The Chinese New Year is the most important festival in China and this year the holiday will start on 12 February 2021. Most factories will shut down for the Chinese New Year at the beginning of February 2021 and will remain closed for a few weeks. When they reopen it will take some weeks for them to resume to their normal operation.
It`s common in China for workers to move from their hometown to other cities or even provinces in order to earn more wages. When the Chinese New Year holiday is approaching, it can be quite difficult for them to buy a train ticket or even to book a flight back home due to the high number of people moving around, however they always try to go home for a reunion with their families. Usually the Chinese New Year is the only time of the year they get to see their families. This is the main reason why the Chinese factories keep closed during a longer time as they won`t have enough workers to run their production line.
Obviously this long holiday and production pause can cause a big impact to the buyer. The following impacts are common:
1. Order delay before/after the Chinese New Year
It`s not unusual for workers to leave the workplace even before the holiday in order to avoid paying for an expensive transport ticket or trying to escape the crowd. It causes an impact to the production as factories do not have enough workers to fulfill the orders.
Furthermore some experienced workers may not go back to the same factory after the holiday. These factories will then hire new workers, however they might not have the necessary experience and it can cause a delay in the production time.
2. Product quality before/after the Chinese New Year
Factories will try to ship out the goods before the Chinese New Year as they want to receive the balance payment of orders before the holiday. It happens because factories are required to pay salaries and bonus to their workers before the Chinese New Year and it may cause financial pressure to the factories as well.
In order to make sure all orders will be fulfilled the factories might push the workers to finish the production as soon as possible and this pressure may impact in the quality.
Furthermore it`s also possible that the more experienced workers will not return back to the same factory making it necessary to hire new workers who might be less experienced. Having less experienced workers can impact in the final product and its quality as well.
3. Lack of container/space and shipping cost increase
Due to the high demand of containers and vessels before the Chinese New Year it can get quite difficult to find empty containers and they can be more expensive than normally.
Even though you manage to get a booking confirmation from the carrier, the container might be rolled to the next available vessel due to space issues delaying the arrival to the final destination.
4. Avoid paying deposit to the factory before the Chinese New Year
Many factories that are about to go out of business tend to close down permanently at the time of the Chinese New Year. Also, as mentioned, it`s not uncommon for some workers to not go back to the same factory after the Chinese New Year so the order can be delayed or have quality issues.
Furthermore the executive sales person who is usually the communication bridge between the clients and the factories and is responsible for following up the orders can also leave the factory after receiving the bonus or commission given before the holiday. Having a new executive sales person can affect the priority of your order considering they will not earn bonus or commission from your order.
If your company already buys from China, most likely you know well the impacts of the Chinese New Year on the supply chain. But keep in mind that this year the situation might be even more challenging due to Covid-19 impacts on the supply chain globally. Try your best to anticipate the shipments as much as possible to avoid the even higher prices of freights or delays from suppliers. But in any case, be patient.
If your operation demands local support in Asia to assist your company on the management of order placements and shipments, talk to us. We can help you to setup your own team in China or design a specific solution for your operation.
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