The upcoming Chinese Lunar New Year has sparked concerns among some American retailers. "In China, everyone goes home for the Lunar New Year," said Mona Williams, vice president of purchasing at a Texas-based store. This means that the "world factory" — responsible for producing everything from toys to televisions — will halt operations for up to 15 days. While this annual shutdown is not new, it’s drawing more attention this year as U.S. companies fear supply chain disruptions.
Many migrant workers who leave their jobs in factories return home during the holiday, and there are growing worries that some may not come back. This labor shortage is already causing problems for American stores, with products like wire pencil boxes and assembled drawers becoming hard to find. Williams noted, "In the past four to six weeks, we’ve had no inventory at all. We’re losing millions in sales every day."
One of Williams’ major suppliers recently moved part of its production back to the U.S. because its Chinese factory couldn’t find enough workers. "He also has a factory in the U.S.," Williams explained. The company plans to restart operations there within the month, aiming to restore supplies quickly.
Other vendors have warned that delays caused by the Spring Festival will be longer than usual. "This year, the delay could last several more weeks," Williams said. "We won’t know exactly how long until after the holiday."
Experts say the panic is spreading. Mulhajji, a partner at Bain Advisors, mentioned that some of his clients are struggling with supply issues. "These clients include companies that specialize in consumer goods," he added. He pointed out that China is no longer seen as an endless source of low-cost labor. Wages are rising due to stricter labor laws, and costs for energy and materials are also increasing. Additionally, the Chinese government is encouraging rural workers to stay in their hometowns rather than move to coastal cities, making the "Made in China" label more expensive.
Bruce Kern, a partner at Corte Simone, a firm that advises retailers, said his clients have seen a 10% to 15% increase in purchases from China over the past year. However, the type of work Chinese workers are willing to do is changing. As living standards improve, many are seeking better-paying jobs in sectors like technology, automotive, and services — leaving traditional manufacturing roles less appealing.
Kern advised his clients not to rely too heavily on China. Even though it remains the best option for certain products, he emphasized diversification. For example, clothing production is moving to countries like Vietnam, Indonesia, Bangladesh, and Costa Rica. "You’ll rarely see 'Made in China' on a T-shirt anymore," Mukhaji said.
High-end garments like jeans and swimwear are now being made in southern California. "Ordering from China takes 12 to 16 weeks," said Kesi. "If produced domestically, retailers can restock faster." Some electronics manufacturers are shifting production to Mexico, while other household items are being made in the U.S.
Williams confirmed that 30% of their plastic products are now made in the U.S., driven by quality demands. "China is still the best choice for many products, but delays or shortages are a serious issue for us," she said. (CNN News)
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