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Understanding Chinese New Year and Its Implications on your Business

Understanding Chinese New Year and Its Implications on your Business Part 1 : Factories Operations

  • Published on January 9, 2017

Jamal Mernissi 李维安, MBA

Jamal Mernissi 李维安, MBA

Chinese New Year”, Also called the “Spring Festival”, is the most important festival in Mainland China , Hong Kong , Macao , Taiwan and Singapore . It’s the Christmas or Ramadan or Diwali of China only on a bigger bigger scale. The date is decided based on the lunar calendar , So the exact date varies each year but usually falls between mid-Jan to end of Feb. The variable date is one of the factors that adds to the confusion & planning complexity of any buyer.

The CNY (Chinese New Year) is very important for the Chinese people because it is the time where people get together with their families ,exchanging gifts and red envelops. This holiday is more important for Blue-Collar workers because it is the only time of the year they go back to their hometown to see their families . Most of them, they are from inner/Central China and working in coastal provinces where factories are located.They often leave their families and kids in their hometown , therefore , the CNY has an emotional value to the Chinese People.

How long is the Chinese New Year?

Officially the Chinese government allows one week. Companies in the International Business such Quality Control , Logistic , sourcing will be on off for two weeks.

However, Factory's holiday is another story .The stuff in the factory administration take two weeks off and the workers in the production floor takes 4 weeks to up to 6 weeks. The reason is because It is only time they can go back to their hometown. They usually accumulated holidays during overtimes , working on weekends and on other Chinese holidays.

Another thing affecting the duration of the holiday is how far the workers hometown is from the working place.The further the distance the longer the holiday will be.

Most of the workers leave 2-4 weeks before the CNY because it is hard to find train/bus ticket to be back home.As for the return date , is usually 2-3 weeks after the CNY . Workers who come back earlier can get a bonus so it can motivate them to come back earlier .

Except the 1-2 week holiday period for the administration staff , most of the sales who are serving will remain active , providing products quotations and taking new orders although nobody is on the production floor.

The biggest Challenge/nightmare facing Suppliers, is the fact that many workers do not back , some factories can lose as many as 40% of their work force.

Here are the main reasons:

  • The working force market in China is very competitive , so factories in order to attract workers tend to provide better working environment and high salaries
  • Most of workers wait until the Chinese New Year to get their bonus then change their job.
  • Once back to hometown , workers 'friends and family members can introduce them to new job opportunities.
  • Because of the rising cost , Factories are moving to the interior provinces . Therefore , workers have chances to find jobs near their hometowns.So they do not have to stay far from their relatives.
Conclusion : Before and After CNY , be aware that the production line is slowing dramatically , severe delays and quality issues arises & shipping transportation becomes expensive .

After the rise of price raw material , war on pollution by the government , and the shortage of Blue Collar workers which pushing the waging higher , Chinese Suppliers are once again facing many challenging ahead .

In part 2 of the topics , I will show the steps to take to avoid shipping/production issues during the Chinese new year.

BY Jamal Mernissi


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