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China is an increasingly attractive destination to do business, but it is also one of the oldest civilizations with a very rich and vibrant cultural heritage. This cultural aspect is also quite evident in the Business domain as well and should be one of the most important considerations when doing business with Chinese companies. Festivals are a very important part of the rich Chinese culture, and the most important festival and the public holiday is the Chinese New Year.

This year the Chinese New Year starts on February 16th and lasts until March 2nd. 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. You need to understand the fact that all the Chinese people have to get back to their family for this holiday, much like the Thanksgiving in US or Canada. Typically, Chinese offices and factories close for about three working weeks, allowing workers time to travel back home to spend the holiday with their families. Apart from offices or companies, many service outlets or restaurants are also closed in that period.

How does it affect Business?

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. There is always a mad rush to ship product out of ports before the country shuts down. This can lead to increased freight costs and longer transit times if there is a delay at the port or a container is not loaded on its intended vessel.

Don’t forget to account for travel time back to the city. In all, the holiday can disrupt production and shipping schedules for up to three weeks or more. Interestingly, the CNY holiday is also considered a prime time to switch jobs, and many workers don’t return to work at all. This can lead to even longer production times as factories struggle to find new workers and ramp up on production orders. Since China is an economic giant in the global exporting industry, the effects of CNY can ripple around the world, especially for retailers and anyone else who relies on imports from China.

How can this risk be mitigated?

Now that I have managed to get your attention, we can talk about what can the importers, and other companies working with Chinese companies handle this. We have 5 tips to help you mitigate the risks associated with the holidays.

Develop a trusting relationship with your supplier or manufacturer

If you are just beginning to build your supplier network, it will be difficult to build that relationship in the months immediately prior to CNY. If you’re working with a manufacturing partner, ensure that they have experience handling the CNY crush. Ask what measures they have in place to help their customers plan for CNY. One of the advantages of working with a manufacturing partner is that they usually have years of experience building a trustworthy supplier network and can help ensure your product is shipped on time during the hectic holiday rush.

Create a forecast to get you through CNY and beyond

If you’re able to forecast how much product you’ll need for the first 3 to 4 months of the next year, you’ll have a leg up on ensuring your company has enough stock on hand to last you through CNY.

Put a Quality Management Plan into place

The last thing you want is for an order of goods that has quality issues to ship right before CNY. Sometimes quality can take a back seat as the factory is producing in high gear and is in a rush to get the product out the door. This is yet another time when a trusted supplier or manufacturer relationship will help tremendously Or you can go through a manufacturing partner like us.

Don’t put all of your eggs in one basket

This means that you need to make sure that you are not dependent on only one manufacturer during the holidays with no backup plan. Make sure that you have a backup supplier, and favorably in another country. A manufacturing partner can, however, help you achieve this quite easily.

Start planning early

It’s never too early to start planning for China’s biggest holiday. The earlier you begin, the better your supply chain will be.

Conclusively, these are important considerations for any company or people who want to do business in China during the CNY. Alternatively, choosing the right partners in China can lower these shortcomings for any outsiders. Our company has been helping a lot of companies to manage all the communication, and meetings on behalf of our clients with their Chinese Counterparts, making sure that the disruptions and risks due to a major holiday are mitigated even before the holidays.