The Phenomenon of Chinese New Year
Chinese New Year, or Spring Festival, is an amazing time of year in China and several other Asian countries who also place a lot of importance on the lunar calendar (such as Vietnam, Taiwan, Japan, and others). In China, it is the greatest human migration with more than a billion people travelling around the country to visit family and friends and have a well-deserved break this February coming.
China’s fairly unique reliance on migrant labour, where workers often travel vast distances to go to work far from home if they’re not from the main coastal industrial areas, and pressure coming from millions of buyers from around the globe to get orders in before the break, means that CNY throws up a number of challenges and risks for importers with Chinese suppliers, and this is what we’re discussing in this episode of the podcast.
Unlike Christmas, where people are back at work quickly afterwards and there is usually minimal disruption to usual service, CNY greatly impacts manufacturing in particular, and the period before, during, and after the holiday can cause issues like poor product quality, delays, shipping cost rises, and supply chain disruption, amongst other things.
So, don’t go into the holiday period blind, listen to this episode to get Renaud’s advice on how to plan for and deal with the challenges that CNY causes.
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Here’s a summary of key sections of this episode:
✅ What the Chinese New Year or Spring Festival holiday is and what happens in China, especially with manufacturing staff. This introduces the migration and the concept of staff not returning to work after the holiday ( 😳 )
✅ The regularity of Staff turnover around CNY and what this can teach you about certain suppliers. Lower staff turnover often = better working conditions.
✅ Problems which typically occur after Chinese New Year. For instance, as factories scramble to get back up to speed, often with fewer or new untrained staff, quality issues and delays can occur easily.
✅ How even the pre-CNY period is stressful for importers. High demand for suppliers to finish orders before the holiday also often leads to quality issues, cancellations, shipping cost rises, and more.
✅ How long suppliers may be closed for. Assembly factories may not be closed for too long, perhaps around 2 weeks, but you’ve got to look out for component and material suppliers!
✅ The dates for Chinese New Year 2021 and pre-CNY wind-down. CNY occurs between 11-17 Feb 2021, but the wind-down will start around December 2020, when staff have one eye on the holiday.
✅ Risk of supplier bankruptcy. It’s common for companies who have been struggling to call it a day around this time. How would you be affected if your supplier closed down?
✅ A list of preventive measures importers need to take starting in October to get through the CNY period without too much hassle. This includes keeping extra inventory, planing orders ahead for post-CNY in good time, increasing product inspections in the periods before and after the holiday, and more.
✅ Common supply chain risks and contingencies to deal with them. Of course, a flare-up of the coronavirus during the holiday in China is a big one, but other risks such as suppliers going out of business or being affected by accidents such as a fire are something to plan for. What would you do if your supplier was out of action for a period of time, or maybe forever? Many importers faced this reality in 2020, and many were badly hurt.
A timeline of the CNY holiday period
This timeline from the Blinc group is a neat illustration of the holiday period’s disruption to manufacturing and shows, based on the Feb 11-17 holiday period, roughly when you should place either new custom orders or hardware reorders and expect to get them delivered (pre-CNY order times are also mentioned in the episode, too).
Additional information about Chinese New Year and resources mentioned in the episode
- Renaud wrote about how to manage issues caused by the holiday here: Chinese New Year: how to manage the disruption?
- You can learn more about the CNY festival itself, dates, etc, from this handy page: Chinese New Year – China’s Grandest Festival & Longest Public Holiday
- There are a number of really great posts from Renaud about supply chain risks and how to put in place contingencies to manage them collected here in a series: Supply Chain Risk Management Blog Posts
- Read more about arranging a backup supplier here: Why you Need a Backup Factory for your China Production
How are you affected by CNY? Do you have a specific plan in place to deal with it?
Let us know your experiences by leaving a comment, please.
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