China’s new graduates get hired, then cut loose

(By Caixin journalist Zhang Can and intern Sangdan Baimu)

In 2025, Xu Shan, a senior majoring in product design at a college in East China’s Anhui province, joined the fall campus-recruiting drive at his school. After applying and completing three rounds of interviews, he received an offer to become an industrial designer at Marssenger, a leading kitchen-appliance maker in Jiaxing, Zhejiang province.

“The offer paid 8,000 RMB (US$1,194) a month and included meals and housing,” Xu said. “Compared with other entry-level jobs in the industry, it was pretty good.”

Xu was tempted, though not ready to decide immediately. The company, however, seemed in a hurry. Its human resources staff told him to sign within three days or lose the role to another candidate. The company also said he would have to pay a 5,000 RMB penalty if he backed out.

Worried about missing the opportunity, Xu signed a standard tripartite employment agreement for college graduates. His start date was set for 7 July.

Then, in mid-June, just two weeks before he was due to begin, Xu received notice that Marssenger was rescinding the offer. The company paid the contractual penalty, but Xu said he felt angry and helpless.

Xu had lost his first job before it began. For those forced out after joining, the loss can extend well beyond a pay cheque.

Cutting new graduates

Even before his offer was withdrawn, Xu had a bad feeling. “The company’s share price kept falling,” he said. He had been following its developments before his anticipated start date.

Market data showed that, as of 16 September, Marssenger’s shares had fallen more than 13% since the start of the year. In its 28 August interim report, the company said first-half 2026 revenue fell nearly 27.6% from a year earlier to 271 million RMB. And its net loss attributable to shareholders was 130 million RMB.

The company said its industry remained in a deep adjustment period because of the continuing downturn in China’s property market and the slow recovery in consumer confidence.

Zhang Lu, a recent graduate who once worked at a pharmaceutical company in Tianjin, still remembers the circumstances of her dismissal. Zhang, a member of the class of 2024, was also recruited on campus. A few days before her probationary period was set to end, the company conducted reviews of probationary employees in batches.

On the day results were announced, Zhang recalled, 20 to 30 recent graduates waited outside an office. They were taken into a conference room in groups of three or four, then called individually into a smaller meeting room. Once the door closed, an HR representative repeated a simple message: “We regret to inform you that you have not passed the assessment.”

There was no scorecard and no specific feedback. Instead, Zhang said, the company appeared more focused on persuading the graduates to sign separation agreements quickly.

“The wording was polite, but the message was that if we didn’t sign, it could hurt our future job search,” she said.

After Zhang and an earlier cohort of new graduates left, the company continued to hold recruitment events on campus and hire new students for the following year, she said.

The first to go

New graduates are being laid off soon after joining companies for a variety of reasons.

Some businesses hire aggressively during the spring and fall on optimistic projections, only to see demand weaken, projects shrink and budgets tighten the following year. The newest recruits often become the first to go.

Another rationale for such layoffs may be even more widespread. With a relatively plentiful supply of graduates, some companies adopt a strategy of hiring first and cutting later, hoping to identify candidates who offer better value and better fit the role and corporate culture.

Some employers that don’t comply with labour law engage in murky practices, said Huang Yi, a lawyer at the Shanghai Win Zone Law Firm. They may hire large numbers of graduates, pit them against one another and dismiss them shortly before the end of probation on different pretexts.

The practice is particularly pronounced in manufacturing. Seasonal fluctuations in labour demand are one reason. Another is that companies are reluctant to maintain a large long-term workforce and the associated fixed staff costs.

In lower- and mid-level manufacturing, where margins are thin and businesses often operate close to breakeven, there is little room for risk.

Finding a path

After his offer was rescinded, Xu did not have time to dwell on it. Wanting to support himself rather than ask his family for money, he quickly went to Shanghai, found a part-time job and continued his job search.

Compared with the jobs available during the 2025 spring and fall recruiting cycles, Xu found it much harder to land a role at a listed company of similar standing. He had to turn to smaller startups. Before long, he joined a robotics startup in Suzhou that provided housing and paid more than his original offer.

Still, he couldn’t relax. “My new company was the kind of business I wouldn’t have considered during the fall or spring recruiting cycle,” Xu said. “Its management systems and work processes are incomplete, and staff professionalism is uneven. I had hoped a large platform would be a high starting point and a springboard for my career. That plan has fallen apart.”

The job search challenge has several causes. Rapid technological change is one. AI applications are replacing many junior positions, removing the first rung on the career ladder for new graduates.

Xu said many classmates who studied product design have shifted to operations jobs with lower barriers to entry.

Source of disputes

Dismissals during probation have consequently become a frequent source of disputes involving new graduates.

Bai Yufei, a lawyer at Beijing Hengdu Law Firm’s Shanghai office, said the most common legal reason cited by companies is that an employee failed to meet hiring requirements. If an employer can prove that claim, it may legally terminate the employment relationship without severance or damages.

“But under China’s Labor Contract Law, every new graduate a company hires establishes an independent employment relationship, which can’t be terminated at will,” Bai said. “For example, if a company hires three people but intends to retain only one, it cannot unilaterally dismiss the other two unless it can prove they failed to meet the hiring requirements.”

Failure to meet hiring requirements may be the most commonly cited basis for dismissal during probation, Bai said, but it isn’t the only one. Employers must prove that the requirements were clearly communicated in advance and specify how the employee failed to meet them. Otherwise, the termination is unlawful, Bai said.

After having offers withdrawn or being dismissed, many graduates are becoming more cautious about their career choices. On 26 August, Xu received his first pay cheque from his new job — one day later than expected.

The delay left him deeply uneasy. “I’m still sending out resumes,” he said. “I hope to find something more stable.”

(Xu Shan is a pseudonym.)

Sangdan Baimu is an intern at Caixin Media.

This article was first published by Caixin Global as “In Depth: China’s New Graduates Get Hired, Then Cut Loose”. Caixin Global is one of the most respected sources for macroeconomic, financial and business news and information about China.

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