Taking Care of Business During the Chinese New Year
It’s about a month into the new year, which means it must be about time for...the new year. The Chinese New Year is something you have to take into consideration when doing business in a global economy. Just like someone in China might have a hard time getting in touch with U.S. companies on Thanksgiving or Christmas, U.S. businesses have to take this major Chinese holiday into account when sourcing products or supplies from Asia.
When is the Chinese New Year?
The Chinese New Year (CNY) is the start of the traditional Chinese calendar. Since the calendar is based partly on the phases of the moon, and the new year always coincides with a new moon, the CNY can fall anywhere from January 21 to February 20. For example, in 2015 the CNY occurs on February 19, one of the latest possible dates. In 2016, the new year will occur on February 8, and in 2017 it moves up to January 28.
The Chinese New Year is by far the largest holiday on the Chinese calendar. It’s the time when everyone takes off work and gets together with extended family for an extended period of time. Festivities often go on for over two weeks, ending with the Lantern Festival on the 15th day of the new year (which is March 5 in 2015).
How Does It Affect Business?
Obviously, a major holiday like Christmas in the U.S. has a big impact on business, as companies shut down temporarily and employees take time off work. The Chinese New Year has a similar, but much larger, effect: the shutdown lasts longer, is less predictable, and can affect production even after the holiday.
To understand why, you have to look at the travel involved. In China, most industrial workers have jobs that are far from their hometowns and their families. CNY might be the one time all year they can go home and visit family. That means, in the world’s most populous country, everybody is trying to travel somewhere. It’s called the world’s largest human mass migration, with an estimated 3.6 billion passenger trips taken during the holiday in 2014. Trains and planes fill up quickly, so many workers have to head home for the holidays a week or two ahead of time in order to get a seat.
Because of this, some factories shut down a couple of weeks before the New Year to give their workers time to travel. Add in the holiday itself and the return trip, and you’ll see that Chinese companies are often closed for a full month.
Additionally, some workers never do come back. They may decide to stay closer to their family, find a new job nearer to home, or have some other life change during the long holiday. It’s estimated that up to one-third of Chinese factory workers choose not to return to their old jobs after CNY. That leaves many companies severely understaffed in the new year, and it takes time to hire and train new workers and return to full production.
Scheduling Around the Chinese New Year
If your company relies on any kind of just-in-time inventory imported from China, this could be a challenge. The key to making it through the Chinese New Year without any supply interruptions is to be aware of the situation and properly plan ahead.
- For starters, you need to add at least three extra weeks of lead time when placing orders before CNY. If the normal lead time is 12 weeks, plan on at least 15.
- If you have a special order or a product that is highly customized (and therefore different than what the factory is used to producing), it may require an even longer lead time. Check with us at Impak to find out what your pre-CNY deadlines should be.
- Pay attention to where the CNY falls on the western calendar each year. For years with an early CNY—like 2017, when it occurs on January 28—you need to allow for even more additional lead time. That’s because Chinese suppliers will start closing down in the first half of January, and it starts bumping up against our own Christmas and New Year’s holiday season.
- Get whatever inventory you need for the duration of the holiday delivered before the shutdown begins.
- Factories will have a backlog of orders when they return after the holiday, and they’ll likely be short on workers to fill those orders. So, you’ll want to get your post-holiday orders in early as well, and may want to schedule at least some of the following month’s inventory to also be delivered before CNY starts.
- Since everyone is trying to get shipments out before CNY, it can be difficult to book freight during that time. Chinese ports become congested, and it can take several additional days to get your container loaded on a ship. So, make sure you allow for longer-than-normal shipping times.
- Of course, another option would be to find an alternate supplier closer to home who could help fill in the gaps caused by the Chinese New Year.
At Impak, we manufacture our luxury shopping bags, boxes, mailers, and other custom packaging solutions both here in the U.S. and abroad. We can handle the logistics for you, making sure you get the inventory you need right when you need it. To learn more or get a quote, please contact us.