Toby Fairclough explores the impact of the Chinese New Year on goods production and global supply chains.
It might come around every year, but, still, every year many companies are left surprised by how much they are affected by the Chinese New Year (CNY).
Perhaps the biggest celebration of the year, CNY marks a week of celebrations across China. With many businesses closing entirely to allow people to celebrate with their families.
In 2022, the Chinese New Year falls between January 31st – February 6th. With the new year itself taking place on February 1st. This year marks the year of the Tiger, said to relate to a spirit of competition, courage and ambition.
Despite the festival officially lasting just one week, businesses across the world feel the impact of Chinese New Year for much longer. Particularly with delays in production and distribution.
Without exception, all factories in China close for CNY celebrations.
This obviously has an impact on your business if you produce goods in China. But beyond this the lead up to the New Year sees factories slow-down production in preparation for the closure.
Due to the number of people travelling to see family and friends over the holiday, many employees take additional holiday around this time. And some factories remain completely closed for a further week or two after the festivities. All-in-all, it can take more than a month for factories to properly build back up momentum after CNY.
While Chinese ports and postal services remain open over CNY, freight forwarders and logistic companies do not.
This can be frustrating to businesses in other countries that to do not observer the holiday, but with factories closed as well, product cannot be picked up from the factories anyway.
A third potential issue to be aware of is that there can be a dip in quality control for manufactured goods both before and after CNY.
While the lead up to CNY sees factories pushing their workers hard to get jobs finished before the holiday; a significant proportion of workers decide not to return to work afterwards too, having found employment closer to home. As a result, most factories need to bring in new, untrained, workers to bring manufacturing back up to speed.
An increased production volume combined with lesser-experienced staff can lead to a higher number of errors in production and assembly, as well as an increase in misunderstandings and miscommunications.
While China does account for nearly 30% of manufacturing output across the globe, it is not the only country to manufacture goods.
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With increased import fees and associated taxes from foreign production, there has never been a better time to switch to British manufacturing.
If you’d like to find out more about our manufacturing and production capabilities get in touch: https://designreality.com/contact/