May just file change of status application from H1 to F2 before the H1 I-94 expires or before he is laid off, whichever comes first and see how lucky he will be (not hurt anything to try it, anyway). He can legally stay during the change of status application pending. Also, try to find a new job.
The filing of change of status application allows him to stay in US legally for a few months and thus, he can try to find a job during this period and then, ask the new employer to sponsor the h1 and he just needs to go to China to get the H1 visa to come back if the new H1 approval has no I-94. So, don't be panic!
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