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Chinese New Year Under COVID

February 10, 2021

 by David Collins III

Chinese new year lantern

After a year of anxiety, many will remember the year 2020 as the year characterized by the global COVID-19 pandemic.

 For those who follow Chinese New Year, the end of the turbulent Year of the Rat is fast approaching. February 12th marks the start of the Year of the Ox. According to astrologers, the second animal of the Chinese zodiac, the ox, signifies the hard work, positivity and sincerity that will be revealed in all of us this year. Although COVID-19 might still be running rampant, China's major holiday is still underway.

We've covered the effects of Chinese New Year (CNY) on China’s manufacturing industry in our previous blog, which explains the closure of China's entirety for a month. But with the rapidly changing nature of travel (which is detrimental for the CNY holidays), what will the transition to the year of the Ox entail?

"The country's authorities expect the nation to make some 2.5 billion trips by land, 356 million by rail, 58 million by plane and 43 million by sea in a phenomenon called "chunyun", the world's largest annual human travel season."

                                                                                                                                              -The Telegraph, pre-COVID-19

The first thing to address is that the festivities will still be underway. China is closed off for the month. As the celebration continues, the long-standing tradition of travelling to their respective home villages still stands. Like Christmas in the United States this year, many are expected to continue China's annual internal migration. With the caveat that if there was an outbreak (similar to Wuhan early 2020), then China will start imposing shutdowns and slowdowns across affected areas. 

Steps to prevent internal migration are in place and are mainly incentives for locals to consider the alternative of opting out travel. The incentives in place pose as both red tape for travelling and rewards for staying. For example, Hangzhou has started offering phone cards and vouchers for migrant workers to stay in the city. As for red tape, people travelling must present a negative COVID test seven days prior to travel and also quarantine at home for fourteen days as they arrive. [1]Enforcing these incentives and red tape will take a toll on resources, so these measures' effectiveness is still in question. 

All this translates to a more significant slowdown than expected in manufacturing. As the process of getting to-and-from worker's respective cities and villages gets more complicated would mean that you should be prepared to accommodate complications and delays in travel which would mean a steeper path towards business as usual after the CNY holidays.

Although this news may seem alarming, this complication does have some upside, and a mere perspective change could provide you with the silver lining, which can boost productivity. Being prepared for the slowdown by taking compensatory actions can be a great way to soften the slowdown blow and bring long-term productivity to your manufacturing. 

An example of tackling an obstacle beforehand that might come up after CNY would be to create a standardizing work instruction manual for new employees. As post-CNY is often a time for recruitment, creating a standardize work instruction can significantly shorten training for new employees. It could help negate some aspects of lost productivity due to slowdown.

Another way to look at the slowdown would be to do an overhaul and see this as an opportunity to downsize to a more productive and efficient workforce. From our experience, we've found that existing manufacturing processes always have room for improvement. For example, CMC has found ways for factories to reduce their workforce by up to 35% whilst still increasing overall productivity. Focusing on downsizing and creating greater efficiency before and after CNY will be a great strategy to fight the drop in productivity.

As we said in 2019, "Don't Panic!" CNY will be different this year, but engaging in preventative planning will spare your company and supplier from a tough transition.

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¹’Chinese New Year: Clamping down on going home for the holidays’. BBC. Available at: <https://www.bbc.com/news/world-asia-china-55791858>

Topics: Manufacturing Consulting, Manufacturing In China, COVID-19 Outbreak

David Collins III

David Collins III

David was a Senior Strategy Consultant for Deloitte, served in Iraq as a Special Operations Civil Affairs soldier, and as a Governance Advisor to the Afghan Government with the Department of State. At CMC, David advises clients on strategy and investments.

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