It's Time to Start Planning for Chinese New Year!

Chinese New Year will begin Sunday, January 22, 2023. Typically, Chinese offices and factories close for about three working weeks, allowing workers time to travel back home to spend the holiday with their families.Time to start planning!Wait a minute, you say. It's only August, you say. We know, we know. But this is a big deal, and if you're going to escape Chinese New Year (CNY) unscathed, you need to start preparing now.

What Does Chinese New Year Mean for You?

Maybe you’re halfway around the world wondering why you should be mindful of and plan for the largest Chinese holiday of the year. Grab your calendar and follow along.

Although CNY officially only lasts for one week, many factories and businesses shut down about 10 days before CNY to allow time for workers to travel home. There is always a mad rush to ship product out of ports before the country shuts down. This can lead to increased freight costs and longer transit times if there is a delay at the port or a container is not loaded on its intended vessel.

Don’t forget to account for travel time back to the city. In all, the holiday can disrupt production and shipping schedules for up to three weeks or more. Interestingly, the CNY holiday is also considered a prime time to switch jobs, and many workers don’t return to work at all. This can lead to even longer production times as factories struggle to find new workers and ramp up on production orders.

Since China is an economic giant in the global exporting industry, the effects of CNY can ripple around the world, especially for retailers and anyone else who relies on imports from China.

How to Plan for Chinese New Year

What can you do to keep your supply chain running smoothly when one of the world’s largest exporters shuts down for nearly a month? We’ve outlined 3 tips to proactively plan for Chinese New Year to minimize any disruptions to your supply chain:

1. CREATE A FORECAST

If you’re able to forecast how much product, you’ll need for the first 3 to 4 months of the next year, you’ll have a leg up on ensuring your company has enough stock on hand to last you through CNY. We’ve created a simple rule to help account for CNY delays: For orders normally received in January, take 50% of the volume and receive it in November of the previous year. Receive the other 50% of that volume in December. Another great advantage of providing a forecast to your supplier or manufacturing partner is that they will be able to see your demand after CNY so the factory can begin recruiting and training workers earlier, already knowing that a portion of their staff will not return.

2. INCREASE INVENTORY

That forecast you created for our last tip will come in handy for this next piece as well. If you already know how much product you’ll need for the first part of next year, you could begin to order a little more product now to hold in inventory which will account for the lack of orders to be received in January of next year. An accurate forecast and previous sales history will be beneficial to keep inventory at a manageable level and ensure you don’t over order product.

3. DELIVER CARGO WELL BEFORE SHIP DATE

If you’re responsible for arranging your own logistics from China to your company or customer’s door, book shipments with steamship lines well in advance of CNY. Steamship lines are notorious for taking advantage of the Chinese New Year situation when there is an abundance of shipments waiting to leave port before everything shuts down. These lines often impose large freight rate increases during this time, as the demand to get on board a cargo ship is high, and those who can afford to pay the higher cost will leave the port on time. It’s not uncommon to hear of containers getting rolled to the next booking during the weeks leading up to CNY; this means the container gets bumped to the next available vessel leaving port. Depending on how often a container gets rolled, this could mean days or weeks of delays. Here is where another trusted relationship with a freight forwarder or manufacturing partner will come in handy as many work with shipping lines that are more organized and better prepared to deal with the peak demand of CNY.

It is never too early to start planning for China’s biggest holiday. The earlier you can begin, the better your supply chain will be. Analyze your sales history from the past year, start developing a forecast as accurately as possible and start communicating with your suppliers and manufacturing partners now to begin planning for the upcoming Chinese holiday.