Xingyu Auto Recruits 440 Graduates, Dismisses 107 Amid Labor Probe
Changzhou-based auto lamp maker Xingyu Auto has come under fire for dismissing 107 of 440 newly recruited 2026 graduates, with about 70% of the cohort reportedly leaving. The local labor inspection authority has launched a probe into the company's employment practices. Xingyu apologized and suspended its HR director, denying any improper government subsidy claims. The company, which is pursuing a Hong Kong listing, saw headcount fall 27.76% in 2025 despite strong earnings.
On August 25, the Changzhou Municipal Human Resources and Social Security Bureau issued a notice regarding Xingyu Auto's dismissal of newly recruited university graduates. The notice showed that Xingyu Auto had recruited 440 graduates from the class of 2026 and terminated contracts with 107 of them. The company acknowledged that its negotiation methods were blunt and lacked effective communication, causing a negative impact, and expressed deep regret, suspending its HR director. An investigation found no improper enjoyment of employment or talent-related government subsidies.
As of August 25, 22 of the 107 dismissed graduates had found new jobs, and 14 were attending interviews with other companies. The human resources authority said it would continue to provide employment services to the rest. Changzhou will urge the company to learn from the incident and improve its human resource management to safeguard employee rights, while strengthening inspection and guidance of employment practices across the city's enterprises.
In August 2026, Changzhou Xingyu Automotive Lighting Systems Co. , Ltd. , a leading domestic automotive lamp maker, became embroiled in controversy. Reports said the listed company, known for stable performance and ample cash flow, launched large-scale "persuasion" talks with new graduates just one month after a high-profile campus recruitment drive, forcing over 70% of them to leave. The unusual staff adjustment came at a critical juncture as the company made a second attempt to list on the Hong Kong Stock Exchange, drawing market suspicion that it was window-dressing financials.
On August 25, sources from the Changzhou labor inspection detachment said the Xinbei District labor inspection team had formally intervened, conducting a comprehensive review of Xingyu's employment compliance, focusing on issues such as false recruitment, coerced resignation, and illegal job transfers. As of press time, Xingyu had not officially responded to the mass "persuasion" event. Repeated calls to the company's board secretary office during working hours on August 25 went unanswered.
In early July 2026, Xingyu's official recruitment WeChat account promoted onboarding and welcome activities for its 2026 campus hires, bringing in hundreds of graduates as reserve talent for its smart lamp business upgrade. However, just one month after joining, the situation reversed sharply. Audio recordings of HR-employee conversations leaked online showed that in early August, the HR department held batch meetings with all 2026 graduates, offering a controversial "either-or" choice: resign voluntarily citing "personal reasons" for half a month's salary compensation, or face unilateral reassignment to frontline assembly, lamp plugging, and screw-fastening jobs with pay recalculated under the worker system. The talks also involved implicit pressure such as industry background checks, leaving inexperienced graduates in a dilemma.
Several graduates said the cohort's group chat had about 400 members initially, but only around 120 remained after the layoffs, meaning roughly 70% had left. One master's student from a non-elite university said most of his fellow recruits held master's degrees, and some even doctorates. This meant many departing students completely missed the 2026 exclusive recruitment channels for civil service exams and state-owned enterprise campus hiring.
Before the mass dismissal of graduates, Xingyu had been streamlining its organization and cutting labor costs for over a year. Annual report data showed total employees fell from 10,426 at the end of 2024 to 7,532 by the end of 2025, a net reduction of 2,894 people, or 27.76%, nearly a third. The move drew skepticism because it contradicted the company's strong operating figures. In 2025, Xingyu posted revenue of RMB 15.257 billion and net profit attributable to shareholders of RMB 1.624 billion; in the first quarter of 2026, revenue reached RMB 3.43 billion and net profit RMB 355 million, with core metrics maintaining double-digit growth. Financially, as of the end of the first quarter of 2026, the company held over RMB 2 billion in cash and equivalents, with robust operating cash flow.
With both performance and cash flow growing, yet large-scale layoffs and graduate dismissals, some analysts pointed to the company's Hong Kong listing plans. On July 29, 2026, Xingyu submitted its second listing application to the Hong Kong Stock Exchange, reviving its "A+H" listing plan shelved for half a year; just a week later, it began the concentrated persuasion talks. Industry insiders believed the targeted staff adjustment aimed to cut labor costs in the short term, optimize per-capita efficiency metrics, and beautify financial statements to pave the way for the Hong Kong IPO. Some also questioned whether the recruitment and subsequent dismissals were an attempt to claim local employment subsidies. However, under Changzhou policy, companies must pay social insurance for graduates for over three consecutive months to claim a RMB 1,500 per-person expansion subsidy.
Notably, the company's short-term cost-cutting ran counter to its long-term strategy. Xingyu is at a critical stage of industrial upgrading, shifting from traditional lamp manufacturing to high-end smart lamps such as DLP projection headlights and lamp controllers. In 2025, R&D investment reached RMB 884 million, up 34.82% year-on-year, with continued focus on smart lamp technology development and mass production, requiring high-caliber technical talent. Multiple labor lawyers criticized Xingyu's actions as potentially illegal, including unilateral changes to rotation periods, breach of contract job assignments, and coercive reassignments to force resignations, avoiding statutory economic compensation obligations and violating the Labor Contract Law's principle of mutual agreement, constituting disguised illegal termination. They also noted the use of graduates' limited eligibility window and workplace information asymmetry to pressure departures, infringing on their legitimate employment rights.