Don’t let poor planning and a lack of preparation negatively impact your supply chain this upcoming Chinese New Year. Start taking the steps today to ensure smooth sailing during this national holiday.
A time for family gatherings, fireworks, gift giving, and time off from work, Chinese New Year marks the start of the new year, beginning on the second new moon after the winter solstice and ending on the full moon 15 days later. Chinese New Year falls in February in 2019 because it marks the start of the lunar new year, or the start of a new moon. This differs from the Gregorian calendar, which always starts on January 1st.
The official holiday is February 5th, but the merrymaking, fireworks, and celebrating will start days earlier and wind down days later than that actual date. This presents some interesting challenges for Chinese importers and exporters, most of which will be dealing with complete plant, port, and logistics facility shutdowns during the two-week period (and potentially longer, depending on how long it takes everyone to get back to work).
If you’re new to manufacturing in Asia or new to dealing with supply chains in Asia, prepare yourself. Chinese New Year is like nothing you’ve ever experienced. Chinaimportal.com says the holiday is rife with traditions, including:
- The date changes from one year to the next — it’s connected to the Chinese zodiac; 2019 is the Year of the Pig. Pro tip: Write it down now, keeping in mind that Chinese New Year 2020 will be early and held on January 25.
- There are family gatherings all over the country. It is celebrated on a massive scale.
- The public and private sectors close up shop for up to two weeks (often longer) and if you’re not prepared — meaning if you haven’t ordered and shipped product well in advance — you are out of luck.
Steps to Take Now
The good news is that there’s still time to make a few strategic moves to avoid unnecessary delays and continue operating with few (or no) holiday-related disruptions. Here are steps every importer and exporter should be using as 2018 comes to a close:
- Get the accurate scoop on factory closures. Here’s how it works: One to two weeks before the actual holiday, factories will speed up their production, causing a surge of freight, according to Material Handling & Logistics News. Then, during Chinese New Year, they will close down completely. Production will resume and be back to normal one to two weeks after the holidays.
- Avoid the “poor planning” trap. “Very often the problems of Chinese New Year aren’t happening at Chinese New Year at all, East West Manufacturing points out in How to Manage Supply Chain Delays Caused by Chinese New Year. “They occur well before or well after the actual event. That’s because of poor planning.” Armed with the right information (e.g., past sales data and sales projections) shippers can develop informed, accurate forecasts. “Combine that with ordering guidance from your customer service representative on timing, shipping, and logistics,” East West adds, “and you will be in good shape to maintain your inventory to serve your customers through Chinese New Year 2019 without a hitch.”
- Pay attention to seasonal and time-sensitive shipments. Within Chinese New Year, two celebrations will take place: the official holiday and the traditional holiday. So, while the official holiday only lasts for around a week to 10 days, most factories are closed for an entire month, and with severe delays to be expected once they open up again in March. “This time is especially risky for products that are due for shipment in the spring and summer season,” according to com.
- Become a preferred partner for your suppliers. Chinese New Year can affect your business in several ways, including longer production and quotation times; decreased staff (some factory workers decide not return to their workplace after the holidays, causing production times to be extended); and production queues will back up. “With one month’s worth of orders backed up,” MH&L notes, “factories will first process orders from their preferred partners.” The answer? Focus on becoming a preferred business partner whose orders get preferential treatment during the challenging times.
- Get out in front of it now. Congestion at the ports as the holiday approaches can cause massive delays and even rolled shipments (i.e., when your booking gets bumped or your shipment doesn’t have the correct documentation). “When the closing bell rings,” East West Manufacturing points out, “the workers leave and the port closes.” Build up sufficient stock, taking into account a period of up to four weeks after Chinese New Year, MH&L advises. Provide good forecasts to your logistics partners, consider using priority shipping (in case space is limited), and “reserve space on passenger flights for shipments which cannot be delayed.”
Chinese New Year has been celebrated since 1766 BC, when the Shang Dynasty ruled the country. So eventually, everything does get back to normal. However, many manufacturers still struggle to get back to a normal mode of operations in the weeks after the holiday, Chinaimportal points out. By placing orders on time, avoiding last-minute orders in January, and working closely with your logistics providers to secure capacity, you can avoid any major headaches and just join in the celebration!