Some Chinese factories may keep running during the Spring Festival holidays this year, as workers are incentivised to stay in order to curtail the spread of Covid across China.
China’s week-long Spring Festival holidays are less than one month away. During this time, factories traditionally shut down for a couple of weeks as migrant workers return home to their families. Last year, the coronavirus outbreak saw production grind to a halt, with a shutdown rate nearing 90%.
This year, the picture could be very different: it appears that the threat of spreading the virus has prompted some workers not to return to their hometowns. According to a report in Global Times, a toy factory in Dongguan has confirmed that more than 100 migrant workers have decided to stay in the city during the upcoming Spring Festival holidays. The factory, which employs about 800 workers, has offered migrant workers 1,000 – 2,000 yuan, plus overtime pay, to stay.
The policy echoes calls from local governments in recent days, including cities like Beijing and Shanghai, as well as manufacturing bases such as Dongguan and adjacent Foshan, to encourage employees to stay. Foshan said it will release consumption coupons worth millions of yuan and free entrance to all local top-level tourism spots as stay-in-Foshan benefits.
One factory manager told Global Times: “In the past, operations at the factory were suspended for more than two weeks during the Spring Festival break. And we generally face a labour shortage issue afterward. But as more workers are staying this year, we’ll be able to resume production very quickly after the holidays.”
However, not all factories are experiencing this trend. Vantage Sourcing’s Ger Murphy, who is on the ground in Hong Kong, posted this comment on LinkedIn: “China is doing everything it can to restrict travel during Chinese New Year to avoid another massive Covid wave. However, many factory workers want to go home immediately because of the updated policy from the Chinese government. It could restrict workers crossing the province in the next few days, or might lock down the province border completely. My advice is check with all your factories immediately as it could affect your pre-Chinese New Year orders if workers have already gone home or are planning to go soon. Hebi Province is already locked down.”
In addition to the evolving Chinese New Year situation, there are also multiple reports coming out of China that highlight increases in the price of raw materials and labour costs, while the yuan has strengthened against the US dollar in recent weeks. All of these developments point to imminent price rises on products manufactured in China, which would pose another challenge for suppliers already grappling with sky-high freight costs.