|Year||Date of Chinese New year|
|2013||Sunday, February 10|
|2014||Friday, January 31|
|2015||Thursday, February 19|
|2016||Monday, February 8|
|2017||Saturday, January 28|
|2018||Friday, February 16|
|2019||Tuesday, February 5|
|2020||Saturday, January 25|
The December holidays’ spike in consumer purchases often stretches the operations of small and large businesses. However, just a month afterward, Chinese New Year has a mammoth impact on Asian suppliers and customers. Consequently, any supply chain that involves Asian links, especially Chinese links, should prepare for the disruption in supply and the possible increase in demand.
Chinese New Year Length and Timing
Beginning on the first day of the traditional Chinese Lunar calendar, Chinese New Year (CNY) usually lands between January 22 and February 19. However, in order to give employees time to return home to their families, most Chinese companies close one to two weeks prior to the actual date. In addition to closing early, they often remain closed for an additional two weeks after the specific CNY date. Even after they open, factories rarely have enough employees return in time to produce at full capacity. Sometimes factories resume production with as much as two-thirds of the workforce not yet returned. Depending on the labor market, some of those employees may never return to their former job.
Chinese New Year for Chinese Employees
For employees, CNY is a welcome vacation that tops those offered by most US companies. The entire country begins to shut down one to two weeks before the big day. Travelling home can be quite difficult, often taking 3 to 7 days by train to arrive at hometowns with waiting families. Fortunately, many factories pay their workers an addition month’s pay as a bonus right before the holiday. This benefit is why some Chinese companies will ask for payment of all upcoming invoices before the CNY holiday. The managers and business owners usually do not need to return to a distant home, since their families often live nearby. Nevertheless, they will often take at least a week away from work, which essentially means email silence for at least a week, if not more, with your Chinese associates.
Supply Chains at a Stand Still
Imagine an abandoned airport with FedEx and Cargo planes scattered around the tarmac. Pilots have shut down, locked up, and exited their planes. They join their crews and head home for CNY. In a week or two, the pilots and support staff will return, and the planes will simply turn back on and continue with their deliveries. No matter how much you beg, freight simply cannot move for the week around CNY. FedEx, UPS, and DHL usually post the expected delays on their websites, so be sure to utilize that information.
In addition to airfreight delays, sea freight can get even more congested if you don’t plan well in advance. Shipments must be at port at least 10 days before CNY to ensure shipment before the break starts. Shipments must also be booked at least two weeks in advance because space will quickly fill up. If you ship a large amount around that time, then congestion will likely bump at least one of your shipments to a later ship date, often a week after CNY. Most ports open again for normal shipping about one week after CNY. Check with your freight forwarder on what advice it has to minimize disruptions and plan for the delays.
How to Prepare Your Supply Chain for Chinese New Year
Unfortunately, if you rely solely on Chinese vendors for your inventory, you will likely need to increase your inventory for the CNY season. This is the least desirable option, but often the one most companies take. Instead of shipping a huge amount of product right before CNY, consider increasing stocks slightly, and have your factory prepare a shipment to leave immediately after CNY. This can smooth out the bump and minimize the needed investment.
Consider Other Sources
Instead of buying additional inventory, look at other possible suppliers to help bridge the gap. Dual sourcing in different geographic locations, as previously covered in an article on how to avoid supply chain disruptions, is the benchmark for a robust sourcing strategy. Whether you develop a domestic vendor, or just a non-Asian option, switching to your second source for the month China shuts down may help prepare your supply chain for additional future disruptions.
Explore Other Creative Solutions
Depending on your market, you may be able to minimize disruptions from CNY by creatively approaching the problem. Later January and Early February are not traditional peak seasons for most industries. Accordingly, you may be able to offer incentives to clear out older inventory, or focus on another aspect of the business, to help mitigate CNY’s impact.
Open up the Chinese Market
As the Chinese market expands to imports, CNY may actually come to be a boost, rather than a burden, to your business. While most traditional gifts are food items, CNY spending is similar to the holiday spending in the US, and thus presents opportunities to grow sales of your product. China Daily reported that luxury import purchases in 2012 reached $7.2 billion, a number expected to grow significantly in the future. Getting your products into the Chinese market in time for CNY shipping may be just what’s needed to boost your company’s first quarter sales.