Volkswagen launches probe into Chinese auto supplier's graduate dismissals

Volkswagen 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, 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.