On Sept. 3, The Paper and China National Radio published follow-up investigations showing that the human resources director of Xingyu Co., said to have been 'suspended' in a Changzhou human resources bureau notice, does not exist in the company's disclosed job hierarchy. The position does not appear in the list of directors and senior management in the Hong Kong IPO prospectus. The company's official website lists management levels from junior to deputy general manager, with no 'director' tier. Several employees interviewed said the title is not used internally.
The listed company's disciplinary action may have targeted a person who doesn't exist. Whether the role is an actual position or a generic title awaits clarification from Xingyu. The company had not responded by press time.
The company has already generated enough news in the past two weeks. A group of 107 recent graduates used an English complaint letter to push a leading automotive lighting supplier—which had just collected a 'Changzhou Top 10 Employer' award and posts annual revenue of 15.2 billion yuan—into issuing an apology.
It took just three days from trending on social media to the company's apology, but before that, it held out for 19 days. Here's a look at why a company that could withstand 19 days, after three days of trending, made a full apology but still failed to stop the damage, instead making one mistake after another.
From Offer to Rescission: Just Two Months
In its 2025 autumn recruitment drive, Changzhou Xingyu Automotive Lighting Co. extended 440 offers to 2026 graduates, mostly master's students, for R&D, technical and management trainee roles. Xingyu is a leading automotive lighting supplier with annual revenue of 15.2 billion yuan. Its clients include Mercedes-Benz, BMW, Audi and Volkswagen.
The graduates joined on July 1, 2026, and entered production-line internships on July 6. According to multiple media reports, the one-month workshop rotation promised at hiring was extended to three months, and salaries were recalculated at ordinary-worker rates.
From Aug. 8, HR began holding one-on-one talks. The young employees faced a choice: sign a 'resignation for personal reasons' and leave with about half a month's pay, or accept a transfer to work as an operator on the production line. Media reports said recordings of the talks suggested that a WeChat group of more than 400 HR professionals in Changzhou exists, and that refusing to sign could affect future background checks.
The official count was that 107 people had their labor contracts terminated.
On Aug. 24, a hashtag about Xingyu Co. pushing fresh graduates to resign trended on Weibo. The next evening, Changzhou's human resources bureau said the company's approach during negotiations was 'simple and blunt, lacking sufficient and effective communication,' suspended its HR director, and ordered remediation by a set deadline.
On the morning of Aug. 27, the company's official WeChat account posted an apology letter offering three compensation items: an immediate three-month job-search living allowance totaling about 15,000 yuan per person; free accommodation during that period; and an additional six months' salary if the graduate remained unemployed by end-November. That day, Xingyu shares closed down 5.2% at 81.86 yuan, the lowest since May 2020.
On Sept. 1, Volkswagen China announced a special investigation into related complaints. On Sept. 2, Zhou Xiaoping publicly apologized at the semi-annual results briefing. By then, Xingyu's share price had fallen to 77.69 yuan.
The 72 Hours After the Apology:
A Chain of 'Secondary Disaster' Demonstrations
Objectively, the three compensation measures were rare in similar incidents. The subsidy arrived quickly, the fallback clause of 'six months' additional salary if unemployed by end-November' showed sincerity, and the departure certificate was issued citing non-personal reasons, addressing the background-check threat. If the matter had ended there, Xingyu's crisis management would have been passable.
But over the following week, Xingyu's repeated missteps triggered a series of 'secondary crises.'
1. Inconsistent messaging. On the day of the apology, Xingyu's securities department told media that "the company did not push fresh graduates to resign and is proceeding normally with its Hong Kong listing." The same day, the official WeChat account was apologizing. No. 9 reiterated that the first rule of crisis management is a single external voice; Xingyu failed to do so.
2. Multiple flaws in the apology letter. According to multiple media reports, the initial letter's date mistakenly said '2025,' and there were rumors that the company name was written incorrectly as 'Xingyuan' and 'Xingyuan' (using different characters). Additionally, the National Anti-Fraud Center app flagged the text as containing traces of AI generation. These two details combined sparked strong public dissatisfaction, with widespread opinion that the apology was hastily put together and possibly not written by a human.
