2019 Chinese New Year: How Can Importers Prevent Disaster?
The Chinese New Year (CNY) of 2019 starts on Tuesday, February 5th, and lasts officially for 7 days. While many of us who work in Asia are painfully aware of the Chinese New Year, and the coming disruption to all production, many importers are caught completely off guard.
As if the rush to get your shipments in time for Christmas is not enough, you now have to make sure that your goods are ready well before your supplier close the shop for CNY 2019. During this holiday, all factories are shut down. Without exception.
While the official holiday only lasts for around a week to ten days, most factories are closed for an entire month. With severe delays to be expected once they open up again in March.
Now is the time to prepare, and in this article, I will explain how you can avoid delayed shipments and quality issues during the Chinese New Year of 2019.
1. Production is halted one or two weeks before the Chinese New Year’s Eve
While the Chinese New Year Eve is set on February 5th, 2019, all suppliers start to wind down operations one to two weeks in advance.
As such, the CNY puts a halt to mass production, and even sample orders, far earlier than many buyers anticipate. This is not always in your supplier’s direct control.
One component and materials subcontractor closing doors a few days earlier can essentially result in an unexpected and early shutdown of the supply chain.
This partly explains why different companies close their doors on different dates. Get confirmation on their schedule well in advance to prevent delayed orders.
However, administrative functions tend to be operational a week or two longer, than the production lines. As such, you can, at least, save some of the runways on sample development and contract negotiations, that may take place at this time.
2. Production is halted for a minimum of two weeks after the Chinese New Year’s Eve
While the official holiday is only lasting for roughly 5 working days, plus two weekends, most workers remain in their home provinces for an extra week or two.
This explains why most suppliers are not back in business until two, sometimes even three, weeks after the Chinese New Year’s Eve.
You will have a hard time reaching any representatives, including the salespeople, on CNY eve and the following days.
However, they will most likely be available to handle administrative tasks within 5 to 7 days. Don’t hesitate to contact them at this time frame.
3. Getting operations back to normal can take up to a month (or more)
Eventually, everything gets back to normal. Hopefully. The truth is that many manufacturers struggle to get back to a normal mode of operations in the weeks after the Chinese New Year.
The primary reason for this being workers who simply don’t return to their former employers, without any prior announcement.
Depending on the number of workers departing in secret, it can cause severe disruptions across the supply chain. Finding, and training, a new batch of workers provides new challenges of its own. Skilled workers are, to a certain degree, replaced by rookies.
This is one, of two reasons, why the risk of quality issues is at its peak right after the end of the Chinese New Year. The other reason for an increase in Post-CNY quality issues, as hinted above, is the large number of orders a (moderately successful) supplier, and its subcontractors have stacked up.
This may include a backlog of orders from early December and onward, depending on the production time needed. This is stretching the suppliers’ capabilities to its maximum.
Plenty of suppliers, even those who are not so busy, just use the general Post-CNY stress as an excuse for being slow and providing poor service. That’s worth mentioning too.
4. How to avoid severe delays due to the CNY
Now that you are aware of the somewhat complex dynamics of the Chinese New Year, and how it may affect your business, it’s about time to explain how you can prevent related delays and quality issues.
a. Place your orders in time: Ensure that production starts in late November, at the latest. That assumes an average production time of 30 to 40 days. If longer, you must start counting backward. Counting on tight schedules is never wise, so make sure that you confirm when your supplier halts production and accept new orders. Try to have a minimum 2-week buffer between the end date of the production, and the date they close.
b. Avoid placing last minute orders in January: Remember what I mentioned about the risk of quality issues Post-CNY? The same applies to the January rush, leading up to the CNY. Never place orders at this time, as the goods will most likely not ship on time while the risk of quality issues increase.
c. Keep things moving forward, to the extent possible: While production halts relatively early, sales, engineering and administrative departments are more flexible. Hence, you can move forward with due diligence, price research, sample orders and negotiations as usual.
d. Don’t make deposit payments prior to the Chinese New Year: Some suppliers never open again. If they do intend to shut down, they’ll most likely do so at the time of the CNY.
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