China Manufacturing and The Chinese New Year Shutdown - How Will It Impact to Your Business?

China manufacturing doesn’t just stop during Chinese New Year, it grinds to a complete halt. You can barely get a reply email, let alone answers to questions you might have on product development timelines or the status of an order.
Chinese New Year is based on the lunar calendar and so it is not the same time period each year. If you are producing in China you need to prepare for this time period months in advance. The best time to check with factory is during December of each year. Chinese New Year may start as early as end of January or not until mid-February. You must plan ahead if you want your shipment to leave the Chinese port before Chinese New Year. It is always very difficult to book shipment with the freight forwarder during this time of year; you must instruct the factory to book your shipment earlier.
The factory will start closing down their production line around 2-3 weeks prior to the Chinese New Year. The factory will resume working after approximately one month of holiday. Some factories will claim that they only have 10-14 days of holidays, but this only applies to their office - clerical work may resume, but the production side will still be on holiday. Therefore, you also must make sure you have enough inventory to cover the CNY closure time prior to CNY, otherwise you will have to wait an extra month to receive any goods needed.
Chinese Labor
The workers travel home via bus, train or plane to visit with their families and see their children who had to stay at home. You need a permit card that is tied to your birth to live in certain parts of China. Chinese workers are sponsored by the factory and able to live in other areas. If the children who don’t have this permit card and come with the workers, they would be unable to attend school, access public services, etc., so they normally stay at home with the grandparents.
Workers will begin to leave the factory when it gets close to CNY. Up until ten ten what ago the trains and buses were limited, so you would see thousands of people lining up to get tickets home. Train stations were packed as far as the eye could see. Tickets were scalped for outrageous prices.
To cope with this, workers began returning home earlier and earlier to avoid the crowds and high prices. As a result, factories would start to see their work force dwindle as soon as the earlier pay packets were handed out. Factories began shutting down a week in advance, then two weeks in advance, and it has begun to stretch out even longer.
Today you have subcontractors closing early to cope with the labor shortage, which then forces a shutdown to the main plant. Depending on when they offer the workers a break this can be much earlier than CNY, or they may offer more days after CNY. As a result, the production downtime due to Chinese New Year has stretched out to a month.
Factory relocation and the labor shortage
Years ago, the production in China was just focused on the coasts. Highways and infrastructure had not developed enough inland so that Chinese factories could cost effectively set up a plant further inland. As a result, factory workers had to return to the same area for their jobs or find new work.
After the government made a push to develop the infrastructure workers had more choices closer to home to find employment, either at a new factory or through government opportunities.
This policy has caused factories to be unable to count on the workers automatically returning to a plant after CNY.
Check with you supplier for the dates that Chinese New Year will impact its production schedule and plan accordingly.
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My name is Chris Folino. In 2000 I founded a sourcing agency, Newvision Asia Ltd.
I have managed hundreds of millions of dollars in purchase orders and overseen tens of thousands of skus from China.
After returning to the U.S. my interest in sourcing has evolved into the desire to teach others how to successfully source from China.
To learn how to protect yourself and make more money when sourcing from China check out: newvision-asia...
Buying and sourcing from overseas will never end, but it does evolve. I look forward to educating you on the sourcing process and keeping you up to date on the changes happening in the Chinese sourcing market.