Quick Summary of Key Points
Xingyu Shares, a well-established domestic leader in the automotive lighting industry, has recently become the subject of widespread criticism online due to an incident where a newly hired graduate was humiliated and forced to leave the company. Further investigation by the media revealed that the "Human Resources Director" who was cited in the official announcement does not exist in the company's official management structure or internal hierarchy, and no one even dares to reveal who this person is. Following this revelation, it became apparent that the company, which has seen impressive performance in recent years, has secretly laid off nearly 3,000 employees this year. As a result, the company experienced a significant decline in both revenue and profit in the second quarter. This incident coincided with its critical period for listing on the Hong Kong Stock Exchange, casting a shadow over its otherwise smooth plans.
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Detailed Analysis
1. The Mysterious "Non-existent Position" as a Cover for Liability Shifting
Many people are wondering, "If the company doesn't even dare to mention the name of the HR Director, what exactly are they afraid of?" The reason behind this is quite straightforward: the internal hierarchy of Xingyu Shares does not include a position titled "Director of Human Resources." The company only recognizes roles such as team leader, section chief, department head, vice president, and executive vice president. The official list of executives does not include a position for human resources management; the person in charge of this area is Executive Vice President Li Shujun. By using the non-existent title of "Human Resources Director" in the official announcement and avoiding the identification of the responsible person, the company is trying to avoid putting the long-serving HR professional in the public eye and taking the blame. It is suspected that the person involved, Zhou, has worked at the company for 15 years and received equity incentives worth over 400,000 yuan, which, based on the current stock price, would represent a market value of more than 3 million yuan. Using this vague excuse allows the company to avoid accountability and quickly dampen public outrage, demonstrating a severe lack of compliance.
2. Harassing New Graduates: The Lowest-Cost Option in a Large Layoff Drive
The act of forcing new graduates to leave was not the result of a single HR employee's misbehavior but part of a larger layoff strategy. Between 2022 and 2024, Xingyu Shares' workforce grew from just over 7,000 to more than 10,000 employees, with a 40% increase. The number of production line workers doubled. However, this year, the company suddenly faced a shortage of orders, leading to the layoff of nearly 2,900 employees, or 27% of the total workforce, with production positions being cut by more than 40%. To avoid legally required severance payments, the company adopted two cost-cutting measures: first, replacing regular employees with contractors, increasing outsourcing costs by 3.5 times (300 million yuan annually); second, targeting new graduates, who have no formal employment contracts and are easier to manipulate. The company used tactics such as threatening to transfer them to low-paying jobs or writing negative evaluations to persuade them to resign voluntarily, thereby saving on compensation. This approach proved to be the lowest-cost and least resistant method of layoffs.
3. From Rapid Expansion to Sudden Cuts: The End of the Automotive Industry's Boom
Xingyu Shares' success as a leading company in the automotive lighting sector was largely due to the booming domestic automotive market, with customers ranging from BYD and Li Auto to BMW and Mercedes. The company expanded its production capacity and hired many workers. However, this year the automotive industry has entered a period of intense competition, with car manufacturers struggling to sell vehicles, resulting in a significant reduction in orders for Xingyu. Rising raw material prices also increased costs, leading to a 5.7% decline in revenue and a 18% drop in net profit. The large capacity and workforce acquired in previous years could not be sustained with insufficient orders, forcing the company to cut staff to reduce costs. Interestingly, the company had already reduced its technical staff by one-third in the previous two years and focused on hiring more production line workers. Now that these production lines are idle, the new graduates, who have the least bargaining power, are the first to be affected.
4. A Bombshell at the Time of Listing
Xingyu Shares was eagerly preparing to list on the Hong Kong Stock Exchange to raise additional funds. It had submitted its application in January and revised it in July, and had even obtained the necessary approval from the Securities Regulatory Commission. However, the incident with the new graduates has severely impacted these plans. Its core customers, BMW and Mercedes, have launched investigations into the company's labor practices. Foreign automakers have strict requirements for supplier compliance with labor rights, and if Xingyu is found to have mistreated its employees, it could be removed from the list of qualified suppliers, costing it a significant portion of its high-end business. The Hong Kong Stock Exchange will also likely scrutinize the situation, questioning the company's compliance with labor laws. With such significant issues, the company's ability to successfully list and raise funds is now uncertain.
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In summary, Xingyu Shares' recent mishaps have not only damaged its reputation but also put its listing efforts at risk, potentially costing it a significant portion of its business due to the scrutiny from key customers and regulatory authorities.