Chinese factories and businesses shut down for the majority of February and part of March due to Chinese New Year. Chinese New Year (CNY) can be overwhelming to anticipate and prep for sellers who source their products from China.

So what can you do to ensure that you have all of your orders produced and shipped before CNY shuts down the urban majority of China?

How To Prepare Product Orders For Chinese New Year chinese calligraphy year of the dog

About Chinese New Year

This year, CNY starts on February 16, 2018—which means businesses could close down as early as February 9. Most businesses will take off at least a week before CNY so workers can travel home from urban areas to their families in more rural areas.

This Chinese New Year migration tradition goes back to the late 1970s. During a recession, people from the coastal regions of China were looking for a stable paycheck, so they moved to more urban areas. But Chinese New Year is an important cultural tradition meant to be spent with family. Thus, Chinese workers now in urban areas had to take time off to return home to the coastal regions to be with their families.

Over time, Chinese business calendars have come to reflect the New Year as a permanent vacation time. Now, hundreds of millions of Chinese people migrate each New Year, making nearly 2.5 billion road journeys.

Chinese New Year itself lasts 15 days total. Then, it takes time for workers to migrate back into the cities. Thus, most factories are closed 3-4 weeks.

Then, there are usually another 2-4 weeks of delays for the factory to begin production again. Often factories will see a 20-30% decrease in their returning workforce after the holiday, usually because many workers move facilities or industries to be closer to their hometown. Factories then have to hire and train new workers, which can put them at low capacity for 2-4 weeks after CNY.

This results in nearly a 2 month slow down of all Chinese production.

How CNY Affects Sourcing

If you’re sourcing from China, it’s important that you’re mindful of this extensive shutdown. This could impact your ability to produce orders, and it may even impact the quality of your goods. Freight costs are usually increased before CNY, and there are longer transit times with greater delays at ports.

In America, it’s hard for us to fathom that almost all businesses shut down for nearly a month. But there’s nothing you can do to avoid it. Chinese New Year is a cultural tradition embedded into the heart of urban cities. Your sourcing needs will fall to the wayside if not properly handled.

Thus, you need to plan accordingly to ensure that your orders and shipments don’t interfere with the Chinese New Year calendar.

How To Plan For Chinese New Year

1. Forecast for Q1.

How much inventory will you need to get you through the entirety of Q1? If you typically do several orders in one quarter, you may want to consider consolidating them in the beginning of the quarter. You should forecast through March to determine how much you’ll need to get on hand before CNY.

 

2. Plan for after CNY.

You should also create a forecast for Q2. Show this forecast to your supplier. This will help them prepare appropriately for when they return from CNY. They’ll already have your forecasted order ready to go, so they can start sourcing the materials and training necessary workers right when they get back from the holiday. They can walk into the factory and immediately start working on your order, even when the factory isn’t yet at full capacity.

 

3. Increase your inventory.

Order more product than you need. This will help make sure you have a cushion in case you get an influx of sales during CNY.

However, don’t increase too much. If you place too large of an order, the factory might not prioritize you because they want to reach more clients. Order 1.5 to 2x your typical order for Q1.

How To Prepare Product Orders For Chinese New Year pile of cardboard boxes

4. Build a relationship with your supplier.

Having a strong relationship with your manufacturer ensures that they’ll prioritize your production and shipment. If you don’t have a good relationship, they’ll place other clients on the conveyor belt before you. If they don’t get around to making or shipping your product before CNY, you’re at a loss. Thus, it’s crucial to build valuable relationships with your factory.

Often, the best way to build these relationships is with a partner like Ask Idea Sourcing. We are on the ground in China to build partnerships with suppliers firsthand. We can be present to make sure the product is produced and shipped in time. Learn more about our supplier assessment services here.

 

5. Have a relationship with a freight forwarder.

It’s common for shipments to be delayed in the weeks leading up to CNY. Most freight companies will wait until they’ve filled their carriers to the brim before transporting. They’ll also charge a significantly higher price. Moreover, there’s a greater number of vessels leaving in the beginning of the year, so there can be significant loading and unloading delays.

You want to have a trusted relationship with a freight forwarder. This will help you organize your shipping lines, minimize costs, and keep track of your orders.

 

6. Create a quality management plan.

Factories are rushed at this time of year to put out a high volume of products. This rush can end up in defective or low-quality products, which you don’t want going to your customers (and you don’t want to pay for). Even the best factories can put out lower quality items during the CNY busy season.

Thus, you want to implement some sort of inspection process to ensure you are only delivering the highest quality products to your clients. This can include putting quality standards in your sourcing contract and training quality inspectors at your warehouse in America.

We also recommend having a partner on the ground in China to perform factory quality inspections. You shouldn’t wait to do inspections only in America, because if there are concerns with the product, it could be too late to reorder before CNY.

 

7. Order today.

The earlier you start planning, the better shape you’ll be in when CNY rolls around. Moreover, the earlier you order, the lower your costs and risk of delays.

We recommend placing orders in early January so they can be shipped by the third week in Jan. Ideally, you want to allow for double your typical lead time.

 

The Bottom Line

Don’t put your business behind schedule with Chinese New Year delays and mishaps. Prepare early, order early, and ship early to ensure you have a fully stocked inventory for Q1.

If you want to be fully prepared for Chinese New Year, you need strong partnerships. You want a supplier who will prioritize your production and a freight carrier who will give you the best and fastest rates.

The best way to build these relationships is with Ask Idea Sourcing. We have years of experience building partnerships in both America and China to ensure you always get quality sourcing and logistics.

Consult with us today to start preparing your inventory for Chinese New Year.