I Interviewed 5 Chinese Factory Owners About CNY (They Told Me 3 Secrets!)
Chinese New Year is one of the largest celebrated holidays in the world. For most it means getting together with family, eating dumplings, congested trains, and the favorite “Hongbao” or red envelopes.
For most factory owners however, the weeks leading up to CNY (Chinese New Year) are the biggest rush of the year. Seasonal factories, like those that produce summer products, will see an increase in their current orders. Most however, have pretty average volume, but are fighting to stay ahead before employees disappear to enjoy some much needed and well deserved vacation.
The management nightmares become increasingly complex as employers not only fight to keep employees at the factory working, but also choose which orders to prioritize.
Some factories like this one I visited in January last year had almost 50,000 bags to make in 10 days. You can see that several stations are missing employees and the already large orders are seemingly becoming ever larger.
What’s the solution? What do factories do to try to keep employees working?
I was also curious so I interviewed factory managers from several different industries throughout China to see what they had in common and how they handle the situation.
I started by asking them the 3 questions that hurt the most and the responses as follows:
- What percentage of your workforce is already gone for the holidays?
Oliver, a factory owner in Dalian said “Skilled workers that are good at what they do know they can find another job easy. They don’t care to work the overtime. Just go home with family, if fired doesn’t matter because demand for skilled worker is high!”
2. What percentage of your workforce do you expect to have return from CNY?
The biggest surprise were the two factories that expect a full return of employees. I met with a wood working factory 3 years ago in Fujian that told me they usually plan on 50% turnover every February. I asked Jim in Ningbo about this. He said “Most of my employees are local, from Ningbo. The rest have been working with me for 5 to 6 years already. They like it here and I don’t see any reason for them to go elsewhere.”
3. How much CNY bonus are you giving to each laborer on average?
I impressed by some of these responses. These bonuses were relatively high, and would be considered a significant sum in the USA or Europe. It’s important to note that some of these numbers represent the overtime pay + the red envelope bonus payment.
With all costs in China increasing rapidly employers are willing to pay extra to reduce employee turn over. One factory owner told me he was exploring a profit sharing model based on seniority with the company paid out halfway through the work year. Others mentioned better housing arrangements or paying for air travel home.
When it comes to managing which orders to put first the struggle is real. Ms Lee, from a factory of 50 workers in Dongguan, said that they already had to delay over 20,000 pieces to March. She added that they delayed the order despite having all their production lines fully booked through the month and that any other orders would be scheduled for April, increasing lead time almost 75%.
The year of the Rooster ends and the Year of the Dog Begins on February 16th. Streets neighborhoods will smell of noodles, braised pork (红烧肉), and dumplings (水饺). Don’t expect many responses after February 10th from any manufacturers in China, Taiwan, and Hong Kong. Until then however, “Yali henda” (Stress will be high) and factories operating 24/7 to complete the orders they willingly accepted.
For more information on manufacturing in China, Dumplings, or to help source a product. Please reach out to Thiefaine Magré directly or visit the Prouduct website.
