Chinese New Year 2023 Factory Shut Downs

SOURCE: Titoma Blog

There’ll be a China factory shutdown in 2023, but; it’s the same shutdown that happens every year.

The Chinese New Year (CNY) holiday 2023 on the calendar lasts only 7 days, but the disruption it causes in manufacturing can be up to 40 days.

• CNY in China 2023 will be from January 21st to January 27th
• CNY in Taiwan 2023 will be from January 21st to January 27th

Unfortunately, the CNY factory shut down 2023, in China, will most likely be worse than in previous years, due to rising Covid-19 cases after the lifting of restrictions and mandated lockdowns.

Here’s an interview from 2022 that is still relevant, as factories struggle to open on a limited workforce because of the rate of infections.

• Last year, the Chinese government regulated industrial energy consumption for a number of months, and it’s difficult to say if that will happen this year or not.
• Many factories operated for 15 days and then shut down for another 15 days, continually.
• Some factories were limited to working four times a week only.
• Rising raw material and shipping costs made it harder for manufacturers to stay open.

These factors could result in many factories in China taking extended CNY holiday breaks in 2023.

If you’re planning on ordering anything for the coming months, you better place orders now, and expect some delays.

HOW WILL THE CNY 2023 HOLIDAY AFFECT MANUFACTURING?

1. All significant businesses in China and Taiwan completely shut down for at least 7 days, including all factories.
2. Some factories may even shut down for up to 3 weeks because CNY will block China’s transportation systems entirely as all employees return from their factory to their hometowns up to 2,000 km away.
3. All manufacturing projects will be on hold.
4. Component manufacturers and distributors also take 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 answer phone calls or emails.
7. You might experience severe production slowdowns 1 or 2 weeks before the CNY holiday because many workers leave factories early to go home – to avoid the peak time rush.
8. Before the CNY holiday, you might experience an increase in quality issues. As factories and suppliers get 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 the CNY holiday, you might also experience increased quality issues. This happens because one-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, critical firmware, and design engineers too.

As you can see, the Chinese New Year holiday sends the manufacturing industry into chaos.

WILL COVID-19 AFFECT CNY 2023?

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

Covid-19 spreads in close and overcrowded environments, which perfectly describes train stations, trains, buses, and airplanes during what is described as one of the world’s most prominent human migrations.

Millions of Chinese working in the cities travel back to their provinces for the holidays. Due to the recent lifting of the country’s zero-Covid policy restrictions and mandated lockdowns, China is experiencing a surge in infection rates. This will undoubtedly affect the CNY holiday and subsequent period after, as the migration will help spread the virus even more.

This will translate into early supply chain disruptions, and possible extended holidays for the factories – resulting in further delays to the already-struggling manufacturing industry and a backlog of projects and orders.

 

IS CHINA SHUTTING DOWN IN 2023?

There are a lot of questions and speculation regarding manufacturing shutdowns in China in 2023 (other than the CNY holiday and other national holidays).

For now, China is open for business, although it is difficult to say what will happen in the future, as, from my experience, things can change on a daily basis.

However, there is the possibility of power cuts, components shortages, and container and port issues, which could affect factory outputs.

Last year’s series of events significantly slowed down product manufacturing and exports, so plan well in advance and budget in added costs and delays, just in case.

It’s certainly made it more complicated than usual to manufacture and get products out of China, and added further strain to an already weakened industry.

Let’s break down 2022 in more detail.

 

CHINA FACTORY SHUT DOWNS 2022

• For a number of months, China had been dealing with a large power crunch as extreme weather, surging demands for energy, and strict limits on coal usage delivered a triple blow to the nation’s electricity grid.
• It’s a problem that lasted several months, straining the country’s economic recovery and affecting global trade.
• Guangdong province — a manufacturing center responsible for $2.2 trillion, or more than 10 percent of China’s annual economic output and a more significant share of its foreign trade — had to ration power for over a month.
• The restrictions forced factories to shut down for a few days per week.
• Yantan port in Shenzhen, a key South China port, saw its capacity sharply reduced during June due to a Covid outbreak and measures taken to control it.
• Maersk described the disruption as bigger than the Suez canal closure caused by the Ever Given.
• The June 2021 Yantan port shutdown, as reported by SCMP on July 20th, created a massive backlog of appliances, commodities, and toys sitting in storage, waiting to be exported.
• Some analysts said Christmas shipments were affected by the massive backlogs. Located in the Pearl River Delta, the Yantan port is responsible for 10 percent of China’s foreign container traffic.

 China is not shut down, but it is struggling to keep a fast pace in manufacturing and exports. 

What can you do about this if it happens again this year?

There isn’t a magical strategy to ensure you get your orders manufactured and shipped quickly in 2023.

You have to think of a long-term strategy and look for a substitute country to manufacture electronics if necessary.

Here in Taiwan, where we are based, these issues are not a problem.

Ports congestion is not an issue; CNY disruptions last only a week, and power cuts are rare. 

Here is an article that you may find interesting — alternatives to China Manufacturing.

 

 

WHAT IS THE 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 occur on the same date, but it always takes place between January 21st and February 21st.

 

WHY DOES THE CHINESE NEW YEAR CAUSE SO MANY ISSUES IN MANUFACTURING?

 

If you wonder why the government and companies allow this disruption to occur every year, you have to understand that this is the most important holiday for Chinese people. So they’re all on board with the celebration.

 

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

 

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

 

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

 

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