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The Chinese New Year, commonly abbreviated as CNY, may not be a bother for someone who is not involved in the importing business. China goes on a total shutdown at the end of January into the early weeks of February. Factories close shop, companies close down, and everybody goes home to celebrate the festivities. Anybody involved in business with companies or factories or even suppliers and distributors based in China needs to factor in this as it may affect the business extensively due to delayed shipping and stock depletion during this period. Many US and European sellers lose hundreds of millions in revenue during this period because they fail to plan ahead. Factories, shippers, and inspection companies shut down during this period for about two to three weeks.
In the article below, we discuss tips on how to avoid any inconveniences during the CNY but first here are some of the ways through which your business will be affected during these holidays.
Planning early and stocking up enough helps beat the possible catastrophe resulting from CNY shutdowns. If you have never experienced this before, it is important to take note of the dates so as to remain in business during the season. We shall highlight other important dates later in the article that sellers, suppliers, distributors who solely depend on China and other manufacturing companies should take note of.
Here’s why:
Businesses all over the world that ship supplies from China will most likely face delayed shipping. As the holidays draw near, the factories boost their production in their facilities to help them meet the increased demand from sellers ordering inventory. If your business does not place an order on time, you will most likely receive your shipment too late. The number of workers reduces significantly as more and more people head home for the holidays and if on average it takes about one week to receive your shipment, it may take up to a month. Shipping companies also slow down during this season.
Factories completely close down during the CNY. Just like any other public holiday around the globe, people go home to celebrate and be with their loved ones. China comes to a standstill during the CNY. The CNY stretches for a period of about two weeks or slightly longer. Company owners, suppliers, distributors, and manufacturers also follow suit. If you are planning on placing an order for your business around this time, it may be impossible to get in touch with anyone until the holiday is over. Since factories are shut down, no production goes on, and sourcing your products may be close to impossible.
The quality of products may be affected during the CNY or just after the CNY. Few workers are handling the processing or manufacturing lines and in such instances, it is difficult to ensure consistent quality of the products. In some cases, workers may not report back to work. In an effort to save the company, the managers will be forced to employ new personnel who at times are not well acquainted with the job and the quality standards for each product. When this happens and you had already placed an order, chances are that the substandard products will find their way into your shipment. This may not only incur your extra costs but also affect the performance and the reputation of your brand in the market.
In a few weeks, China will be shutting down to celebrate the New Year. To avoid any inconveniences that may adversely affect your business during this season, do the following.
Delays are inevitable during the CNY due to the factors we have listed above. Just like Christmas, everybody closes shop and goes home to be with their loved ones in China. It is, therefore, wise for any business person to double or triple the amount of inventory coming in from their suppliers or manufacturers. Preparation is key in such instances and having more than enough keeps you safe. Order as much as your warehouse can contain for both your top-selling products as well as the less popular options on your catalog. Better safe than sorry.
Since the CNY falls right around popular holidays such as Valentine’s, ensure that you have these in stock as it will take a lot of time before the factories bounce back in business after the shutdowns. Our experts’ advice: Order 2X your usual order amount. You also want to order your products by October 30 to allow the manufacturer enough time to process the order and ship them to you with no delays in-between. Stocking up well before the holiday allows you enough time to also process and fulfill your orders to your clients.
Some problems cannot be addressed from your end. It is important to establish rapport and open communication with your suppliers. Let them know your fears and expectations prior to the CNY. They will help you address certain issues that you have no control over and even suggest solutions to help avoid delays in the shipment. This also includes unforeseen costs that may come about due to the shutdown. A good example is the shipping and freight fees. During the shutdown, shipping companies increase the fees incurred for these services.
To avoid this, you can discuss with your supplier how to ship the products before January the 15th. Shipping rates go up in January. Production could take 30-45 days to become normal after CNY. Some factories will lose their workers during this time and this may affect the production process and timings. Come up with collaborative solutions on how to evade any delays before and after the holidays. Note that not all factories can be trusted when it comes to such arrangements.
Bonus Tip: Don’t put down a deposit with a Chinese factory before the Chinese New Year (CNY). They may go bankrupt after the CNY..
The hassle and bassle of the CNY has its own downside. As factories rush through to fulfill orders from sellers, the probability of overlooking the quality of the products is high. After the shutdown, workers take the opportunity to switch between jobs. Factory owners have no option but to bring in unskilled and untrained workers to close the gap. With no experience in the production lines at all, the risk of substandard production is high. Low and poor quality products could damage your brand irreversibly.
That said, having a quality control team in place will help avoid such happenings. Quality inspection allows you to pick out any substandard products or defects in the products before they reach the consumers. Chinese suppliers will be rushing orders so make sure you do an inspection of the orders before and after the Chinese New Year.
There are other companies that offer inspection services for sellers. If you do not have a quality management system in place, you can hire them to do the job on your behalf. Schedule your inspection 15-30 days in advance. However, inspection companies will also be fully booked so make sure you book your inspection well in advance and align it with the time your order will be ready at the factory.
You can also source products from other locations during the CNY. Some countries in these regions do not completely shut down while others close down only for a while. You can supplement your production to other countries such as Korea, Vietnam, and Malaysia if you can. Alternatively, you can check with the supplier if they have factories in other countries. If they do, opt for this as it means your business will not be affected by the CNY. As a plus, the location might be convenient for you in terms of shipping hence cutting down fees incurred during shipping.
Here are other holiday dates in China that sellers should be aware of:
Note that in some instances, the factories may have additional dates to the days listed above to allow them to close down. Contact your support or manufacturer to know the exact dates they will be shutting down.
The Chinese New Year is a tough time for many sellers all over the world. This does not have to be the case for you. Take time to prepare in advance for the season and your business will sail through to the next year smoothly. Avoiding production and shipping delays keeps your business in good books. You will be able to fulfill your customer orders effortlessly throughout the year with no hiccups whatsoever.
Norman Farrar – is a serial entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.
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No resources.
Norman Farrar – is a serial entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.
