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Chinese New Year vs Supply Chain Management

A Large group of people at a train station during Chinese spring festival


Chinese New Year -CNY- is the festival that celebrates the beginning of a new year on the traditional lunisolar Chinese calendar, not the solar calendar, and the date changes every year.

During the 15-day Spring Festival, fireworks, dragon dancing, putting up New Years scrolls “春联”, giving red envelopes “红包” to the elderly and young kids, etcetera, are the norm.

During these 15 days of celebration, each day celebrates different things. People are used to get together with their families.

The Chinese New Year is sort of a religious celebration too. In general, we worship our ancestors instead of gods, as people do in other countries. Our ancestors are our gods.

So how does the Chinese New Year holiday relates to supply chain?

We should keep in mind that most of the factories are located in the coastal areas and big cities, while the workers are often from remote provinces and villages. Most people go back to their hometown during CNY and manufacturing cities become empty.

You may think it’s only a 2 weeks’ holiday and not a big deal. Then you are completely wrong!

CNY is the largest migration of human being on the globe! That means it’s extremely difficult to book tickets for train, air, and buses. And the roads are packed with traffic jams. Many people combine their annual leave with the New Year's holiday, which extends their time away from work to more than one month.

Some workers may even ask for unpaid leave before the holiday, simply to avoid the hassle. And others may not come back to work after the holiday at all.

This is why it is very common to see a decrease of production capacity before and after the CNY holiday.

Since most commodities are made in China, all the buyers are shipping their products at the same time, congesting he ports before and after the holiday.

Production delays are common during this time, as many factories can’t get enough manpower or components to fulfill the order on time.

In some cases, factories rush the production, thus a lot of quality problems occur.

If the production and logistics are not planned properly, you might not be able to receive any goods to sell for 3 whole months!

Aerial View of Phase I, Guangzhou International Port

Aerial View of Phase I of Guangzhou International Port

Tim Wu, CC BY-SA 4.0, via Wikimedia Commons

So how to deal with the situation?

The risk exists we don’t know what we don’t know; but once we know what we don’t know, there is always a way to mitigate the risks.

To keep your business in calm waters, remember these three Keeps:

  • Keep 2 months in mind instead of 2 weeks as a disruptive period
  • Keep close communications with the suppliers to understand their production capacity and human resources
  • Keep up to date with the shipping companies and other stake holders in the supply chain

Plan your orders and shipments as early as possible. If possible, at the beginning of the year. As a bare minimum, you should always order enough stock for Q1’s demand.

Get to know both the production lead time and the delivery lead time, and double confirm these with the suppliers during and after placing the orders. Plan the quality check at the same time.

Deliver the goods not later than 10 days before the shipping date. Avoid shipping on the last day as much as possible, as this will likely hold your goods at the port with sometimes extra costs.

Do send greetings to your partners in China. This is always a good way of showing courtesy and there is no better time than CNY to build a good relationship with Chinese partners.

Last but not least, work with a local partner on the ground, being your eyes and ears monitoring all the production, quality, engineering, logistics and routine communications. This will clear a lot hassles of your China Sourcing activities.

What are your experiences with rushing production or shipping right before Chinese New Year?

Let's talk below in the comments! ????

#ChineseNewYear #Shipping #Manufacturing #ChinaPort #ContainerShipping #LabourShortage #ProductionPartner

Featured image: Paul Weedman. Re-use allowed with a backlink to this post.

Paul is supply chain professional and world traveller with 20+ years in the supply chain management and manufacturing. He owns his own company and has been helping numerous companies sourcing and manufacturing in China.

  • Dennis Ash says:

    Great article. I used to write one on this topic every year, but recently I have not done so. We do need to remind people of big events like this, especially after the COVID disruption. I believe that many people might have forgotten.

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