About Chinese New Year
The Chinese New Year(CNY) is the most important festival in China. It is also referred to as the Spring Festival, which celebrates the beginning of a new year on the traditional lunar calendar. The exact date of CNY varies every year appearing between January 21th and February 20th. For example, the CNY starts from Feb 12th and lasts up to 20 days in 2021.
Chinese New Year is a significant time of the year not only for individuals and families, but also businesses in China. For people who do import business with Chinese suppliers, it is important to understand the impact of CNY and learn to prepare for the disruptions and delays caused by the holiday.
What happens during the CNY
The Chinese New Year is a public holiday when schools and most business close down. Usually, preparations of the CNY begin in the week leading up to the first day of the holiday. Workers start their journey back to their hometowns to celebrate with their families and return back to work after 15 days. This national holiday witnesses a busy travel season called Chunyun. About 3 billion passenger journeys are expected to be made beginning weeks before New Year’s Day and lasting for around 40 days.
How the CNY affects your business
The Chinese New Year causes major production disruption all over the country. Although the official public holiday only lasts for a week, the majority of factories are fully closed for two or even four weeks. You need to be aware of the impact of this essential nationwide shutdown, particularly with regards to ordering, payment, supply chains and business travel.
The disruption lasts weeks after the CNY is officially over. Even when the holiday ends, factories will take a long time to be back to full production levels. This is due to a high level of employee turnovers after the CNY. Many workers will look to level up or move to another city. Some may even decide to stay at home and not go back to their original work. Therefore, many factories will hire new workers and spend time training them.
Being well prepared is the best way to alleviate any negative impact on your supply chain. It is always wise to start your plan earlier to make sure your business sails through the special time.
What you can do to prepare for the CNY
- Place orders in advance
Most suppliers will not accept new orders a few weeks before Chinese New Year due to an overload of work and great pressure coming from the whole production chain. It is wise to confirm with your suppliers with their schedule weeks before the holiday hits.
It is also especially important to stock up popular items that may run out before the nationwide shutdown. Meanwhile, you will also expect an increase in shipping costs and production with the holiday approaching. There will also be shipping delays due to an overload of orders. Therefore, you should avoid last-minute order in January to make sure you get your products in time.
- Level up quality inspection
Factories often have to hire new workers or even use untrained staff due to high turnover before and after the holiday. As expected, when new workers are on the line, they are more likely to make mistakes than the previous experienced ones. There will be more quality issues than usual.
The declined production quality often occurs before and after the CNY. You are highly recommended to implement a quality management and level up your quality inspection process during this special time.
- Create a forecast of products
As the ramp-up period after the holiday mentioned above, it often takes some time for factories to fully return to normal again. Thus, you are advised to prepare for the products you will need a month afterwards to make sure you have enough inventories to see your business through the holiday period.
Creating a forecast to your demand is very helpful to get you through CNY and beyond. If your supplier or manufacturing partner understands your demand after the CNY, they can begin recruiting and training earlier to speed up the production process.
- Keep things moving forward
Although production will experience a relatively long time of halt, other departments like sales, engineering and administration are still available. For example, the Sales Department often keeps running its operations as usual with customers worldwide to help customers to place orders before and during the holiday. You can continue to move forward with sample orders, negotiations with a sales representative or contacting the factory managers to prepare for your business.
Most factories are expected to resume production as usual unless we see major outbreaks in mainland China. The Chinese government has implemented short-term restrictions in certain areas to minimize the risk of a potential outbreak. Some local authorities even offer subsidies to encourage people to travel less or cancel their trip back home. So far, we are optimistic about the situation and believe that the possibility of major disruption post-CNY 2021 is very small.