In August 2026, a news story sparked a domestic public outcry - A-share automotive lighting leader Xingyu Co., Ltd. had recruited 440 graduates from the class of 2026 during its 2025 fall recruitment drive, promising management positions, technical positions, and "core positions after one month of production line internship". However, just after these students started working in July 2026, the HR department began to talk to them in batches in early August, presenting 107 of them with a "choose one of two options" scheme: either sign a "voluntary resignation" and leave with half a month's salary as compensation, or be transferred to the production line to "tighten screws" with their salary recalculated according to the standard for ordinary workers.
This was originally a ordinary labor dispute in the country, but what really made it go viral was that these young people did something unexpected - they didn't hold up banners, nor did they go to labor arbitration, instead they collected over 100 pages of evidence and sent complaint letters simultaneously to the EU supply chain compliance channel, the Hong Kong Stock Exchange, and the whistleblower systems of Mercedes-Benz, BMW, and Volkswagen.
Half a month later, Xingyu Shares publicly apologized and upgraded its compensation plan from "half a month's salary" to "3 months of job-seeking subsidies + 6 months of salary guarantees". The Mercedes-Benz BPO office formally responded, characterizing the incident as "serious ethical and labor misconduct by a supplier". Volkswagen China launched a special investigation into its supply chain. The Hong Kong Stock Exchange intervened to conduct an audit.
One event, a different outcome, the logic behind this is worth everyone's careful consideration.
The Course of Events
Let's get the background of the situation straight, during the 2025 autumn campus recruitment, Xingyu Shares posted research and development, technical, and management trainee positions, among others, targeting universities nationwide, with a total of approximately 440 job openings for 2026 graduates, many of whom were master's students from 985 and 211 universities. During the recruitment phase, HR explicitly stated that there would only be a one-month shop floor rotation experience, after which they would return to the technical positions they signed up for.
In July 2026, just one month after these students officially started working, the HR department summoned 107 of them for a meeting in early August. The content of the meeting was shocking: they were given the option to either receive half a month's salary as compensation and resign voluntarily for "personal reasons," or refuse to sign and be transferred to the production line as a general worker, with their salary recalculated according to the standard for operational workers. There are recordings that show HR even used "industry background checks" as pressure, hinting that those who didn't cooperate would not be able to work in the industry anymore.
Ultimately, 107 out of 440 campus recruits had their labor contracts terminated, accounting for nearly a quarter.
On August 25, the Changzhou Human Resources and Social Security Bureau released a notice, confirming that Xingyu Shares had terminated labor contracts with 107 people, and ruled that the company's approach during the negotiation process was "overly simplistic and rigid, lacking sufficient and effective communication". The bureau ordered the company to issue a public apology and suspended the Director of Human Resources.
On August 27, Xingyu Shares issued an apology letter, acknowledging that "the management made mistakes in decision-making and had loopholes in management: the communication was rigid and the methods were simple in specific implementation." The compensation scheme was upgraded from the initial half-month's salary to: immediate payment of 3 months' job-seeking living subsidy, free extension of dormitory accommodation, and an additional 6 months' salary if they are still unemployed after 3 months.
The situation would have ended there as a routine public opinion incident involving "brutal layoffs," but what really caused the event to spiral out of control was the students' "unconventional actions."
A whistleblower letter has caused things to completely spiral out of control
The recent graduates who were persuaded to resign did not pursue the conventional route for defending their rights.
They have done three things:
First, evidence was collected. This included recordings of HR meetings, chat logs, labor contracts, job offers, and job descriptions, all of which were organized into a dossier totaling over 100 pages of material.
Second, they researched the rules, not just focusing on domestic labor laws, but also studying the business structure of Star Universe, relevant EU regulations, and the complaint channels for suppliers of German car companies.
Third, complaints were filed through multiple channels simultaneously. The materials were sent to four places: the EU supply chain compliance channel, the Hong Kong Stock Exchange's ESG complaint channel, the supply chain whistleblower systems of European car companies such as Mercedes-Benz, BMW, and Volkswagen, as well as domestic labor supervision departments.
This move directly escalated the issue from a "domestic labor dispute" to an "international supply chain compliance problem".
The effect was immediate, and on August 30, Mercedes-Benz's BPO (Business Practices Office) formally responded, generating a dedicated case number WB0011869, with the subject "Severe Ethical and Labor Misconduct by Suppliers - Changzhou Xingyu Automotive Lighting System Co., Ltd.". The response clearly stated that the behavior described by the whistleblower "does not conform to Mercedes-Benz's corporate principles", and the report has been forwarded to a professional team for further review.
