Chinese New Year - What does this mean for manufacturing?

18 October 2015 posted in The Bellouco Discussion on China and Beyond

Throughout December and January, it's business as usual.  But come February hundreds of thousands of factories and businesses across China will close down for Chinese New Year (CNY). Technically the official closedown period lasts 15 days, but with millions of workers travelling home to see their families for up to 40 days, this can have a huge impact on those outsourcing their manufacturing in China.  

Chinese New Year can have implications in several areas; being Quality Control, Cash Flow, Shipping and Productivity once production restarts after the national holiday

Businesses in China will close this year on or around 5th February 2016.  Scott Darmenia from Genfreight Logistics advises that shipments need to be at the export office ready for export processing at least two weeks prior to this date for FCL and three weeks for LCL.  Shipments must also be booked well in advance to ensure that your goods will depart on schedule.

On a Quality Control issue, diligent control needs to be followed for the last production run prior to Chinese New Year.  With the shipping deadlines, the high production demand and the need to lodge their export tax rebates before the holidays, factories are extremely busy and simple checklists for QC can be overlooked.  Rush jobs in any industry, in any country, can mean mistakes that are not picked up  - well due to the rush.  It's a fact.

Chinese New Year also symbolises a time where all debt needs to paid up, in readiness for a fresh new start when everything resumes after the holiday.  Your factory not only needs to pay all of the factory workers any due salaries but will also need to pay them an annual bonus (usually equivalent to 1 months salary).  Not ensuring employees are fully paid up can mean the workers can seek action through the local courts.  It is most important during this period to ensure that any amounts owing for foreign production are cleared prior to the close of the factories to enable the factory manager to complete his/her duties.

During this holiday time where most workers will go back to their hometowns, and some may not return. The New Year also symbolises a time of new beginnings, and this is an auspicious time for marriage and pregnancy.  Trained employees who do not return to a production line can have huge implications on factories who need to replace and train staff once production starts again.  Training in a textile factory production line alone can be up to a 3 months period. Skilled workers a lot longer.

So in closing, remember  - Book shipments in advance and be aware of meeting those deadlines.  Ensure your quality control is tight around this time.  Make sure that you clear any debt that you owe to the factory.  And last but not least, be prepared for new staff being employed at the start of the New Year, bringing in new training.  A good time to take a look at training procedures.