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Mandy Zuo

Weeks after sparking a nationwide outcry over its mass dismissal of recent college graduates, Xingyu – a major automotive lighting maker in eastern China – has severely penalised four of its executives and promised to help the former employees find new jobs.
Two of the firm’s top executives received salary deductions and two human resources managers were dismissed or demoted for their “misjudgment and hasty decision-making”, the company said in a lengthy statement detailing its recent “mistake” last week.
The saga began in early August, when the Shanghai-listed company, whose clients include international carmakers such as Volkswagen and Mercedes-Benz, presented more than 370 fresh graduates – who had joined the company a month earlier – with a stark choice.
They could either resign “voluntarily” and receive half a month’s salary, or stay and be reassigned from office-based technical roles to factory-floor work, including tightening screws.
According to the firm, 107 chose the former option. But the uproar that ensued has placed the company firmly in the centre of a media firestorm, with Communist Party news organ People’s Daily calling the move “a blatant trampling of social trust” in a commentary late last month.
The extensive public attention the incident aroused stood as a tangible reflection of corporate workforce contraction, youth employment pressure and growing incidents of labour disputes, phenomena occurring within a broader slowdown in the world’s second-largest economy, analysts said.
While neither the firm nor local authorities specified any violation of labour law by the short-term manoeuvre, which coincided with its application for a listing in Hong Kong, its adverse effects were evident, the analysts warned.
“The company’s planned Hong Kong listing is very likely to be blocked, because the negative impact is simply too damaging,” said Tang Dajie, a senior researcher at the China Enterprise Institute, a private think tank in Beijing.
As for the employment of fresh graduates – an increasingly sensitive issue for Beijing amid a tough job market – “the fact that this incident has escalated to such a degree is also highly unfavourable. Big companies will become very cautious in their future hiring”, he said.
According to its statement, Xingyu had recruited more than 400 college graduates through campus hiring last autumn and this spring, while 372 formally joined the company in July.


About one month into their employment, the company’s human resources department conducted one-on-one meetings with each of them, presenting the binary choice. The decision resulted from a workforce optimisation plan “based on the company’s order pipeline and staffing needs”, it said.
The move sparked backlash from many former employees, who complained to domestic media that after being dismissed, they lost their status as fresh graduates and could only re-enter the job market as social hires with a termination record on their résumés.
Within China’s institutional framework, losing this status stripped them of many competitive job-seeking advantages.
The company and the municipal human resources bureau of Changzhou, where Xingyu is based, have so far arranged for 71 of those dismissed to join new employers, while an additional 22 passed interviews and received offer letters.
The remainder were either undertaking interviews or planning to pursue postgraduate studies, Xingyu said last week.
Previously, both the firm and the bureau responded with apologies and explanations over the incident but failed to quell widespread public scepticism.
On August 25, the bureau confirmed the controversial lay-off – after media reports went viral – noting that the negotiation process was “overly rigid and simplistic, lacking full and effective communication”.
Two days later, the firm issued a public apology, acknowledging “managerial errors in decision-making” and offering a package of remedies including three months’ worth of job-seeking living allowances, free dormitory accommodation and an additional six months’ salary compensation for those who remained unemployed.
At its half-year performance briefing on September 2, the company’s chairwoman and general manager, Zhou Xiaoping, apologised and said the company was “properly implementing remedial measures” under government guidance.
According to its earnings results, Xingyu posted revenue of 6.88 billion yuan (US$1 billion) in the first half of the year, up 1.87 per cent, year on year, with a profit of about 712 million yuan, down 7.78 per cent, year on year.
Behind this is the current macroeconomic environment – finding a job is just very hard
Nie Riming, Shanghai Institute of Finance and Law
Its 2025 sales figures showed that it held an 11.6 per cent share of China’s automotive lighting market, ranking first in the country, and accounted for 4.6 per cent of the global market share, ranking seventh.
Nie Riming, a researcher at the Shanghai Institute of Finance and Law, said the broader lacklustre job market was primarily why this incident generated such a huge response.
“Behind this is the current macroeconomic environment – finding a job is just very hard,” he said.
Another record-breaking army of university graduates – an estimated 12.7 million students – entered China’s job market this summer, up about 4 per cent from last year, according to official data. The youth jobless rate – covering those aged 16 to 24, excluding students – climbed to 17.9 per cent in July from 14.9 per cent in the previous month.
Nie noted that Xingyu’s immediate cash compensation alone could compare favourably with statutory minimums in Germany, where labour protections are generally stronger.
While China has relatively high-standard labour laws on paper, enforcement and compliance are uneven, especially among smaller firms, he said. Against this backdrop, listed companies like Xingyu – along with foreign-invested firms and state-owned enterprises – remain the primary sources of higher-quality jobs in China.
However, these relatively “well-behaved” companies had been steadily reducing their headcount in recent years, and after this incident, such formal, regulated positions were likely to become even more scarce, he added.
“For companies going forward, they will become increasingly cautious when hiring for compliant, formal positions,” he said.
“They will lean more towards non-standard employment arrangements – such as outsourcing and dispatching – to offload their staffing responsibilities. That, in turn, would further reduce formal direct hiring and reinforce labour-market dualisation.”
The most contentious issue remains fresh graduate status, as many recruitment policies, including those for civil service admissions, favour fresh graduates, he said.


