German automaker Volkswagen has launched an investigation into the Chinese company Changzhou Xingyu Automotive Lighting Systems after the supplier abruptly terminated the employment contracts of 107 newly hired college graduates. Xingyu is one of the leading manufacturers of automotive lighting and also supplies brands such as Mercedes and BMW.

The graduates were given the choice between half their monthly salary as severance pay or a transfer to an assembly line with a lower wage.

The case sparked a debate about labor rights and prompted local authorities in Changzhou to intervene, criticizing the management’s conduct. Xingyu subsequently apologized for its failure to communicate effectively and suspended its human resources director.

The incident came at an inopportune time, as the company is seeking a listing on the Hong Kong Stock Exchange, where the affected graduates have filed complaints against it.

Volkswagen described the investigation as standard procedure and emphasized that it requires compliance with fundamental rights throughout its entire supply chain. Once the results are known, it plans to take appropriate measures.

(Reuters, max)