3. Avoiding legal characterization. The apology letter only mentioned 'decision-making errors,' 'management lapses,' and 'blunt communication,' without the phrase 'illegal termination.' Chen Fei, a lawyer at Jingdu Law Firm, said apologies and compensation are after-the-fact remedies and do not change the nature of the act. No. 9 believed Xingyu's wording was likely intended to control the scope of the fallout and avoid self-characterization that could trigger greater controversy, but he failed to fully anticipate how public opinion would interpret it. The public saw Xingyu trying to replace 'illegal' with 'error' and avoid the root of the problem. This undoubtedly undermined all the previous compensation measures.
The chairman's statement contradicted his actions. At the Sept. 2 earnings call, Zhou Xiaoping said the company "deeply reflects and sincerely apologizes," but immediately added that it had "filed complaints and reports with cyberspace and cybersecurity authorities regarding false media reports." The commentary argues that legal recourse is understandable, but from a communications standpoint, juxtaposing the two statements will lead the public to read the apology as coerced and insincere.
Lying to manage a crisis is the most fatal error, crossing the line on integrity. The Aug. 25 notice came from a government department, but the information about suspending the human resources director could only have come from the company itself. If no such position exists, it means Xingyu provided false accountability information to regulators, using the official notice's credibility to stage an accountability performance for the public.
A complete apology typically consists of three actions: admitting the mistake, accountability, and rectification. Accountability proves to the public that someone bears responsibility for the error. With accountability now a sham, the apology loses its meaning.
What does fabrication mean in crisis response? Crisis response is meant to restore credibility and requires honest communication. If Xingyu cannot even manage basic integrity, how can the public believe its promises? Among the first five problems, inconsistent messaging and rough text are capability issues; the public has patience for capability. Fabrication is a matter of stance, and it will fundamentally change public perception.
Once Xingyu's fabrication is confirmed, on the regulatory front, the incident will expand from labor-law violations to regulatory dishonesty, and subsequent scrutiny will only be stricter and deeper. On the Hong Kong IPO front, capital markets fear disclosure distortion most; for a company awaiting a hearing, an integrity flaw is far more fatal than a labor flaw. On the customer front, Mercedes-Benz titled the case when accepting the complaint as "supplier's serious moral and labor misconduct." Once the false accountability is confirmed, "moral misconduct" shifts from an allegation to an evidenced description. German clients look at the credibility of rectification, not the number of apologies. Internally, corporate cohesion is damaged and employees lose confidence in the company. On the public front, every future response from the company will be presumed false, and even truthful statements may not be believed.
These six errors, viewed individually, are execution problems. Together, they point to a single conclusion: Xingyu lacks crisis-communications awareness. The PR team apologizes, the securities department defends the stock price, the workshop issues statements, and the chairman counterattacks. Each department fights on its own, with no one coordinating how the company should present itself after the apology. The public perceives Xingyu as internally fragmented.
This episode is a reminder to all companies. An apology is not the end of a crisis. After the apology is issued, the public truly begins to scrutinize the company, and the standards are far stricter.
Why This Company Caved in Just Three Days
Looking back at the silence after the apology's chaos is more instructive. From Aug. 8 to Aug. 27, Xingyu held out for 19 days. Leaks circulated, recordings spread, media followed, topics trended, and notices were issued — but the company didn't say a word.
Reading the silence as slow reaction would be a shallow take. Silence was Xingyu's first crisis decision — a bet that the matter would blow over. Labor-related public opinion has a short half-life; once posts sink, the company doesn't need to do anything. That playbook works most of the time in A-shares. Even after the notice was issued, Xingyu still wanted to wait — otherwise there's no explaining the half-year report it released as scheduled on the 26th.
It lost that bet. Four factors actually drove Xingyu's apology, with supply-chain compliance being the key.
