article about Chinese new year

Be ready for Factories Closing, Chinese New Year 2022

The Chinese New Year, also called Spring Festival, throws the factories and the manufacturing units for a loop. Unlike any holidays across Europe, Australia, or North America, the Chinese New Year slows down the business quite a bit. However, unless you have planned for the event and taken necessary actions, you cannot mitigate its impact on your business.

What is Chinese New Year, and Why Does it Have a Great Impact?

Chinese New Year marks the start of the new year in the Chinese calendar. It includes visits to family and friends, special meals, gift-giving, fireworks, and more. An important point to note is that Chinese New Year doesn’t happen on the same day every year. For example, this year (i.e., 2022) starts on Tuesday, February 1st. However, it didn’t start until Feb 12th, much later than last year.

In Mainland China, the official holiday window is seven days, starting from Jan 31st to Feb 6th. But most factories close between 2-4 weeks, during which the migrant population working here travels back home. This is referred to as Chūnyùn and is the largest human migration in the world.

This year is the year of the Tiger

Things to Know About Chinese New Year Factory Shutdown

Around the Chinese New Year, the factories closed, and most manufacturing units came to a halt. It takes more than a few weeks for everything to get back to normal and in total production capacity. In the meantime, here are a few things you need to know about the factory shut down and sourcing in China during the Chinese New Year.

Production is Halted Way Before CNY and Continues for 2-4 Weeks

Official holidays are week-long on account of the government shutdown. However, factories shut down far earlier than anticipated. This is to facilitate the return of the workers to their respective hometowns. An unanticipated shut down of a materials or component subcontractor can have a sequential impact further down the line.

This halt to the manufacturing unit affects even the sample orders. However, the administrative functions may continue to operate for a week or two more.

Getting the Production Back to Normal Takes a Month or More

New Year is considered the best time to jump jobs in China. So, there is no guarantee that all the workers who leave the city will return. Close to a third of workers will remain in their hometown or move to another factory.

The manufacturing units will need time to recruit new workers, train them and get them up to speed. Most of the manufacturing units will take close to a month to get back to before the factory shuts down.

A Rise in Quality Issues Before and After the CNY Factory Shutdown

Before the factories close down for the Chinese New Year holidays, the pressure is intense to complete the orders. Deadlines have to be met so that the stock doesn’t sit idle on the factory floor. Naturally, such a rush will result in quality issues.

Factory managers are creative in completing the pending orders and meeting the deadlines. Unfortunately, these conditions increase the risk of quality defects, although this can be mitigated with the right supplier for sourcing in China.

Increased Cost of Shipping Around CNY Holidays

Freight rates for imports from China have increased tremendously, much to the annoyance of the importers and suppliers alike. And the festival season hasn’t helped it much. Shipping rates always spike around the Chinese New Year holidays. The reason is the heavy volumes of products waiting to be shipped via the ports. Unfortunately, only a few ships are handling the freight, which means that the shipping rates will increase.

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