On September 1, a Volkswagen China spokesperson responded that they attach great importance to the matter and have immediately launched a special investigation, emphasizing that "respecting workers' legitimate rights" is a core principle of supply chain management.
The Hong Kong Stock Exchange also received complaints and has referred the materials to the Listing Department for review.
From fermenting domestic public opinion to overseas clients getting involved, it took only half a month. During this half month, Xingyu Shares' attitude underwent a 180-degree drastic turn - from initially offering only half a month's salary and taking a tough stance, to publicly apologizing, significantly upgrading compensation, and promising to provide a safety net.
Why is a "foreigner's" cough more effective than the law?
What is most piercing to the public's nerves is a cruel contrast of reality —
Domestic public opinion has been in an uproar for over 20 days, with netizens expressing outrage, media following up, and the Human Resources and Social Security Bureau issuing a report, but Xingyu Shares' initial attitude was: half a month's salary, sign if you want to.
A whistleblower letter sent to the EU and Mercedes triggered a series of events: within less than a week, Mercedes filed a case, Volkswagen launched an investigation, the Hong Kong Stock Exchange intervened, the company issued a public apology, and its compensation plan was significantly upgraded.
Why? The answer lies in the business logic of CNGR Advanced Materials, also known as Xingyu Shares.
First, customer concentration determines bargaining power. Starry's top five customers have consistently accounted for over 60% of revenue for years. Order share from German automakers directly determines the company's revenue base. Mercedes-Benz and Volkswagen are the core OEM customers Starry has been tied to long-term.
Second, EU regulations provide hard constraints. The EU's Corporate Sustainability Due Diligence Directive, which took full effect in 2024, holds brand owners jointly liable for labor compliance violations by upstream suppliers. This means that if labor violations at Xingyu are confirmed, Mercedes-Benz and Volkswagen not only have the right to reallocate orders but can even activate supplier exit mechanisms.
Third, the business losses far exceed the personnel costs. Xingyu Shares optimized 107 new graduates, and the saved personnel costs are estimated to be less than 80 million yuan. However, if core customers reduce orders by 10%, the losses will far exceed this number. In the automotive supply chain circle, a case number starting with "WB" means that a formal investigation into the supplier's compliance has been launched. Before the investigation process is completed, all new project quotations, new model appointments, and long-term contract renewals involving the supplier will likely be suspended or delayed.
In Xingyu's eyes, domestic public opinion and regulation amount to little more than a self-imposed three-drink penalty at the dinner table—while a mere cough from an EU company lands like a thunderclap on a summer day.
This is no exaggeration, from the perspective of students, the domestic labor arbitration process is lengthy, evidence collection is difficult, and enterprises delaying execution is the norm. In contrast, the EU's supply chain compliance whistleblower channel has a clear acceptance process, a legal basis, and immediate feedback. Mercedes-Benz BPO's formal response letter, dedicated case number, and clear statement - "not in line with the company's principles" - these signify real and tangible business risks in a Western business context.
Xingyu Shares respects whose rules and abides by whose law? The answer is very clear: whoever holds the orders is the "law".
Double standards are not limited to this instance
Just as the wave of layoffs has yet to subside, Xingyu Shares has been exposed for having "double standards" at its overseas factories.
According to a report by ifeng.com, there is a significant labor disparity at Xingyu Shares' factory in Serbia. Local Serbian employees work from 9 am to 5 pm in accordance with local regulations, while Chinese personnel sent from the company's domestic operations work an average of 10 hours a day. If production tasks are not completed after local employees leave work, Chinese employees are required to work overtime to complete them.
What's more interesting is the data comparison: in the first half of 2026, Xingyu's overseas business revenue was approximately 332 million yuan, with a gross margin of only 5.86%; in contrast, the domestic business had a gross margin of 19.41%, a difference of over 13 percentage points. The overseas factories have been losing money for a long time and have been relying on continuous subsidies from the parent company.
Domestically, the company has been known to "humiliate and persuade" its own employees to leave, offering them half a month's salary as severance pay. In contrast, overseas, it strictly adheres to local regulations and maintains a standard 9-to-5 work schedule for local employees.
Same boss, same company, but two different sets of standards - this is no longer a matter of management style, but rather a matter of values.
This bill, Star Universe miscalculated
From a purely commercial and financial perspective, Xingyu Shares made an extremely poor decision.
First, the timing could not have been worse. Xingyu Shares submitted its H-share listing application to the Hong Kong Stock Exchange for the first time in January 2026, and after the application lapsed in July, it resubmitted the application on July 29. The company had just received the CSRC's filing notice for overseas issuance and listing on August 14. However, the buyout negotiations were initiated on August 8. Triggering a labor dispute involving over 100 people during the IPO audit window - what else could be considered self-destructive?
