The matter of Changzhou Xingyu Automotive Lighting Co., Ltd. terminating the contracts of more than a hundred fresh graduates continues to ferment. The Shanghai Stock Exchange issued a regulatory work letter to Xingyu Co., Ltd. on September 9, and the Hong Kong Stock Exchange has also postponed its listing review process. Previously, Zhou Xiaoping, chairman of Xingyu Co., Ltd., had publicly apologized for the incident.
The incident originated in July this year, when Xingyu Co., Ltd. recruited 440 fresh college graduates, who were originally scheduled to take up R&D, technology and management positions. However, only one month after joining the company, the company began to intensively interview some employees, asking them to choose between "voluntarily resigning and receiving half a month's salary compensation" or "transferring to the production line and being paid at the salary of a general intern for three months."
The interviewed graduates compiled the recordings, contracts, recruitment materials and other evidence into a volume and sent it to Xingyu Co., Ltd.'s downstream customers, including multinational car companies such as Volkswagen, BMW, and Mercedes-Benz. At present, Volkswagen China and Mercedes-Benz's German headquarters have confirmed that they will launch special investigations on this matter, and the Hong Kong Stock Exchange has also forwarded relevant complaints to individual cases for processing.
Since the turning point of the incident was when fresh graduates complained to overseas downstream companies, prompting all parties to quickly intervene. Chinese Internet netizens nicknamed this kind of approach as "complaining to foreigners", that is, only by using pressure from overseas forces can the problem be solved. This statement has also triggered extensive discussions on the Internet about China’s labor rights protection system.
The whole story of the incident: from interviews and pressure to transnational intervention
According to previous reports by Chinese media, Xingyu Co., Ltd.’s human resources department repeatedly used rhetoric such as “future background checks” to put pressure on the affected fresh graduates during the interview process. The graduates then compiled the recordings, recruitment information, and employment contracts into hundreds of pages of evidence documents, and sent them to many overseas car companies that Xingyu Co., Ltd. cooperated with, causing a labor dispute to quickly evolve into multiple crises involving ESG compliance and overseas customer relations.
According to public information, Xingyu Co., Ltd. was listed on the Shanghai Stock Exchange in February 2011. It is China's largest supplier of automotive lighting products. It has 16 R&D centers and 12 factories around the world, and has established supporting cooperative relationships with 9 of the top ten vehicle companies in the world. Its customers include BYD, Volkswagen, General Motors, Toyota, Mercedes-Benz, etc.
Previously, it was not uncommon for the Hong Kong Stock Exchange to delay the listing process due to labor compliance issues. Xingyu Shares, which just submitted its listing application in July this year, has now also entered this process.
On August 31, Mercedes-Benz responded directly to the complainant with the theme of "serious ethical and labor misconduct by suppliers," stating that it had forwarded the relevant content to internal experts and external business cooperation teams for further review.
On September 1, a spokesperson for Volkswagen China confirmed to a reporter from the Shanghai Securities News that the company had launched a special investigation into complaints against Xingyu Shares, and said: "Respecting the legitimate rights and interests of workers is a core principle that the Volkswagen Group adheres to in all business activities. This also runs through the management of our supply chain system."
Local authorities in China are also taking action. On August 25, an investigation by the Changzhou Municipal Human Resources and Social Security Bureau confirmed that Xingyu Co., Ltd. had terminated the labor contracts of 107 fresh graduates. It also determined that the company's "simple and blunt methods and lack of sufficient and effective communication caused adverse effects" during the negotiation process. Its human resources director has been suspended.
Since then, Xingyu Co., Ltd. publicly apologized and promised to provide three months of job search subsidies to the graduates involved; if they still fail to re-enter the job within three months, they will provide another six months of salary compensation.
Fresh graduate status and labor rights protection
This incident exposed two core controversies: first, how to protect the rights and interests of directly affected fresh graduates; second, why China lacks an organizational structure that can accept and correct illegal employment.
In China's job market, the status of fresh graduates has special value. It is directly linked to public examinations, campus recruitment of public institutions and state-owned enterprises, and local talent introduction policies. Recruitment by major Internet companies also often provides more favorable treatment to fresh graduates. Because of this, many students choose to postpone their graduation to retain their status when they are unable to find a job as they wish.
For fresh graduates from Xingyu Co., Ltd. who were threatened with termination or job transfer just after one month of training, losing their jobs means missing out on fall recruitment, losing their status as fresh graduates, and leaving a career gap. Against the background of the current downturn in China's job market, these combined losses are particularly heavy.
In other words, companies pass on the costs of their own poor hiring decisions to graduates.
Seven Chinese workers who spoke anonymously to BBC Chinese were from the media, major Internet companies, and car companies. They said that cases of companies unilaterally breaking contracts have occurred in recent years, and the handling methods are similar: a small amount of compensation is given, the workers admit that they are unlucky, and the matter often goes away.
The key reason why the Xingyu Shares incident had a different ending was that 107 graduates submitted a complete chain of evidence to overseas downstream companies that paid more attention to compliance. These multinational car companies generally implement supplier codes of conduct and strict ESG (environmental, social and governance) indicators, such as the EU Market Regulation on Products Prohibiting Forced Labor.
A person who was responsible for the overseas business of Chinese companies at Deloitte told BBC Chinese: "How to help Chinese companies bypass or beautify data to achieve ESG compliance has always been a headache for us. Companies will turn off the lights early during the review and let employees leave early to create the illusion of 'getting off work on time', but we know that is not the case."
The differences in public opinion behind the "complaint against foreigners"
On Chinese social media, the practice of large-scale complaints by fresh graduates to downstream companies is called "sue foreign complaints," which means that only by letting outsiders know, the problem can be solved.
In the context of fierce competition in the labor market and increasing employment pressure on enterprises, it is not uncommon to withhold wages, fail to pay social security in accordance with the law, delay wages, and not compensate for overtime work.
For example, in 2023, NIO, a Chinese new energy vehicle company, was exposed by the family members of its employees. One employee worked as many as 500 hours of overtime in six months and was sent to the emergency room three times. The company's human resources department only described this as a "voluntary act."
After the Xingyu Co., Ltd. incident was intensively reported by many Chinese media and involved in handling by various departments, netizens joked, "It's good to sue foreign countries. Western medicine is fast, but Chinese medicine is useless." Some labor agencies also issued a document stating that they would no longer cooperate with Xingyu Co., Ltd.
"These young people have done a great job," Shen Kailing, associate professor of the Department of Economics at the Australian National University, praised after learning the whole story.
She pointed out to BBC Chinese that Xingyu Shares had bad motives during recruitment and rough termination methods. The graduates involved had reasonable demands for rights protection and always acted within the legal scope.
In her view, this reflects that China's younger generation knows how to argue in the current business order, is trying to break the old model of "maintaining advantages by exploiting workers," and has the potential to become a promoter of more equitable rules.
"They were originally deceived by false recruitment information. If after decades of studying hard, they still choose to accept such rough treatment, that would be sad and shameful for the entire society." Shen Kailing said.
