"World Factory" seasonally suspended US company afraid of Chinese New Year

The upcoming Chinese Lunar New Year festival has caused some American retailers to worry. “In China, everyone has to go home for the Lunar New Year,” said Mona Williams, vice president of purchasing at a store in Texas. This means that the "world factory" that produces various products from toys to televisions will continue to suspend work for up to 15 days.

This annual shutdown is not a new phenomenon, but this year, this phenomenon will undoubtedly cause more attention in the US market. They worry that after tens of millions of migrant workers return home after the New Year, many people may not return to the original factory. jobs.

The continued shortage of labor in China has caused a shortage of American stores, and some shortages such as barbed wire pencil boxes and assembled drawers are difficult to find on the market. Williams said: "In the past 4 to 6 weeks, we have no inventory at all. We lose millions of dollars in sales each day."

Recently, a major supplier of Williams's store has transferred its production base back to the United States because his factory in China does not have enough workers. “He also has a factory in the United States,” Williams explained. The company will restart the factory in the United States and will restart supply within the month.

Williams said that other vendors relying on the supply of Chinese factories have issued new warnings: Generally, due to the Spring Festival holiday, suppliers will postpone some, but this year will be delayed for several more weeks. , "As for the extension of how long, we know after the Spring Festival." Williams said.

The panic is still spreading, said Mulhajji, a partner at Bain Advisors. “Some of my clients are also facing difficulties. These customers include companies that specialize in consumer products.” Mukahaji said that for many U.S. companies, China is no longer the source of lowest-cost, "unlimited supply." The blue-collar workers in China are undergoing transformation. The Labor Law requires the increase of workers' wages. This, together with rising energy and raw material prices, reduces China's advantage. In addition to this, the Chinese government encourages peasants, the main labor force in China, to stay in rural areas instead of giving up land to work in coastal cities or big cities. This makes the label “Made in China” more expensive.

Bruce Kern, a partner at consulting firm Corte Simone, which specializes in providing services for the retail industry, said that his retail customers have witnessed a 10% to 15% increase in the annual purchase of goods from China. The work that the Chinese are willing to do is also changing. “With the improvement of the quality of life in China, workers also want to find jobs with higher wages,” said a Hong Kong consultant Hu Henry. The original workers who produced tops and socks now look for jobs in the service industry, high-tech industries, and automotive manufacturing.

Therefore, Kern advised his clients not to put all "eggs" in the Chinese basket. Even for some products, China is their best choice. Taking the apparel industry as an example, industrial transfer is underway. Mukhaji said: "Recently, if you look at the label of a T-shirt, you will not often see 'Made in China'. You will find that the places of origin have become Vietnam, Indonesia, Bangladesh, and Costa Rica."

High-yield garments such as jeans and swimwear are being developed in southern California. “Ordering from China takes 12 to 16 weeks,” said Kesi. “If these products are produced domestically, retailers can replenish inventory faster.” Some electronics manufacturers are shifting production to Mexico, and other households. The products are produced in the United States.

Williams said: “Our 30% of our plastic products will be produced in the United States. We need high quality products. In general, China is the best choice. However, the goods are delayed or even have no goods. It is the same for us. Very serious problem.” (CNN News)