Over the past weekend, Li Lei, a 985 university master's graduate, experienced what he called a harsh lesson in the corporate world at Changzhou Xingyu Automotive Lighting Systems Co.,Ltd. On Saturday, the company recalled some new graduate employees and asked them to resign, citing "operational issues," but required them to list "personal reasons" as the cause. Those who refused were offered a transfer to a production line operator role—essentially, "tightening screws," as employees put it.
"I spent seven years earning my bachelor's and master's degrees from a top-tier 985 university, joined the company through campus recruitment in July, and just one month in, I'm being laid off," Li Lei said. "If I don't cooperate, I'm sent to the factory floor to tighten screws." He is not alone. Multiple employees told reporters that around 400 new graduates joined the company in July, but only about 120 remain in the internal work group, suggesting roughly 70% have been let go. The situation is even worse for veteran employees with 4 to 7 years of tenure, who are also being targeted. In some factories, the layoff rate may reach 40%, according to sources. The company recently filed for a Hong Kong IPO, and employees believe they are being sacrificed as the company cuts costs to boost its financials for the listing.
Where to Start
According to company policy, employees who resign for "personal reasons" receive 0.5 month's salary as compensation, with their departure processed immediately. The company also offers a "recommendation letter." Those who refuse to resign are reassigned to production line operator roles. Employees say the company pressured them during termination meetings, threatening to use negative references from background checks and announcing the reassignment to operator positions, which they consider a "humiliating push-out." The new roles are seen as a poor fit for those hired for research and development or technical positions.
The new graduates reject the proposal for two main reasons. First, the HR team admitted the layoffs stem from company operations and organizational changes, yet employees are forced to cite "personal reasons," shifting responsibility to the workers and jeopardizing their future labor rights. Second, since they have already paid into social insurance, leaving immediately strips them of their "fresh graduate" status, which is a "irreversible loss" for those seeking civil service exams or state-owned enterprise jobs. "To get justice, we'd have to file for arbitration, but even if we win, we'd only get a few thousand yuan more," Li Lei said. "And an arbitration record could make it harder to find a new job later."
Employees suspect the company may have hired new graduates in bulk to claim local government subsidies for employing fresh graduates, only to quickly dismiss them after the subsidies were secured. "This also saves on outsourcing costs for a month," one employee said. The company did not respond to requests for comment on the allegations.
Veteran Employees Also Targeted
Veteran employees are also being affected. One employee with four years of tenure said his entire factory was given a seven-day holiday starting July 30, citing "hot weather and client holidays." But he claims the company was already preparing to lay off workers, requiring them to write self-criticism reports and accept public reprimands. "This is to build a case for dismissal," he said. "First, they make you admit fault. If you don't leave, they say you're incompetent and transfer you to a role on the production line." The company is now requiring employees to transfer to a factory several kilometers away to "tighten screws," with layoffs likely for those who refuse. In his factory, the layoff rate is around 40%, while a larger factory on Hanjiang Road has been struggling since last year, with employees working one day on and one day off. A seven-year veteran also confirmed being pressured to leave, with the company refusing to pay severance and threatening to assign low performance ratings or transfer him to a different role.
Why Just 10 ASX 200 Shares?
Despite the layoffs, the company's financial reports show that revenue and net profit for the first quarter of this year both grew by about 10% year-on-year, though growth is slowing. Employees believe the second-quarter results may be even worse, prompting the recent job cuts. The company's workforce has already shrunk from 10,426 in 2024 to 7,532 by the end of 2025, a 27.76% reduction. Industry insiders say the company, which derives over 95% of its revenue from automotive lighting, is under pressure from declining orders and price cuts from automakers. To cut costs, it is reducing headcount. However, the company's push for a Hong Kong IPO has not slowed. In July, the company filed for a listing, planning to use international capital for overseas expansion and research into smart lighting and embodied AI. Some new graduates have even filed complaints with the Hong Kong Stock Exchange about the layoffs.
Founded in 1993 by Zhou Xiaoping, a former teacher who left a stable job to start a car lighting business, the company is now China's largest automotive lighting supplier, with an 11.6% market share and ranking seventh globally. Zhou, known as the "car light queen" and the richest woman in Changzhou, earned a salary of 1.1 million yuan in 2025, unchanged from the previous year, making her the highest-paid executive. While the founder collects a high salary, the company is aggressively cutting jobs. "A company that wants long-term success needs more than just good financials," said one industry insider. "It needs responsibility and culture. The way it handles layoffs—whether legally and fairly—is a real test of its character."