CNY 2021 Factory Shutdowns will be worse because of Covid

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Chinese New Year 2020 Impact on Manufacturing

CNY 2021 Factory Shutdowns will be worse because of Covid

The CNY 2021 holiday, on the calendar lasts only 7 days, but the disruption it causes in manufacturing can be of up to 40 days.

 

If you’d like to know more about the Chinese New Year and how it disrupts business in China and Taiwan, please read on.

CNY and Manufacturing affectations

 

How will CNY 2021 affect manufacturing?

 

  1. All major businesses in China and Taiwan completely shut down for at least 7 days -that includes factories.
  2. Some factories might even shut down for up to 3 weeks, the reason being that China’s transportation system will be completely blocked as all employees go back from their factory to their hometown up to 2,000 km away.
  3. All manufacturing projects are put on hold.
  4. Component manufacturers and distributors also go on vacations.
  5. No manufacturing components orders ship out of China or Taiwan during CNY.
  6. The information flow is cut during the CNY holiday. No one will pick up the phone if you call.
  7. You might experience serious production slowdowns 1 or 2 weeks before CNY holiday, this is because many workers leave factories early to go back home.
  8. Before CNY holiday, you might experience an increase in quality issues. As factories and its suppliers are getting ready for the big holiday; they rush to finish as many orders as possible before too many workers leave for the holiday, and before all businesses in China and Taiwan officially close.
  9. After CNY holiday, you might also experience an increase in quality issues. This happens because up to a third of the factory workers don’t go back to their jobs. As a result, many inexperienced workers are promoted or hired. This phenomenon is not limited to assembly line workers, it can even extend to managers and key firmware and design engineers.

 

As you can see, Chinese New Year sends the manufacturing industry into quite a bit of chaos.

 

CNY 2020

 

What is Chinese New Year?

 

Quick answer: It’s the beginning of the New Year according to the lunar calendar.

 

It begins on the second moon after the winter solstice and ends on the full moon fifteen days later. Unlike the western new year, it doesn’t always take place on the same date, but it always takes place between January 21st and February 21st.

 

Why does Chinese New Year cause so many issues in manufacturing?

 

If you’re wondering why the government and companies allow this kind of disruption to take place year after year, well, you have to understand that this is the most significant holiday for Chinese people and they’re all on board with the celebration.

 

The celebration is largely marked by visits to family and friends, special meals, fireworks, and gift-giving.

 

It’s also a time when people forget about work and studies and just enjoy and relax.

 

Be sure that during CNY celebrations, no Chinese worker or plant manager or even owner, will be thinking of you and your manufacturing project.

 

Let’s explore further a critical point in this CNY and manufacturing relationship: Factory workers.

 

Chinese Holidays and the impact on the manufacturing industry

Many workers will leave early and come back later.

 

As we already mentioned, the Chinese New Year is the most important holiday for the Chinese, this is the time for families to come together.

 

It doesn’t matter how far one’s family is, be sure that factory workers will go back home to spend the CNY holiday with relatives and friends.

 

For most Chinese factory workers, this is the only time of the year when they get to see their parents and/or even their children, who many times, are raised by other relatives living in the countryside.

 

Most factory workers in mainland China are immigrants from remote and rural areas of this vast country. For many, going back home by public transportation – bus and train – may take 4 to 5 days in any direction.

 

The long journey many factory workers have to make before reaching their hometowns causes many of them to leave way before the holiday officially begins.

 

This is possible thanks to a practice where factories allow their workers to accrue overtime throughout the year and take it as paid time off at year’s end.

 

With so many workers being absent from 1 to 2 weeks before a holiday week, is inevitable for production to slow down and quality issues to increase as the factory tries to finish as many orders as possible with the few workers it has left before the holiday officially begins.

 

Adding to the issue of many factory workers leaving early for the holidays, and therefore disrupting the manufacturing process, add the fact that many of them simply don’t go back to work.

 

Chinese New Year has another particular impact on manufacturing.

 

Employee turnover during Chinese New Year

Chinese New Year causes high factory worker turnover.

 

It’s very common for factory workers in China to stay on until Chinese New Year to receive their end of the year bonus, then they go home and never return to the factory.

 

Over a third of respondents to a Hays survey claimed their organization’s staff turnover rate was higher around the CNY period as compared with other months.

 

What is the reason behind this phenomenon?

