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Tan Poh Hwee
Opinion
Tan Poh Hwee

Governance must be the new competitive edge for China’s global firms

A compliance case involving a key Chinese auto supplier highlights a growing vulnerability ambitious manufacturers can no longer ignore

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Workers on the assembly line at a Volkswagen electric car factory in Hanover, Germany, on March 4. The carmaker has launched an investigation into the dismissal of 107 newly hired university graduates by its Chinese supplier, Changzhou Xingyu Automotive Lighting System. Photo: EPA
Tan Poh Hwee
Tan Poh Hwee is president of the Asia Academy of Digital Economics, a Singapore-based non-profit, and a corresponding fellow of the National Academy of Artificial Intelligence.
Chinese manufacturers have long understood overseas barriers in visible terms: tariffs, market access, technical standards and geopolitical restrictions. The controversy surrounding Changzhou Xingyu Automotive Lighting System points to a quieter threat: a governance failure at home can follow a company into global markets.

Online, the dispute has been cast as a story of young employees fighting back. According to media reports, Xingyu recruited 440 graduates but asked 107 of them – just over a month after they joined – to sign immediate resignation agreements stating that they were leaving for personal reasons. They were offered half a month’s salary in compensation. Several then lodged complaints with European carmakers and the Hong Kong stock exchange.

On September 1, Volkswagen confirmed it had begun an investigation into the dismissal of the 107 graduate recruits. The carmaker said that basic values and rights must be protected throughout its supply chain and that it would take “appropriate steps” after completing its review.

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