The Hong Kong Stock Exchange's "Environmental, Social and Governance Reporting Guide" has clear audit standards for the labor rights and ESG performance of companies seeking to list. Large-scale labor disputes involving over 100 people are a key inquiry item during the listing review stage. Even if they do not directly reject the listing application, they will prolong the review cycle and require companies to provide more compliance explanations. Each round of inquiry response often takes one to two months.
Second, saving minor expenses can lead to major losses. Optimizing the intake of 107 new graduates may save less than 80 million yuan in personnel costs. However, if core clients reduce their orders by 10%, the losses will far exceed this amount. More severely, the Hong Kong IPO may result in an valuation discount of over 10%. Based on a fundraising scale of 3 billion yuan, the estimated valuation loss could be between 300 million and 500 million yuan.
Third, the capital market has already cast its vote with its feet. Since the news of terminating contracts with new graduates came out in early August, the stock price of Xingyu Shares has been falling, with a cumulative decline of over 19% and a market value evaporation of over 5.3 billion yuan.
Treating employees as adjustable financial variables to embellish financial reports may be feasible in a closed market, but in an open capital market, every move will be revalued.
Who is defining "compliance"?
This incident raises a deeper question: why does a Chinese listed company need to be "taught" by EU laws and a German company's supply chain audit to respect its own country's laborers?
China's labor laws do have relevant provisions, and Article 46 of the Labor Contract Law clearly stipulates the circumstances under which employers should pay economic compensation. However, in reality, cases of companies indirectly pressuring new graduates to leave are not uncommon, and most of these cases are ultimately dropped. The HR department at Xingyu Shares dared to offer the condition of "half a month's salary, sign or not" precisely because, based on past "industry conventions," there were almost no costs associated with doing so.
The Changzhou Municipal Human Resources and Social Security Bureau's report used the phrase "simple and crude methods, lacking sufficient and effective communication," but 107 college graduates were forced to "choose between two options" and quit, and a master's graduate from a 985 university was threatened with "if you don't sign, don't think about working in this industry" - is this merely "simple and crude"? When regulatory language is gentler than a company's apology, how can companies be expected to take the law seriously?
In response, Mercedes-Benz stated unequivocally: "serious moral and labor violations" and "inconsistent with corporate principles". Volkswagen expressed its stance: "Respecting workers' legitimate rights is a core principle of supply chain management".
The same behavior is classified as "communication style needs improvement" domestically, but as "serious ethical misconduct" in the EU. This cognitive gap is the most thought-provoking aspect of the Star Universe incident.
The collective silence of domestic automakers also confirms this point. Xingyu's clients include several domestic vehicle manufacturers such as Li Auto, NIO, XPeng, Chery, and Geely. However, despite the intense public debate, not a single domestic automaker has made a public statement. Some analysts point out that headlights are critical safety components, and replacing a supplier would require redesigning, remolding, and retesting, which is a lengthy and costly process. But does the inconvenience of switching suppliers justify turning a blind eye to the supplier's "humiliating labor practices"?
In conclusion
The reason Xingyu Auto Parts has sparked such an uproar is fundamentally that it has touched two sensitive nerves at once.
One is the business phenomenon of "externally arrogant, internally inferior." A Chinese company may be overly accommodating to overseas clients while being dismissive of domestic laws and public opinion, a stark contrast that offends the public's basic expectation of "fairness."
Second, there is a systemic "distinction between internal and external". When domestic labor arbitration and public opinion supervision are not enough to make a listed company "remember its lessons", a whistleblower letter sent to the EU has succeeded. Is this a tragedy for the company or a tragedy for the system?
Xingyu Shares eventually apologized and compensated, but as some comments have pointed out: the resumes of those 107 young people will no longer include the four characters "Xingyu Shares". The golden job-seeking period they missed and the status of new graduates they lost cannot be made up for with just a subsidy.
Star Universe Holdings itself will also have to face investigations by Mercedes-Benz and Volkswagen, scrutiny from the Hong Kong Stock Exchange, punishment from the capital markets - as well as a completely destroyed employer brand.
Companies that want to grow and strengthen cannot just focus on orders, performance, and profits, but must also uphold the bottom line of labor practices. The newly recruited graduates are not pawns to be discarded at will when the company's operations are not going smoothly.
This incident leaves the entire society pondering: what kind of system do we need to ensure that a company doesn't have to wait until "foreigners cough" before remembering it is also a law-abiding entity?