Volkswagen launches probe into Chinese auto supplier's graduate dismissals

Bayerische Motoren Werke Aktiengesellschaft

01/09/2026 08:02

       SHANGHAI/BEIJING, Sept 1 (Reuters) - Volkswagen
 VOWG.DE  said on Tuesday that it had begun an investigation
into the dismissal of 107 newly hired university graduates by a
major Chinese auto lamp supplier and it would take "appropriate
steps" once the findings were complete.
    The probe followed media reports that Changzhou Xingyu
Automotive Lighting Systems  601799.SS , one of China's largest
automotive lighting manufacturers and a supplier to several
global carmakers including Volkswagen, Mercedes and BMW,
abruptly terminated labour contracts with the affected
graduates. 
    The incident has fuelled social media discussions about
labour rights and youth employment amid China's uneven economic
recovery and highlighted potential compliance risks for Chinese
suppliers and their global clients.
    "Basic values and rights must be respected and protected
across our entire supply chain, and we take any allegations of
violations very seriously," Volkswagen said in a statement,
describing the review as "standard procedure."  
    Xingyu, which has an annual production capacity of 80
million automotive lights, did not respond to a request for
comment on the investigation. 
    In an apology letter posted on its website on Thursday,
Xingyu admitted to management and communication failures in
handling the terminations but did not confirm reported options
it had offered the graduates.
    Chinese media reports said previously that affected
employees were asked to choose between resigning for
compensation equivalent to half a month's salary or accepting
reassignment to assembly-line factory roles at reduced pay.
    The company apologised for its handling of the situation,
suspended its human resources director, and pledged to improve
its processes and employee care measures.
    The apology followed an investigation by local authorities
in the eastern city of Changzhou, which confirmed the
termination of the contracts with 107 graduates and criticised
Xingyu's "simple and rigid" handling of the negotiations and
failure to adequately communicate with employees. 
    Xingyu is pursuing a dual primary listing in Hong Kong to
better finance its global expansion plans, and Chinese media
reported some affected graduates also lodged complaints with
Hong Kong's stock exchange over the company's labour practices.
    Hong Kong Exchanges and Clearing declined to comment on
individual companies, while other automakers supplied by Xingyu
had yet to respond to requests for comment.

    (Reporting by Zhang Yan in Shanghai and Qiaoyi Li and Ju-min
Park in Beijing; Additional reporting by Selena Li in Hong Kong;
Editing by Jamie Freed)