“The way graduates are regulated has yet to align with the job market, and this disconnect must be resolved before it causes further frustration,” he urged.
As the economic slowdown persists in China, lay-offs have become a recurring theme in the workplace, and labour disputes are on the rise.
Labour dispute mediation and arbitration bodies at all levels handled 4.54 million cases nationwide in 2025 – a 7 per cent increase from 2024, following a 10 per cent rise over 2023, according to the Ministry of Human Resources and Social Security’s annual statistical bulletin.
Meanwhile, Xingyu’s lay-off controversy emerged after it refiled its updated H-share listing application with the Hong Kong stock exchange at the end of July, sparking market speculation that it was a short-term tactic to pad the company’s research workforce and make it look stronger for its listing ambitions.
Among the dismissed employees, about two-thirds held bachelor’s degrees, while the remainder held master’s degrees. The majority were assigned to research and development roles, as well as manufacturing and production positions, while a smaller number were allocated functional support roles, according to last week’s statement.
However, legal experts and academics considered it unlikely that this was the company’s primary intention, given that such a move would offer limited substantive gain while exposing it to significant compliance and reputational risks.
Such risks may soon materialise, such as hindering its listing progress, said Zhao Zhanling, a commercial lawyer from Beijing-based Javy Law Firm.
“The stock exchange and its advisers are likely to demand clarifications on the mass lay-offs, labour law compliance and internal control mechanisms,” he said. “Adverse media coverage may also invite regulatory questions, causing delays – though not necessarily scuttling the IPO altogether.”
The Shanghai Stock Exchange website showed that it issued a regulatory work letter to Xingyu on Wednesday, specifying regulatory requirements regarding the company’s “relevant matters”, without providing further details.
The saga could also lead to a loss of business opportunities, according to Tang, the Beijing researcher.
“It is possible that its international clients would respond positively to public outcry,” he said, “but that does not mean they would punish Xingyu – they may downgrade its supplier tier ... or impose more stringent supply conditions.”
Volkswagen China said earlier this month that it had initiated an investigation into the matter following intense media coverage.


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The outlook for China’s young jobseekers could worsen further, after an ugly fallout from Xingyu’s mass dismissal of university graduates


The outlook for China’s young jobseekers could worsen further, after an ugly fallout from Xingyu’s mass dismissal of university graduates.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The outlook for China’s young jobseekers could worsen further, after an ugly fallout from Xingyu’s mass dismissal of university graduates

The outlook for China’s young jobseekers could worsen further, after an ugly fallout from Xingyu’s mass dismissal of university graduates