Summary of Key Points
Xingyu Co., Ltd. (a leading A-share company in the automotive lighting industry) hired 440 fresh graduates from the class of 2026 this year. More than a month after they started working, 107 of them had their contracts terminated. These graduates lost their status as fresh graduates due to the mandatory social insurance contributions at the time of employment, which closed off opportunities for them to participate in the autumn recruitment process, civil service exams, and campus recruitment by state-owned enterprises. Without work experience from these recruitment channels, they faced significant difficulties in finding new jobs. The company's handling of the situation was harsh: either the employees were required to resign for "personal reasons" and receive half a month's salary, or they were assigned to frontline positions with a wage of only 20 yuan per hour. Although this was legal, it was highly disrespectful. After the incident drew public attention, the company suspended the HR director and provided financial compensation as a remedy. However, the company's stock price fell by 5.2%, and the issue was also reported by the graduates to supply chain customers such as BMW and Mercedes-Benz. This is not just a matter of the rights of fresh graduates; it also exposes the company's distorted values and poor employment practices, serving as a wake-up call for both managers and college students.
Detailed Analysis
1. The Importance of Fresh Graduate Status
Many may not understand why graduates place such importance on their status as fresh graduates. Simply put, this status provides them with several advantages in the job market:
- Priority in Recruitment: Autumn and spring recruitment programs are primarily open to fresh graduates, while most open positions in the private sector require experience, making it difficult for them to get in without this status.
- Entry to Government and Public Institutions: Many positions in government agencies and public institutions explicitly require fresh graduates, and without this status, they are ineligible to apply.
- Salary Differences: Fresh graduate offers typically offer 10%-30% higher salaries than those for experienced candidates, and they also come with training programs. Without the fresh graduate status, graduates may end up with lower salaries.
The compensation offered by Xingyu (three months' salary in the form of a subsidy plus six months' salary) may seem substantial, but the loss of the fresh graduate status is irreplaceable. For example, after leaving Xingyu, graduate Zhang Yijia found that the salaries of similar positions were 15%-30% lower. Li Mumu, who stayed at the factory, was assigned to a job that required only a primary school education and offered no opportunities for advancement, with no promise of becoming a permanent employee—this essentially ruined his career prospects.
2. Legal but Disrespectful: The Company's Lack of Humanity
The Changzhou Human Resources and Social Security Bureau stated that Xingyu did not violate the law, as the contract was terminated through mutual agreement. However, being legal does not mean it is reasonable or respectful. For example, if you invite friends to dinner and then suddenly tell them to leave because there isn't enough food, that would be impolite. If you also require them to choose between leaving on their own initiative or washing dishes in the kitchen until they are ready to leave, that would be utterly inhumane. Xingyu's problem lies not in whether its actions were legal or illegal, but in the lack of basic human decency. The management only focused on saving money by terminating contracts early and paying less, without considering the future of the employees. A professor from Nanjing University pointed out that a proper layoff should involve explaining the difficulties to the employees and seeking their understanding, rather than forcing them to choose between suffering losses or even greater losses.
3. HR as the Scapegoat?
The HR director was criticized and suspended, but the real decision-making lies with the management. Hiring 440 people and terminating 107 of them involves business needs, financial budgeting, and human resource planning—none of which can be decided by the HR department alone. Xingyu's apology letter acknowledged the management's mistakes and oversights, yet the HR director was still held accountable. This is like blaming a nanny for a child's misbehavior when the parents are at fault. The company's corporate culture promises "love, gratitude, and responsibility," but its actions show a complete disregard for these values.
4. A Long-Term Pattern of Cost-Saving Practices
Xingyu's approach is not an isolated incident but part of a long-term trend:
- Reduction in Full-Time Employees: From the end of 2024 to the end of 2025, the number of full-time employees decreased from 10,426 to 7,532, a reduction of 2,894.
- Increase in Outsourcing: The number of hours worked by outsourced workers increased from 2.38 million to 10 million hours, indicating a shift from hiring full-time employees to using temporary workers to save costs.
This termination of fresh graduate contracts is just the latest example of this cost-saving strategy. Although the company's revenue is still growing, its profits are declining, and it is trying to cut costs by laying off fresh graduates and using outsourcing. This approach is short-sighted and disrespectful to the employees.
5. The Cost of Inaction: More Than Just Financial Losses
Xingyu's actions had far-reaching consequences beyond the financial losses:
- Stock Price Drop: The company's stock price fell by 5.2% on the day of the apology, indicating that investors disapproved of the handling of the situation.
- Supply Chain Crisis: The graduates reported the issue to compliance departments at BMW and Mercedes-Benz, which place great emphasis on supplier labor rights. If Xingyu is found to have violated regulations, it could lose business orders.
- Damage to Reputation: In the future, few fresh graduates will be willing to apply to work for a company with such a track record. The company's reputation has been severely damaged.
These losses are much more significant than the amount of compensation paid. The issue could have been resolved through proper communication and early support for the employees, but the company waited until the situation escalated before taking action, resulting in doubled costs.
Conclusion
The Xingyu incident serves as a reminder to managers that laws should not be the sole standard, and fresh graduates should not be treated as mere test subjects. When crises arise, the management should not shift the blame onto HR. For college students, it is important to keep evidence of important promises, avoid signing agreements without understanding their terms, and pursue their rights rationally. Times have changed, and young people are no longer willing to tolerate poor treatment. Companies that practice harsh management will eventually face the consequences of their actions. A truly successful company is one that respects its employees even during layoffs.