Preparing for Chinese New Year

Chinese New Year Fireworks
Chinese New Year is an annual 2+ week festival that starts in the early months of the year (late January to mid-February). It is the largest and most important holiday in China, but is also widely celebrated in other countries that have a high percentage of the Chinese population. This year, the holiday officially starts on February 10th, 2024, but many employers start the holiday early to accommodate employee travel time.

During the Chinese New Year celebration, virtually all businesses are temporarily shut down, and people use the time to reconnect with their families. This ultimately leads to a mass migration of citizens. With China’s population being over 1.4 billion, as mentioned above, many workers require additional days off to accommodate travel time when getting home to their families.

China alone is responsible for over 28% of all global manufacturing. Needless to say, the national holiday has a significant impact on the global market. When considering Chinese New Year, companies across the world need to take many things into consideration to appropriately plan for navigating around the holiday.

Protecting Your Business

When working with Chinese manufacturers, there is a deadline to be met if you want to receive goods on time during the latter end of Q1 of 2024. If goods are not loaded onto a vessel by the start of the holiday, there is most likely going to be a significant delay in receiving that order. It is important to work out lead times with suppliers to establish when the cut-off date will be for an order to get out before the holiday.

Unfortunately, it is already past that cut-off date for some suppliers as we rapidly approach the holiday – depending on the product in question. If an order fails to make it out of a factory before the start of the holiday, it can be at risk of experiencing a lead time extension, as well as potential quality inconsistency.

Many factories will be employing a new workforce upon the conclusion of the holiday. This means that there is a high likelihood that a new wave of line workers, engineers, designers, etc., will be coming in to complete the order left from the start of the holiday. Workers can be new to the industry, unfamiliar with the product, or potentially experience a gap in communication from the workforce that left at the beginning of the holiday – all potential factors that can contribute to lead time and quality issues. Even if the same workforce returns to the factory, it generally takes at least one week for factories to get back to normal output.

To mitigate this risk, it is recommended to schedule replenishment cycles around the Chinese New Year holiday. This will ensure that there is no ongoing project during the break, eliminating potential risk of any lead time or quality issues with a supplier. There are many routes to take, including but not limited to – placing a specific order earlier, doubling the quantity of an order placed in Q4, ordering a smaller LCL shipment right before the holiday, or any other solution out there.

Considerations for Effective Planning

Book Freight Early: To avoid port delays, book freight at least 1 month before the scheduled departure date.

Post-Holiday Demand: Plan for the surge in demand post-holiday. Avoid competing for 1st capacity by planning and scheduling orders well in advance.

New Workforce Dynamics: Account for potential changes in the workforce post-holiday. New staff may impact communication and production familiarity.

Replenishment Scheduling: Strategically schedule replenishment cycles to avoid ongoing projects during the holiday, reducing risks with suppliers.

Effective Planning is Essential: Proper and calculated planning is the key to navigating the complexities of the Chinese New Year.

Two men negotiating in a factory

Final Notes

Once the window is missed for getting production orders shipped before the holiday, the question then becomes how soon can the next order be placed. Unfortunately, many companies fail to effectively plan for the Chinese New Year and create a high demand for shipments upon the completion of the holiday. Many companies fight for 1st capacity with suppliers, which leads to overall longer lead times during the beginning of March. Unfortunately, if a brand is competing for 1st capacity – it is likely improper planning was at fault. Brands who planned and took this into consideration are likely placing orders and scheduling freight months prior to the holiday. All things considered, essentially, calculated planning is the only true way to work around the holiday.

Linton Group has over 100 years of combined supply chain experience that has allowed us to effectively navigate Chinese New Year time and time again. With most of our team located across China – our staff knows the ins-and-outs of what it takes to meet deadlines, uphold quality, and maintain project integrity over the holiday period. One of the reasons that we have been able to achieve this is by facilitating healthy transparent relationships between our clients and vetted suppliers.

Contact us and schedule a consultation today with one of our Sales Executives in Philadelphia, PA.