 

During the holiday break, workers spend time with their family members and friends, during these encounters, they share information on various wage levels and new employment opportunities; if sure they’ll be able to find a higher paying job somewhere else; they surely won’t hesitate to ghost their current employer.

 

As many people leave their job it is also easy to find a new job, so this is the time for a big game of musical chairs.

 

Many workers make their return to work dependent upon a pay raise. Workers know that the CNY holiday is a sensitive time for the factory as orders keep coming in and customers’ pressure increases- they feel they’re in control.

 

Factory workers will inform the owners that they won’t return to work for the same salary, if the factory owners refuse to the salary increase, then they’ll have to invest a lot of time finding a new skilled worker.

 

This is a major factor that results in production output decline and labor shortage a week or two after the holiday is over.

 

Getting a new factory worker up to speed should be pretty quick, but the higher the responsibilities, the more difficult it becomes of course.

 

If your Account Manager leaves, you may need to explain a lot of details all over again. If a key firmware engineer leaves, it could be so bad that no one else really understands his firmware code. Not everybody follows TITOMA’S GOOD PRACTICES FOR EMBEDDED FIRMWARE DESIGN

 

Chinese new year and coronavirus manufacturing

 

Coronavirus and the supply chain disruption.

 

This past CNY, the festivities were not the only things affecting the manufacturing business, as you know, COVID-19 happened.

 

The pandemic affected the manufacturing industry by disrupting the supply chain in three key aspects.

 

1- Getting components or materials from China for electronics manufacturing was difficult. Either factories were not allowed to reopen after CNY, or they had only a limited number of workers, mainly due to travel restrictions.

 

2- Moving components and materials was complicated, after CNY, due to global travel restrictions imposed to control the pandemic, there was a significantly reduced capacity for air freight.

 

3- The receiving end. Even if you could get your electronic components and materials, and find a way to ship them to another country, in many occasions, there was minimal workforce on the receiving ports to unload products and send them to their final destinations.

 

 

Will Covid-19 affect CNY 2021?

 

It’s not an easy question to answer, as the Chinese government has not yet officially publicized any special measures. 

 

Covid-19 spreads in close and overcrowded environments, which happens to be the perfect description for train stations, trains, buses, and airplanes during what is described as one of the world’s biggest human migrations.

 

Hundreds of millions of Chinese working in the cities travel back to their provinces for the holidays, we’re expecting government travel regulations to be imposed far before CNY, this will force workers to leave factories early to make it back home in time for the holidays.

 

This will translate into early supply chain disruptions.

 

How Can I prepare for supply chain disruption due to CNY?

 

The best thing to do is to place orders as early as possible and have all components, materials, and/or finished products in your warehouses. 

 

This strategy of course comes with its own challenges.

 

Conclusion

 

Chinese New Year is a unique event that puts manufacturing and supply across China and Taiwan on a complete standstill for at least 7 days.

 

In Taiwan, this is generally the extent of the delay, but in China, the effects tend to be much more severe, and you should count on 2  to 3 weeks of disruption.

 

Factories and its providers begin to experience a decline in output and an increase in quality issues weeks before and after the official time of the holiday.

 

Because of the number of factory workers that leave early for the holidays, factories rush to finish all orders at least 10 days before the beginning of the holiday, at the same time, customers that are aware of the proximity of CNY increase their order volumes.

 

In many instances, the great pressure imposed by the increase in demand, trying to get all orders done as soon as possible, and having many workers leaving results in turning a blind eye to quality control and compliance with order specifications.

 

So: make sure that you place your manufacturing orders well ahead of the CNY holiday!

Read More: Meet Your Time to Market

CHINESE NEW YEAR MANUFACTURING FAQ

Do people work on Chinese New Year?

People do not work during the Chinese New Year. All across China and Taiwan, most people take a whole week off, some people might take even longer vacations if their employers allow so.

 

Be certain that during the official dates of the Chinese New Year holidays, 99% of all companies stop working. Cities like Shenzhen, Shanghai, and Taipei have a deserted city feeling as most residents travel to their hometowns to meet their relatives for CNY.

 

Some convenience stores such as 7-11, or fast food chains such as KFC along with some night market stalls can still be found open during the holidays.

How long do factories shutdown for Chinese New Year 2021?

Factories in China and Taiwan close for -at least- 7 days.

 

Depending on the CNY date on the lunar new calendar, workers could easily extend their holidays for more than 7 days, as it was the case in 2019 in Taiwan.

