Monday, January 25, 2010

Chinese New Year



We're just in the process of finding out just how much China slows down to celebrate Chinese New Year. Both of the shoe workshops we work with are closed for the month of February and the timing couldn't be worse, some of our custom designed shoes are in the February issue of Marie Claire and the last week has been our biggest for both traffic and online orders - so we're going to also have a delay in making the shoes at the start of March because we'll have a larger backlog than we expected. So we've been telling customers that their shoes won't be ready until late March and so far so good, our customers seem to be understanding.

Still, it's not ideal and it's a good lesson. We thought we were managing our manufacturing risk by having two workshops to make our shoes, but that doesn't work when they are both in China and both close for Chinese New Year! For next year we'll either have to find a workshop in another country to help plug the gap, or speak with the workshops and see if some of the shoe makers would be interested in taking a shorter break in exchange for a higher rate of pay.

6 comments:

  1. Yes, the factories in China run every day, 7 days a week for up to 18 hrs a day. The only time that they have off is the month of Chinese New Year.

    I would be surprised if any of the shoe makers would be willing to work during Chinese New Year.

    It is not just a holiday to the Chinese people. It is a time to celebrate the year's hard work and most importantly, it is time for the extended family to meetup.

    The factory workers who work in the cities all year round return to their home villages for one month of family celebrations.

    Having said that, money talks...... And, there would be a few who might be willing to sacrifice family time for extra money.

    But, let's just hope that the price you pay is still economical... (^_^)

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  2. Hi Daniel. Good thoughts. I should have added in the post that personally I would hate to be responsible for preventing someone missing their annual family gathering.

    We were thinking that perhaps, if they were willing to, in exchange for taking 2 weeks off rather than 4 we could fly them to and from their home as well as pay them extra. That way they can still be home for the main parts of the celebrations, and they don't spend as much time travelling by train.

    Anyway, it's a year off but we'll have to work something out for next year. Either something along the lines of the above or find a good workshop in another country to cover the gap.

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  3. Daniel - I should also add something on top of what Michael has said. The issue isn't so much the month that they have off - 1 month off, by itself, wouldn't be such a bad thing. However the workshops stop taking orders two/three weeks before that, and then will take time to startup again as well. That effectively means we stop making shoes for about 2 months, which really hurts us when we're not manufacturing in the typical way (i.e. we're not stockpiling readymade shoes.) Which leaves us with an interesting business dilemma. :)

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  4. Hi guys,

    Fully understand what you guys are going thru...

    And, Knapp (M2?) makes a very good point regarding the manufacturing slowdown leading up to and after CNY.

    A lot of companies do not take this into consideration when dealing with Chinese businesses.

    Also, sidenote that you will also find this "shutdown for CNY" attitude with Chinese businesses outside of China as well.

    I'm sure you can come to a compromise with the artisans. They are businesspersons after all... (^_^)

    You guys should be compiling these business puzzles into case studies for Harvard U... LOL!

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  5. hi fox ,

    the other issue you will have is lots of workers dont return after CNY they go looking for other jobs or stay in the hometown for extra time ,

    so the start up when CNY has finished will be slow as less workers come back , so expect dispatch delays as they will be short staffed

    it is a strange culture and thinking about new year , i liken it to what christmas was to us westerners 20 yrs ago before business and retail took it over

    to give you an example of the size and scale ,

    dongguan city train station handles 2 million passengers each day for the weke prior to the actual new years eve

    thats 14 million people from around dongguan province who leave there for 2 - 4 weeks

    another interesting fact i got form a hk supplier i use is the following

    over 80% of chinese under the age of 30 do not live or work in there home province

    brett

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  6. Hi Brett, last year we definitely learnt the hard way about the slow ramp up after CNY. About half our main suppliers workers didn't come back to the factory after CNY, so it took a month or two for them to hire and train new workers before they were fully up to speed. We're hoping we have that more under control this year but it's no doubt going to still be an issue for us.

    Incredible that 80% of Chinese people under the age of 30 don't live or work in their home province!

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