1. Regulation. On Aug. 25, the Changzhou Human Resources and Social Security Bureau's notice turned the matter from online public opinion into a government-involved employment compliance case, with suspensions, rectification deadlines and special investigations launched simultaneously. The company had no choice but to respond with a stance and a solution.
2. State media characterization. From Aug. 27 to 28, People's Daily spoke out repeatedly. In a commentary published on the 28th titled 'Companies Massively Persuading Fresh Graduates to Resign Is an Open Trampling of Social Credit,' it said: 'This company has growing profits, ample cash flow, large dividends, and is racing toward a Hong Kong listing — it is by no means in financial difficulty or unable to perform its obligations.' That statement directly questioned Xingyu's compliance and was highly damaging for a company queuing for a Hong Kong IPO.
3. Listing process. Xingyu filed a second application with the Hong Kong Stock Exchange on July 29, obtained the filing in mid-August, and is now in the most sensitive pre-hearing window, involving compliance review — especially after state media directly questioned its compliance. Turning a deaf ear could affect its listing process.
4. Supply-chain labor compliance rules. The key turning point, in the view of No. 9, was Germany's Supply Chain Due Diligence Act, which requires German companies to conduct human-rights risk assessments on direct suppliers, with violators facing fines of up to 2% of global annual turnover.
Xingyu's Serbia plant serves major European automakers including Mercedes-Benz, BMW, Audi, Volkswagen and Skoda. It was the first-phase project completed and put into operation in 2022. One of the uses of the Hong Kong IPO proceeds is the second-phase expansion of the Serbia plant, which will focus on intelligent headlights and electronics, and upgrade to front-headlight manufacturing. As a supply-chain partner to German automakers, Xingyu naturally must fulfill German compliance obligations, or it could lose the business.
It is understood that the 107 recent graduates who were dismissed compiled a chain of evidence including offer letters, recordings of termination meetings, labor contracts, and chat logs, translating some into English, and submitted them to four destinations: domestic labor inspection authorities, the Hong Kong Stock Exchange's ESG complaint channel, the EU's Forced Labour Regulation compliance channel, and the global compliance departments of Mercedes-Benz, BMW, and Volkswagen. As a result, the German automakers' compliance departments have been drawn into the investigation, and these departments hold the power to decide whether Xingyu can continue to take orders from German automakers.
It was precisely because the graduates accurately assessed the obligations structure of the German supply chain that their labor contract disputes could be transformed into human-rights risk leads that multinational automakers are legally required to accept.
According to a Mercedes-Benz response letter provided by the whistleblower and reported by multiple media outlets, the company's compliance unit accepted the complaint and generated a case number, stating that "the behavior you described does not conform to Mercedes-Benz's corporate principles." Mercedes-Benz has not publicly confirmed the letter, but Volkswagen China has officially stated: "The group attaches great importance to the relevant complaint and has launched a special investigation immediately; the investigation is currently ongoing."
What ultimately forced Xingyu to change its crisis-response approach was the damage to its interests driven by public opinion.
Compliance Is the Bottom Line
Xingyu is not a company in financial difficulty. Despite a year-on-year decline in net profit, it still plans to pay dividends of 56.64 million yuan. In 2025, it cut 2,894 employees on a net basis, while outsourced labor hours rose to 10.87 million over three years. Workforce adjustment itself is not the problem; the problem is the method. Having master's degree holders turn screws, using background checks to pressure employees, and forcing them to sign "resignation for personal reasons" — this is not sloppy management, but treating legal risk as a cost of doing business.
The results are plain to see: compensation payments, regulatory notices, naming by state media, special investigations by clients, and a five-year low in the stock price. There is also an invisible loss: this supplier, which is racing to list in Hong Kong and plans to use the proceeds for European production capacity, now has a "record" in the compliance reviews of its German clients. Professor Wu Yuming told Caixin that templated compliance management systems are no longer adequate for the increasingly rigid rules of international supply-chain governance.
Many companies are beefing up their public relations. But the Xingyu case shows that compliance is the more urgent lesson. If PR has no say in decisions before the fact, all its efforts are just futile damage control.