authorities said they would meet the companies again on January 7 and propose a deal.

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