How to Negotiate Production Over Chinese New Year

With varying reports of a product shortage and increasing raw material and shipping costs, how do companies sourcing products from China expedite production when the workers in the People’s Republic down tools for two weeks over Chinese New Year? Mould maker Bluestar recently contacted Tyres & Accessories offering the following advice.

First the bad news. When the Chinese New Year holiday kicks in companies sourcing products from North America and Europe have virtually no way of ordering products to be shipped during this period. An estimated 99 per cent of all Chinese manufacturing companies will close on 28 January 2011 and will not return until 14 February 2011.

For those of us in the west that don’t expect a holiday at this time, think of it as a combination of the Christmas and summer breaks we take over here. According to Bluestar marketing manager Hellen Zhang, we also have to take into account the fact that, like with Christmas in the west, taking a holiday at this time is very popular and means workers take whatever means they can to save money:

“You need to understand that many factory workers will leave one week early to beat the rush and save money,” Hellen Zhange explained, adding: “All of North America and Europe relaxes for two or three weeks during the holidays as they enjoy the festivities and use unspent vacation time. When they finally get back into the work mode around 3 January [some] are shocked to find that their production in China is going to be delayed by four weeks as a result of not placing orders before they went on holiday.”

There is also a warning for anyone thinking that, due to the Chinese New Year beginning on 3 February this year, there is still time to place four week delivery orders: “What many North American and European Companies fail to understand is that China is a huge country and the majority of the work force is coming from the outlying provinces. Many factory workers will travel two or three days by bus or train to get home for the holiday. The Chinese New Year is the only opportunity most people have to see their families, including their children, so this is Christmas, New Year and Thanksgiving – and any other holiday you can think of – all wrapped up in one!”

All the major cities are expected to have a mass exodus around the 27 January. Factories are expected to begin working at 50 per cent capacity as of 22 January and then close completely for two weeks. So why is Bluestar Mould making a point of explaining the details of these Chinese customs? Because for the first time, the company is planning to keep its manufacturing doors open during the Chinese New Year and rotate its staff through the month to ensure “customer service and satisfaction.”

“This is good for the customers that need to communicate with their suppliers, especially in emergency situations. It is also good for the employees of the company by letting them travel during less expensive times for those that choose to do so,” Zhange observed.

“We are a service organization with the majority of our customers in North America and Europe. We must be available at all times for them. It is also important to consider our loyal employees, I believe this is a win-win situation,” said Philip Huang, president of BSM Group and Bluestar Mould.

Bluestar Mould/BSM Group Ltd. is a global high-tech custom plastic injection moulder and tool builder, founded in Hong Kong with facilities in Shekou and Baoan District, Shenzhen, China. Annual sales reportedly amount to more than US$40 million.