Chinese New Year 2020: 4 Things To Know To Avoid Setbacks
If you have been importing from China, you have probably heard (or experienced) stories of production and shipping disruptions during the Chinese New Year (CNY). If this upcoming CNY is your first, let us guide you keep your supply chain ahead of the game while mitigating any adverse impact.
The Chinese New Year 2020 will begin on January 25th. The official holiday will start on the 24th (CNY’s eve) until the 29th. All businesses, including ports, shut down during this holiday. It’s not a very long holiday, is it? At least, not for factories.
How Does CNY Affect Importers?
Generally, factories in China take advantage of this holiday to give their workers their much-awaited break from work. This break could take from two to four weeks which allows workers to travel back to their hometowns and spend time with their loved ones.
It is common to expect delays in shipments and an increase in freight cost as there is usually a surge of products to be shipped before the country shuts down.
Planning for the CNY
If not planned correctly, the CNY’s effect on your supply chain will most likely have a huge impact. We’ve come up with 4 ways on how you can prepare for the CNY as an importer.
1. Understanding the effect of CNY
If you are from the west, it’s difficult to comprehend businesses shutting down for a week (or even more). If you’re running a business, most often than not, you’ll make sure that the business will run as usual when you go on vacation.
China is different from most countries as they can afford to shut down almost everything during the CNY. Getting this picture will help you plan ahead of time on getting the inventory that you will need while the country celebrates its longest holiday.
2. Establish an ongoing good relationship with your supplier
Relationships with suppliers are very similar to any other personal relationships that we have. It takes time to build trust and rapport. If you just started sourcing close to the CNY with a new supplier, or you suddenly placed a reorder after not being in contact with the supplier for a long period of time, your goods are most likely to be on their least priority.
If you have plans to start sourcing for a new product, or planning to increase your inventory and want it shipped before the CNY, better start as early as possible. This will also give you ample time building relationships with the suppliers.
3. Add more inventory in advance - highly advisable
Building a good sales forecast will greatly help you anticipate how many inventories you should have to corner the market until after the CNY. It’s best to have an inventory that will last for at least two months or so after the new year. You’re probably thinking, why?
Workers sometimes extend their stay in their hometowns and knowing China as a huge country, it takes time for them to go back to their workplaces. It is also common that factories usually have the highest attrition rate after the CNY break, in effect, it takes time to hire and train new workers.
In addition, a week or two before and after the break has a higher chance of mistakes. The mad rush to get the orders out before everything shuts down leads to details being unnoticed. If you are not regularly having your goods inspected, this is the best time to arrange an inspection to make sure that everything is in the right place.
4. Get the products shipped at least two weeks before
Once the goods were produced and the quality has been inspected, it is now time to get it on the boat. Part of good planning is to not be included in the chaotic rush before the CNY as shipping lines usually take advantage of this peak season and bump their rates as high as possible.
Furthermore, trucks that transport goods from factories to port also become scarce during this period. More trucks fall on queue for hours to days to unload their cargoes as the warehouses and ports get busier, in effect, they cannot go back and pick up other goods on time.
If possible, or if the production has finished later than your target date, it is recommended to ship your goods after the CNY holiday instead.
Make sure to always keep the communication with your factory and know their holiday schedule. Good planning during times like the CNY comes a long way. First, you will most likely not be affected if there’s a price surge. Second, you’ll have time to fix any production mistakes with your factory. Lastly, you’ll be saved from all the headaches of dealing with the CNY-induced issues.