Chinese New Year and How It Effects Your China Supply Chain
December 16, 2016
Most importers know that the Chinese New Year can wreak havoc on your China supply chain. Also, known as the Spring Festival, the Chinese New Year starts on the 2nd full moon after the winter solstice. This is a 15-day holiday celebrated by 1/6 of the world population or over one billion Chinese. The Chinese consider this to be the country’s most social & economic holiday, it is like Thanksgiving and Christmas combined. There are many Chinese customs related to this festival. One is to clean their house to rid it of ghosts and bad luck. Another is to get a haircut or buy new clothes, pay off debts or settle disagreements in order the start off the new year fresh. This is all very similar to our New Year’s Eve resolutions. According to Chinese tradition each year is named after one of the 12 animals of the Chinese zodiac. This year will be the year of the Rooster. Why is this a big deal and how does it affect your China supply chain?
The Chinese New Year shuts down every single production facility in the entire country, for an amount of time that varies from factory to factory. While CNY starts on Jan.28th for 2017 and the holiday lasts officially for 1 week (5 working days, plus two weekends), all suppliers start to shut down production 1 to 2 weeks ahead of time and many of them don’t re-open for another 2 to 4 weeks. Obviously, such factory closings, if unanticipated, can disrupt your China supply chain.
Why does it take so long? Well, this is biggest human migration on earth. It is estimated that 200 million Mainland Chinese travel during this holiday, and this amount of travel puts huge pressure on transportation. There simply are not enough trains and buses to move all these workers who are going back home. So they leave early. And come back late – most workers remain in their home provinces for an extra week or two. This explains why your China supply chain is not back in business until two, sometimes even three of four weeks after the end of the Chinese New Year. Factories don’t work without workers…
Getting your China supply Chain back to normal can be a rather tasking force. Many manufacturers struggle to get back to a normal mode of operations for weeks after the Chinese New Year. The primary reason for this being workers simply don’t return to work. For various reasons they no longer want to work for their former employers, and they don’t usually provide any prior announcement. Dealing with a number of workers disappearing in such secret causes severe disruptions across the China supply chain. Finding, and training, a new batch of workers provides new challenges of its own. Skilled workers must be, to a certain degree, replaced by rookies.
Given this information, importers should prepare for this early. If you are wanting a shipment for March, you may want to plan to order 50% more in January and 50% in February, this will prevent many unwanted disruptions for your deliveries.
Knowing this and handling it efficiently is one more reason why it is so important to have a great relationship with your entire China supply chain, from production to delivery, to help get you through these trying times. But, as always, we will make it through this tasking time and make the best holiday we can.
Gong Hey Fat Choy!
By Susan Timpe