WHAT YOU NEED TO KNOW ABOUT CHINESE NEW YEAR

If you have been in an industry that touches any part of textiles then you should be aware of Chinese New Year (CNY). The hospitality and healthcare industry can be largely affected by this Holiday halfway around the world. So in the spirit of the season, as we here wrap up our New Year celebrations we turn our attention to another very important New Year, just around the corner and I’m not talking about 2019.

Principally the textile industry in 2017 was on pace for 925 billion dollars in exports, of which China is the #1 exporter. Simply stated, we rely on Chinese made fabric a lot. So when something is happening in China, it is essential that we understand what it is and how it affects us.

A CULTURAL LESSON

CNY is celebrated every year, its exact dates fluctuate based upon the lunar calendar. This year, CNY is February 16th, 2018. Though the public holiday that is celebrated lasts 7 days from CNY eve, February 15th 2018 until February 21, 2018. CNY is not a holiday celebrated on just a singular day or even a long weekend. In China, CNY is ‘the’ holiday of the year and in some cases one of the only holidays that largely affects any businesses.

Most of the Chinese workforce in the industrial/manufacturing sector is made up of migrant workers. As the Chinese industrial cities along the southeast coast grew in the 1970s more and more Chinese began to traditionally migrate from more rural areas into these large metropolitan centers to find consistent well paid jobs.

Just as most Americans see Thanksgiving, Christmas and New Years as opportunities to visit family, CNY for the Chinese is when all Chinese return home, no matter how far away home might be. So while the actual festivities only last a week, from February 15 to February 21st, most manufacturers will begin allowing workers off to return home a week prior (February 9th).

In addition, CNY is also the time of year when many migrant workers look for other jobs. They traditionally take advantage of the time off to seek better employment, perhaps closer to home, or that offers better pay. As a result most manufacturing businesses may be slow to return to full functionality after the New Year is over.

What this boils down to…

As an end result we should expect that Chinese manufacturing will be shut down for approximately 3 weeks from February 9th until approximately March 2nd. This means that you shouldn’t expect anything to be made during that time, anything to ship during that time, or honestly anything to get done during that period of time… if it is coming from China.

The other substantial effect of a shutdown of this magnitude is that manufacturing, in the weeks leading up to the closing of factories, will be rapidly increased. This may cause orders to be rushed, which may result in a myriad of problems that can be caused by a surge of work on the precipice of a major holiday. This surge of work does not only happen at the actual factories but more importantly also happens at the ports. Any product that is set to ship in the weeks leading up to CNY should be given extra care in tracking as shipments are known to be bumped due to the large quantity of product trying to exit the country. This rapid speed up combined with at least 3 weeks of zero sum work being done during the holiday and travel time bookending it causes 3 weeks to be added to any lead times. This is a fact that expediting in this case cannot fix.

Finally as we mentioned above, workers may be slow to return after CNY or may not return at all, due to finding better jobs. This causes factories to be slower in returning to full manufacturing levels, which may affect lead times.

What do I do?

Basically you’ve now read a synopsis that says ‘whelp, we’re in trouble’, and you are thinking something along the lines of ‘whelp, we’re in trouble’, shortly followed by ‘what the heck am I supposed to do’? Here are a few quick tips as we prepare for CNY…

  1. I just said it, PREPARE! You know CNY is coming, it comes every year (albeit on different dates) so think ahead, plan ahead, and communicate early.
  2. Check the status of any shipments from China, NOW. Go and make sure anything you have already ordered is on time, it’s on schedule and it’s going to beat the mad dash to the ports.
  3. Communicate ahead of time. If a fabric is late, if it’s most likely going to get caught in no man’s land come the 2nd week of February, let your customers know (especially if it’s us).
  4. Stock up! If you can get something out of China in preparation for the shutdown, do it now. If you have inventory or potential for stock to be brought here prior, we would advise doing so.

We hope you have found this helpful. Remember CNY comes every year so if you get caught out this year, don’t worry you’ve got next year to improve. Secondly, fabrics often have alternates (just keep this one in your back pocket, in case of a pinch). Thirdly, celebrate we are entering the year of the Dog, and who doesn’t like dogs!


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