The upcoming Chinese Lunar New Year has sparked concerns among American retailers, as the traditional holiday leads to a temporary shutdown of manufacturing across China. Known as the "world factory," China's production lines often halt for up to two weeks during the festival, causing supply chain disruptions. Mona Williams, vice president of purchasing at a Texas-based store, explained that this year’s shutdown is creating even more anxiety in the U.S. market.
"Everyone in China goes home for the Lunar New Year," Williams said. "With millions of migrant workers returning to their hometowns, many may not come back to work after the holiday." This labor shortage is already affecting inventory levels, with some products—like plastic pencil boxes and assembled drawers—becoming scarce on store shelves. "In the past four to six weeks, we’ve had zero inventory. We’re losing millions of dollars in sales every day," she added.
One of Williams’ major suppliers recently moved part of its production back to the U.S., citing a lack of available workers in China. “They also have a factory here,†she explained. “They’re restarting operations in the U.S. and expect to resume shipments within the month.â€
Other vendors are also warning of longer delays this year. “Suppliers usually push back shipments due to the holiday, but this time it will be several weeks longer,†Williams noted. “We won’t know how long the delay will last until after the New Year.â€
According to Mulhajji, a partner at Bain Advisors, the situation is causing growing panic. “Many of my clients are struggling. These include companies that specialize in consumer goods.†He pointed out that China is no longer seen as the low-cost, limitless supply source it once was. Rising wages, stricter labor laws, and increasing energy and material costs are eroding China’s competitive edge. Additionally, the Chinese government is encouraging rural workers to stay in their hometowns rather than move to coastal cities, further reducing the availability of cheap labor.
Bruce Kern, a partner at Corte Simone, a consulting firm serving the retail industry, noted that his clients have seen a 10% to 15% increase in purchases from China over the past year. However, he warned that Chinese workers are seeking better-paying jobs in sectors like technology, automotive, and services—leaving traditional manufacturing roles less attractive.
“Workers used to make socks and shirts, but now they want higher wages and better working conditions,†said Hong Kong-based consultant Hu Henry. As a result, many U.S. companies are diversifying their supply chains. “You’re starting to see labels like ‘Made in Vietnam,’ ‘Made in Indonesia,’ or even ‘Made in Costa Rica’ instead of ‘Made in China.’â€
High-volume items like jeans and swimwear are increasingly being produced in southern California, where faster turnaround times allow retailers to restock more quickly. Some electronics and household goods are also shifting to Mexico or the U.S. “Ordering from China takes 12 to 16 weeks,†said Kesi, an industry expert. “Producing locally allows for quicker replenishment.â€
Williams acknowledged that while China remains a key supplier, the recent disruptions have forced her company to rethink its strategy. “About 30% of our plastic products are now made in the U.S. We need high-quality goods, and China is still the best choice for many products. But delays and shortages are becoming a serious issue.â€
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