On January 22, 2023, celebrations begin for Chinese New Year, starting with the traditional Spring Festival and concluding on February 5, 2023, with the Lantern Festival.
Start of the Lunar New Year
China’s technology supply chain is facing twin challenges– slumping demand and staffing shortages, both caused by Beijing’s recent about-face on COVID controls. China’s dismantling of its zero-COVID policy is leaving many of the country’s tech manufacturers scrambling to deal with a sudden rise of infections.
Gloomy Demand Outlook
China’s “factory of the world” status seems to be losing some dominance in the manufacturing and export sectors as other southeastern countries including Vietnam, Malaysia, Bangladesh, India and Taiwan continue to pick up the slack. In addition to technology, apparel, furniture, footwear, travel goods, handbags, minerals and science are also in decline from China.
Policy Change to the Strict COVID Mandate as of December 2022
The Chinese Government’s policy change came in early December when China started to dismantle the world’s most stringent COVID regime, which included mass testing and quarantines, to kick-start their faltering economy. Manufacturers welcomed the government turnaround after nearly 3 years of fighting to keep operations going even as they were mandated to close under the strict COVID measures. Now, with the relaxing of the policy, manufacturers are faced with the challenge of a new norm caused by rising infections with looser COVID controls. The new wave of COVID infections has spread incredibly fast but most companies have found it makes little sense to quarantine their employees. Many Chinese companies have pivoted to expecting that employees will catch the virus. They have adopted new guidelines which ask employees to take leave and stay at home and advised that employees with mild symptoms may return to work with proper protection.
Optimistic Outlook for China
Most experts predict that China will ramp up their production after Chinese New Year and are optimistic that it may return to its previous levels.
To our esteemed Western Overseas clients and friends–
Gung hay fat choy! Wishing you great happiness and prosperity in 2023.