 

In 2019, in Taiwan, the official holiday took place from Feb the 4th to Feb the 8th, having a weekend at the beginning and at the end, allowing many workers to easily have a 9 day holiday.

 

Be aware that slowdowns in production will begin from 1 to 2 weeks ahead of the CNY holiday, and will remain 1 to 2 weeks after it.

How does China celebrate Chinese New Year?

China celebrates Chinese New Year by having a long holiday (from 7 to 10 days), most people either go back to their hometowns to spend time with their relatives and catch up with childhood friends or travel abroad.

 

Red lanterns and red decorations take over temples, homes, and building’s gates.

 

The festivities are largely marked by large feasts, firecrackers, fireworks, and red envelopes. Older members of the family usually give the youngest a red envelope with money inside.

 

Here’s an interesting tradition, on the fifth day of the lunar New Year, the whole family gathers to make dumplings; inside one of them they put a coin, whoever gets the dumpling with the coin during dinner is believed to have a very lucky New Year.

What are good gifts for Chinese New Year?

  • Alcohol
  • Tobacco
  • Tea
  • Fruits (Oranges and apples are preferred)
  • Hats, gloves, and scarf
  • Hampers

 

Red is the color to go for. Make sure your gift is wrapped in red paper or placed in a red box with a red ribbon. Avoid black or white for wrapping, in China, both colors are related to funerals.

What is the difference between Chinese New Year and Lunar New Year?

The difference between Chinese New Year and Lunar New Year is none.

 

In China, the new year is celebrated according to the Chinese lunar calendar, because of this many westerners refer to it as the Lunar New Year celebration.

 

Chinese New Year is another term mostly used in the western world to refer to the new year celebration that takes place in China and Taiwan. Most Chinese and Taiwanese simply refer to the event as “spring festival.”

Will Chinese New Year slow down manufacturing?

Yes, Chinese New Year will slow down manufacturing all across China.

 

You can expect disruption in manufacturing to happen as early as two weeks before the official date of CNY in 2020.

 

Slow down in manufacturing will most likely prevail for one or two weeks after the Chinese New Year.

Chinese New Year 2021 Shutdown, When Will It Happen?

  • In China, factories and offices will shut down  from February 11th to February 17th , 2021
  • In Taiwan, all offices and factories will shutdown from February 10th to January 16th , 2021

Chinese New Year 2021 Impact in Taiwan?

In Taiwan -just like in China- Chinese New Year is celebrated, and most offices and factories close for the holidays, putting businesses on hold for at least 7 days, but unlike China, don’t expect disruption in manufacturing as early as 2 weeks before the holiday or 2 weeks after it’s over.

 

Taiwan is a small island of only 36,193 km2, this means that factory and office workers don’t have to travel great distances to visit their families during Chinese New Year, therefore there’s no need to leave work 1 or 2 weeks earlier.

When Will CNY Factory Closings in 2021 Happen?

CNY factory closings, officially,  take place during the last week of January or the first week of February.

 

In 2021 the official date for CNY closings in China is February 11th to February 17th.   

 

In Taiwan, CNY closings during 2021 will take place from February 10th to February 16th.

 

 

 

When Is Chinese New Year 2021?

Chinese New Year in 2021, the official dates for China are February 11th to February 17th. For Taiwan the official dates are from February 10th to February 16th.

Will Chinese New Year Factory Shutdown 2021 affect Taiwan?

Yes, the Chinese New Year factory shutdown doesn’t just take place in China. Taiwan also takes part of the holidays, and factories will shutdown for at least 7 days.

Lunar New Year 2021, is it the same as Chinese New Year?

Lunar new year and Chinese New Year are 2 terms oftentimes used interchangeably by westerners to refer to the long holidays celebrated mostly in China and Taiwan, which marks the beginning of the New Year according to the Chinese lunar calendar.

 

Technically speaking, there are different lunar new years throughout the year as different cultures came up with their own version of a lunar calendar.

Lunar new year 2021: how long will manufacturing shut down?

The manufacturing shutdown during Lunar New Year 2021 will last from February 11th to February 17th in China. In Taiwan, the manufacturing shut down will last from February 10th to February 16th. Disruption in manufacturing is expected to take place  1-2 weeks before the official date and remain ongoing 1-2 weeks after the end of the holiday.

Eulises Quintero

Currently working as the content manager for TITOMA. With an extensive background in content marketing and a real interest in electronic products I'm able to produce some of the pieces of content you'll find here, all with the help of the TITOMA team of course. On my free time I like to travel, explore and work out.

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