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As the year winds down and shippers formulate their plans for 2023, China’s biggest celebration is right around the corner. Beginning on January 22nd and culminating on February 5th, Chinese New Year technically only spans seven days (the public holiday runs from January 21-27), but the celebrations often last up to 16 days. During that time, the people of China celebrate the beginning of a new year on the traditional Chinese calendar.
Often called the “Spring Festival” in mainland China, Chinese New Year (CNY) is a major holiday that has strongly influenced lunar new year celebrations of China’s neighboring cultures, including the Korean New Year, the Tết of Vietnam and the Losar of Tibet. The holiday is also celebrated worldwide in regions and countries with significant Chinese populations, like Singapore, Indonesia, Malaysia, North America and Europe.
The Year of the Rabbit
Chinese New Year marks the transition between zodiac signs: 2023 is the Year of the Rabbit; 2022 the Year of the Tiger. “Some companies may extend the holiday up to 16 days as Chinese New Year is the most important traditional festival in China,” China Travel points out. “Many working people will take this long holiday to go back home and get together with family.”
As workers take their well-deserved time off and celebrate with their families, supply chains will grind to a halt for a short period of time. This happens every year, so shippers are generally attuned to the issue and know to prepare for it advance, but lingering pandemic impacts may complicate matters for the upcoming holiday.
“Due to the importance of CNY, many corporations and factories will shut down days ahead of time to celebrate,” AQF’s Polly Chen writes in How To Prepare Your Supply Chain For Chinese New Year 2023. “Though the CNY celebration lasts only one week, the factories will typically close 2-4 full weeks ahead, which means the actual production might stop in late December.”
5 Steps to Take Now
Here are five steps shippers can take now to minimize the impacts of CNY 2023 and keep their supply chains running smoothly during and after the extended holiday period:
- Educate yourself on CNY and how it works. “Once you understand that China shuts down nearly everything for CNY and nothing, absolutely nothing will get out of China during that time, the better you can plan,” East West Manufacturing points out. “Your orders need to ship prior to CNY and don’t forget to plan for inventory needed to get you through the holiday.” Also understand that there’s no way to “avoid” CNY. “It happens every year (albeit on different dates),” the company adds, “and it requires advanced planning to minimize interruptions on your end.”
- Check your inventory and stock up. Get a clear view of your current stock. Check your shipments and your unfinished orders to see what gaps are to be fulfilled. “Preparing a buffer of inventory can be helpful when [any] supply chain disruptions arrive,” Chen advises. Be sure to factor in the longer lead times associated with this time period. “If you need any items produced in China, you will need to place your orders well in advance,” UCT (Asia) points out. “It’s also a good idea to build up a buffer of inventory so that you can still meet customer demand even if there are delays in receiving new products.”
- Talk to your suppliers and adjust accordingly. Maintain close connections with your suppliers to make sure you are on the same page. Talk to your suppliers to understand their holiday schedules, says Chen, and adjust your plan accordingly. “By communicating with your suppliers, you can let them know about any potential errors that may occur during the Chinese New Year shutdown,” UCT (Asia) adds. “In addition, by communicating with your customers, you can let them know about the potential delays in shipments. This way, they will be able to plan for it and there will be no surprises.”
- Create a forecast for CNY and beyond. If you can forecast how much product you’ll need for the first three to four months of the next year—and share that data with your suppliers and partners—you’ll likely have enough stock on hand to last you through CNY. “Another great advantage of providing a forecast to your supplier or manufacturing partner is that the factory will be able to see your demand after CNY,” East West says, “so the factory can begin recruiting and training workers earlier, already knowing that a portion of their staff will not return.”
- Work with a reliable global logistics provider. DB Schenker’s unparalleled network gives it a local, regional and global presence in nearly every business market—China included. The company provides innovative logistics solutions for all modes of transportation and believes in making borders “disappear” for its customers’ supply chain. Having this kind of experienced, global supply chain partner in your corner before, during and after CNY helps ensure that goods are picked up and delivered on time, disruptions are minimized and end customers are happy.
It’s never too early to start planning for Chinese New Year. In fact, the earlier you begin the more efficient and productive your supply chain will be during this period. “Knowing what to expect during CNY is only half the battle,” East West says. “Being well prepared is the best way to alleviate any negative impact on your supply chain.”