Statement on Relevant Circumstances and Rectification Measures Regarding Our Company's Recent Erroneous Actions Concerning Job Reassignments and Workforce Reductions

Statement on Relevant Circumstances and Rectification Measures Regarding Our Company's Recent Erroneous Actions Concerning Job Reassignments and Workforce Reductions:

I. Course of Events

During the autumn 2025 and spring 2026 campus recruitment periods, our company signed the "National Employment Agreement for Graduates of Regular Institutions of Higher Education" (commonly known as the "Tripartite Agreement") with a total of 440 college graduates from the Class of 2026. Following their graduation, 372 of these graduates successively established formal labor relationships with our company, while the remaining 68 did not continue to work at the company due to pursuing other employment opportunities, returning to school for further studies, or other reasons.

In July 2026, based on projected subsequent order volumes and staffing requirements, the company management proposed an optimization and consolidation plan for company positions, erroneously made the decision to reassign and reduce headcount among some newly recruited graduates, and requested the Human Resources Department to implement it as soon as possible.

In early August, our Human Resources Department initiated consultations with 140 of the 372 graduates. Among them, 33 graduates retained their original positions, while the other 107 graduates signed the "Agreement on Termination of Labor Contract" with our company. Among these 107 graduates, in terms of educational background, 75 hold bachelor's degrees and 32 hold master's degrees; in terms of job positions, 39 were in R&D and technical positions (including product design across optics, structure, and electronics), 60 in manufacturing positions (including assembly processes, equipment maintenance, and equipment commissioning), and 8 in functional support positions (including quality engineers, project engineers, and quality inspectors).

II. Our Understanding and Stance

Throughout the formulation of the plan and the consultation process, our company management made flawed assessments and hasty decisions without giving full consideration to the actual circumstances of these graduates who had just entered the workforce. Furthermore, during the consultation process, some staff members acted in an oversimplified and rigid manner, causing profound physical and emotional distress to the graduates, as well as serious adverse impacts on their families and society. For this, we feel deep self-blame and have engaged in profound soul-searching. We fully accept all solemn criticisms and public supervision from the public and media, and assume full responsibility. Hereby, the company management once again extends our most sincere apologies to the aforementioned graduates, their families, and all sectors of society. We have decided on the following disciplinary actions: General Manager Zhou Xiaoping, who bears management responsibility, is penalized with a one-year salary deduction; Deputy General Manager Li Shujun, who bears direct responsibility, has his duties reassigned and is penalized with a six-month salary deduction; Human Resources Director Yu Zhiming is dismissed from his post (having previously been suspended); and Li Mei, Head of the Human Resources Department, is demoted and reassigned.

Following the occurrence of the incident, our company actively implemented remedial measures: on August 27, we made a lump-sum payment of a three-month job-seeking subsidy (RMB 5,000 per person per month) to the 107 graduates; reimbursed the travel expenses of graduates from other cities who came to Changzhou to participate in recruitment activities; provided free accommodation to graduates who continued to stay in company dormitories during this period; and explicitly specified that those graduates who do not secure corporate employment within three months will receive six months of salary compensation based on their original salary standards. All of the above measures have been communicated to each graduate individually.

The Human Resources and Social Security authorities at both Changzhou municipal and district levels promptly provided employment services by holding two dedicated campus recruitment fairs for college graduates and targetedly recommending suitable positions to the 107 graduates. Throughout this process, our company actively contacted peer enterprises to provide job support. As of 12:00 noon on September 7, among the 107 graduates, 71 have commenced employment with new employers, 22 have passed interviews and received offer letters, and the remaining 14 are undergoing interviews, aligning employment needs, or preparing for postgraduate entrance examinations. In the next phase, our company will continue to collaborate with the human resources and social security authorities to ensure thorough employment support.

III. Subsequent Improvement and Rectification Measures

In response to the issues and shortcomings exposed by this incident, our company will draw profound lessons, actively correct our mistakes, and, under the supervision of all sectors of society and the media, implement the following rectification measures from the source:

First, strengthening the people-oriented business philosophy. We will consistently place the vital interests of employees at the forefront of corporate development, translating corporate culture and values into reality through tangible actions. We will actively fulfill our corporate social responsibilities, strive to provide more employment opportunities, cultivate a more compassionate corporate working environment, and achieve mutual development among the company, employees, and society.

Second, optimizing human resources management operations. We will implement the "people-oriented" philosophy at the operational level of human resources management, selecting and recruiting dedicated professionals who care for employees, possess deep familiarity with policies, and demonstrate strong professional capabilities to strengthen our HR workforce. Thorough communication will be instituted as a mandatory prerequisite for major personnel changes, with particular attention to listening to the opinions of various representatives. Additionally, a direct channel for daily employee feedback will be established to ensure that employee opinions and appeals are addressed in a timely manner.

Third, reinforcing employee rights and interests protection mechanisms. We will conduct a comprehensive review and systematic optimization of protection systems concerning employee career planning, compensation and benefits, health and welfare. We will increase resource investment in protecting the rights and interests of new employees and establish the "Xingyu Youth Growth Fund," dedicated specifically and transparently to skills training, academic advancement, professional title evaluation, and hardship assistance for newly hired employees.

Fourth, establishing and improving external supervision mechanisms. We will engage third-party professional institutions and invite legal experts, news media, and employee representatives to participate in conducting periodic specialized evaluations of corporate human resources management, which will be published to the public to actively accept social supervision.

We sincerely thank the news media, internet users, and all sectors of society for their attention and supervision!

Changzhou Xingyu Automotive Lighting Systems Co., Ltd.

September 7, 2026