In our years of experience in the quality control industry, there’s one problem we’ve seen newer importers come up against time and time again.
That is, not being adequately prepared for the impact of Chinese New Year on their production and shipping schedules.
Recently, we had a discussion with a producer of outdoor recreational products. They had just placed an order with their factory in October. To their unpleasant surprise, the factory informed them that the earliest possible delivery date would be in mid-March, five months later.
The reason for the extended timeline was, of course, Chinese New Year, which will be happening at the beginning of February 2019. The holiday comes around every year, and veteran importers have grown accustomed to its impact and have learned how to better prepare for it in advance.
So what exactly happens during the holiday period?
The World’s Largest Human Migration
Chinese New Year is often referred to as the world’s largest human migration.
In 2018, an estimated 385 million people made the trip back to their hometowns on China’s roadways, railways, and airplanes. Millions of migrant workers in cities like Guangzhou, Shenzhen, and Yiwu made their way across the country to spend time with their friends and family.
The official holiday lasts for one week, during which time, the vast majority of people in the country take off from work. It’s important to keep in mind, though, that the impact of the holiday extends beyond just that week.
Many workers take extra days off, leaving early and coming back late. In addition, a large percentage of the workforce never comes back at all because they quit their jobs. This way, they can spend more time with their families and/or look for higher-paying jobs when they return.
This all leads to three major impacts on importers… delayed timelines, higher costs, and lower quality.
The Effect on Timelines, Costs, and Quality
You’d think that a week away from work was no big deal. But, during the CNY holiday week, production at most factories comes to a complete halt. In addition, it generally takes at least 10 days to wind down beforehand and 10 days to ramp up again afterward.
This means that there is an entire month of reduced-to-non-existent production.
It’s not just your factory that goes on vacation. Their suppliers do too. Freight forwarders go on holiday as well. Everyone involved in getting your product produced and shipped are all out of commission and need time to restart and sync up again after the New Year. This means that timelines are significantly impacted.
It also means that, as the holiday approaches, factories charge more. This is due to the large volume of orders they have to rush to complete.
On top of this, the mad dash leads to a higher number of quality slip-ups than usual. As always, it is important to be sure you are conducting proper third-party quality inspections.
So, how can smart importers deal with the CNY holiday?
How to Handle Chinese New Year the Right Way: Two Tips
If you’ve talked to your factory recently and realized that CNY 2019 will impact you in ways you didn’t expect, all you can really do now is take it as a learning experience and prepare for CNY 2020 in advance.
What steps can you take?
Tip #1 Forecast Buy Cycles Further out
Plan your orders 6, 12, and even 18 months in advance. This type of forecasting is especially important for products that need to be received for sale in the Spring or early Summer (i.e. Valentine’s Day, Mother’s Day, Spring & Summer outdoor products, etc.). These will be the most impacted by the holiday.
If you have an e-commerce businesses or a newer businesses without a long sales history, this can be tricky. But, as your business progresses, keep in mind that all the sales data you collect can be used for forecasting in the future.
Tip #2 Leverage Your Relationships With Retailers
Try to leverage your relationships with retailers as much as you can. For example, see if you can deliver the product earlier. In exchange for early receipt, a retailer may want a discount from you, due to the warehousing costs involved.
But, by placing orders with your factory far in advance, it’s likely that the cost of production will be lower. The closer to CNY you place your order, the more your factory will generally charge.
Just Remember That Preparation is Key
Chinese New Year is the largest human migration in the world. As such, production across the whole country slows down, stops, and ramps up again over the period of one whole month.
The holiday has a major impact on production & shipping timelines, product costs, and even product quality. Therefore, it’s vital that you prepare in advance.
By forecasting long-term buy cycles, leveraging retailer relationships, and placing orders in advance, you’re more likely to lower your production costs, receive timely shipments, and experience fewer quality mishaps.
And speaking of quality mishaps, be sure that you are conducting inspections on your shipments. If you’re planning to conduct pre-or-post-holiday inspections, the guide below may be useful to you in helping you to prepare for them.
How to Prepare for a Quality Inspection
Are you thinking of hiring a third-party inspection company? If so, you need to be properly prepared. No one knows your product better than you do. So, make sure you give your service provider the information they need to ensure that your inspections are a success.
Download this free guide to successfully preparing for your product inspections.