What is the Chinese New Year?
The Chinese New Year refers to the beginning of a New Year in China following the lunar calendar. The New Year usually begins on the second moon following the winter solstice and ends about fifteen days later when the full moon appears.
Unlike the Western New Year, the Chinese New Year does not have a fixed date and usually takes place anywhere between January 21st and February 21st of the global calendar.
In 2022, the Chinese New Year is expected to complicate the global supply chain as manufacturers are expected to suspend their factories to head for the holidays earlier than usual.
Key Dates of the Chinese New Year to Keep in Mind
There are several important dates to keep in mind during the Chinese New Year that include:
- January 31st, 2022: New Year’s Eve
- February 1st, 2022: New Year’s Day
- February 15th, 2022: The Lantern Festival
The holidays typically mean that employees get seven days off even though the celebrations could be as long as a fortnight. During this time, you should expect factory shutdowns of up to two weeks.
After the shutdowns, you should expect massive demand from many eCommerce businesses that had to deal with no supplies or delayed supplies and now need to make up for it. This is the reason it is critical to be aware of the Chinese New Year dates to avoid delays that may be catastrophic to your eCommerce business.
Why is the Chinese Year So Disruptive?
This is the most significant holiday for the Chinese, so the Chinese government and companies must put up with it, no matter how disruptive it can be.
The celebrations usually involve people visiting their friends and family for gift giving, fireworks, and special meals. During this time people forget about studies and work and get to relax and enjoy the festivities. As such, no plant manager, worker or even owner will be thinking of manufacturing or clients at this time.
How the Chinese New Year Affects Businesses
If an eCommerce business relies on Chinese manufacturing, the Chinese New Year shutdown will impact business even if the Chinese factory is just one component of the retail supply chain. Some of the effects of the shutdown include:
Halted Production
Most countries that celebrate the Chinese New Year make it a public holiday and as such employees go on holiday for a fortnight and all factories shut down. Since this may include production and management overseas at the manufacturing plant, getting in contact with suppliers may be difficult if not impossible.
Reduced Product Quality
When the manufacturing plants reopen following the holiday, workers may come back on different dates while some never come back. Since the factories have to get going, they may have to replace some workers quickly which results in untrained staff and lower quality of products.
Since most factories will not rerun the order placed before the holiday, you may get bad products alongside quality products produced before the shutdown.
Shipping Delays
Most businesses do not plan for the Chinese New Year to shut down and this often results in an overload of shipments, leading to a backup of shipments. The fact that some workers will leave early means there will be fewer people to prepare shipments. As such many shipments can get stuck in the buildup as most employees start leaving.
How to Prepare for the Chinese New Year
Knowing that the Chinese New Year shutdown is imminent, business owners must keep their business running smoothly by considering unplanned delays. Some crucial steps to mitigate against the effects of the New Year shutdown include:
Early Planning
Diving into past sales and using it to determine inventory needs can be critical. By careful management of inventory, a business owner will know their needs and make their orders before the shutdown.
Increase Inventory
Sometimes the dreaded delays happen and could negatively impact business. As such it is important to build a huge stash before the shutdown. Businesses need to catalog their most popular inventory and order enough for any expected and unexpected delays.
This is particularly critical for eCommerce businesses that favor seasonal goods such as Mardi Gras, Valentine’s Day, and spring break items. Since manufacturers take several weeks to get back to speed and work out the kinks following the Chinese New Year, businesses may find themselves in a pickle if they wait until the shutdown to order seasonal items.
Businesses are advised to ensure that they do not run out of important products and that seasonal items are ordered and arrive in time for the associated holiday.
Communicate with Your Supplier
Given that most suppliers in mainland China have previously dealt with complications of the Chinese New Year, it is a good idea to communicate any issues you believe you may experience.
When working with suppliers it is critical to enquire what delays and disruptions may be expected and then find ways to avoid them.
In instances where a business is not sure about the trustworthiness of the supplier or if the communication is not so good, they could always try to find suppliers from sources such as Sourcify. Such platforms usually have pre-vetted suppliers and factories and allow for better communication between businesses and suppliers.
Consider Other Manufacturing Locations
While several other countries in Asia celebrate the New Year, most of them do not shut down as long as China. Some suppliers have operations in other countries and a business can negotiate with a supplier to see if their products could be moved to another location for the time being.
In addition to preventing the complications brought by the Chinese New Year shutdown, this could also prevent complications in case the supplier’s production is shut down by other issues outside the New Year festivities.
Enhance Quality Management
Many employees see the Chinese New Year as the opportune moment to switch jobs. This could result in complications as the quality of products may drop during the transitory period.
Employees have been known to simply not return to the factory after the Chinese New Year leaving manufacturers short-staffed. Since new employees may not be that experienced, the products produced during this time may be of lower quality.
Businesses can avoid this by having a solid manufacturing inspection plan that is followed to the letter during the transitory period. This will ensure that the quality of products is kept relatively similar to before the New Year.
How Does COVID-19 Affect the Chinese New Year
It is not easy to say what effect the COVID-19 pandemic will have on the 2022 CNY given that the Chinese government has not officially taken any public measures regarding the issue.
Since COVID is spread in overcrowded and close-quarters environments, it could impact the Chinese New Year as employees usually head home in crowded buses, and trains and the same conditions may also be replicated in train and bus stations and airports lounges.
As such, it is critical to also consider government travel regulations and plan for them well before the Chinese New Year.
