Top Chinese Auto-Parts Maker Apologizes Over Abrupt Layoffs of Recent Graduates - Caixin Global

A leading Chinese auto-parts manufacturer seeking a Hong Kong public listing has issued a rare public apology and offered compensation after a mass layoff of newly hired college graduates sparked widespread backlash and a government investigation.
Changzhou Xingyu Automotive Lighting Systems Co. Ltd., the country’s largest automotive lighting supplier, admitted to management failures and a lack of empathy on Thursday after abruptly terminating 107 newly recruited graduates just weeks into their employment.
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1. Chinese automotive lighting giant Changzhou Xingyu Automotive Lighting Systems Co., Ltd., which is seeking a Hong Kong public listing, issued a rare public apology and offered compensation after a mass layoff of newly hired college graduates sparked backlash and a government investigation [para. 1][para. 2]. Local authorities were forced to intervene, casting a shadow over the company’s bid to list on the Hong Kong Stock Exchange [para. 3].
2. The controversy erupted in early August [para. 4]. A graduate recruited in April said new hires were initially placed in roles matching their majors, but in July the entire cohort was sent to the factory floor for a mandatory one-month rotation doing manual tasks such as assembly and freight pulling [para. 4][para. 5]. Weeks later, human resources personnel abruptly summoned the graduates, citing poor financial performance and the need for workforce optimization, even though graduates observed the company actively advancing new two-wheeler lighting projects and expanding factory facilities [para. 6]. Xingyu originally recruited 440 graduates from the class of 2026 during its fall 2025 hiring campaign, promising roles in core technical areas including research and development [para. 7].
3. Graduates provided audio recordings and chat logs showing that human resources gave them an ultimatum: sign a voluntary resignation agreement citing personal reasons in exchange for severance pay equal to half a month’s salary, or face reassignment to indefinite assembly-line work [para. 8]. Under the latter option, the promised one-month rotation would be extended to three months, with pay slashed to the standard rate for frontline manual laborers [para. 9]. Some graduates signed under pressure, and after the incident spread on social media, it drew widespread condemnation [para. 10]. The Changzhou Human Resources and Social Security Bureau confirmed that 107 of the 440 recent recruits had their employment terminated, criticized the company’s harsh and simplistic communication style, ordered rectification, and suspended the company’s human resources director [para. 11][para. 12].
4. In its apology letter, Xingyu admitted management decision-making errors and oversights, saying that during execution the communication was harsh, methods were simplistic, and the vital interests of the students were ignored [para. 13][para. 14]. To mitigate the damage, the company rolled out a three-pronged compensation plan: a three-month job-hunting living subsidy, continued free access to company dormitories during the transition period, and tailored job-matching assistance using the company’s supply chain network [para. 15]. Crucially, Xingyu promised a safety net: any affected graduate still unemployed by the end of November 2026 will receive an additional six months’ salary as compensation [para. 16].
5. The crisis hit at a critical juncture. Dubbed the premier stock in China’s automotive lighting sector since its Shanghai debut in 2011, Xingyu filed for an H-share listing in Hong Kong in late July and received approval from the China Securities Regulatory Commission in mid-August [para. 17]. According to Frost & Sullivan data cited in its prospectus, Xingyu ranked first in China and seventh globally in the overall automotive lighting market based on 2025 sales revenue; in the smart automotive lighting segment, it claimed the top spot globally and domestically, capturing a 28.4% share of the Chinese market [para. 18]. Despite its dominance, first-half financial results showed revenue growing slightly by 1.87% year-over-year to 6.88 billion yuan ($1.02 billion), while net profit slipped 5.26% to 669 million yuan [para. 19]. The company attributed the profit decline to sluggish domestic passenger car sales, underperforming vehicle models from key clients, and rising raw material costs [para. 20].
6. Xingyu has been quietly shedding staff for over a year: headcount fell from 10,426 at the end of 2024 to 7,532 by the end of 2025, a net reduction of nearly 2,900 employees, with non-graduates also affected in the latest cuts [para. 21]. Its reliance on outsourced labor has skyrocketed, with outsourced working hours jumping from 2.38 million in 2022 to 10.87 million in 2025 [para. 22]. As a chain leader in Changzhou’s automotive parts industry, the company has long benefited from local government policies including social security exemptions, expansion subsidies, and tax breaks for hiring key demographic groups [para. 23]. It promotes a corporate culture of love, gratitude, and responsibility and was named one of Changzhou’s top 10 employers for 2025 just months ago [para. 24]. While official investigations confirmed Xingyu did not illegally obtain government employment subsidies in this instance, the Changzhou labor inspection department has launched a comprehensive audit of the company’s hiring, transfer, and termination procedures, and the audit remains ongoing [para. 25].
Aug. 28, 2026, Issue 33
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