Here’s what you and your supply chain need to know to prepare for Chinese New Year (CNY):
The 2019 Chinese New Year celebration, also known as the Spring Festival, will take place between February 5th and February 19th, a total of roughly two weeks. What used to be a local and regional celebration has grown and developed in tandem with the growth of China as a nation – the Chinese New Year is now an event capable of impacting businesses around the planet.
What is the Chinese New Year?
As with many cultures around the world, family and friends gather together in celebration of the coming of the new year; the case is the same in China. However, due to the tremendous regional population, family gatherings and celebrations result in the largest annual migration of humans on earth. Mainland China will be most directly affected, as well as Hong Kong, Taiwan, and many peripheral influential areas like Singapore. Close to 100 million workers leave their coastal-urban work areas and travel back to their rural hometowns. Although the CNY only officially lasts for one week, the supply chain repercussions of what is effectively a week-long nationwide business shutdown can be felt for weeks both before and after the holiday.
Understanding how the holiday impacts the supply chain:
The Shutdown – It is imperative to understand the differences between New Year celebrations in Western countries and in China. Simply put, business in China is almost completely shut down during the weeks leading up to and immediately following the CNY – nothing will get in or out of the country until regular business has resumed. Many factories and businesses will shut down up to ten days before the official start of the CNY, and will continue to be shut down through and after the celebrations conclude to allow for travel back to the cities.
Lead Time Increases – Many shippers are aware of the CNY holiday, and will front load their shipments in the weeks before the celebration. Capacity will tighten, prices will rise and lead times for getting products moved will grow as business begin to slow. Plan your shipments well in advance of the CNY, anticipating price hikes and increased lead times. You do not want to be left in the cold at the start of the new year – know that shipments planned for late-January will be hard pressed to arrive on time.
Untimely Shutdowns – Not every manufacturer or supplier will close their doors at the same time – nor will they open them with any sense of consistency. It is easy for individual closings and reopenings to cause unforeseen breaks in your supply chain – it is imperative that you obtain a detailed schedule from your business partners in China before the CNY.
Operational Delays Last Longer Than You May Expect – In much the same vein as the last topic, it should be expected that Chinese business operations may take through the entirety of March to return to normal.
Employee Transitions – The CNY is also a time in which many workers will switch employers, leaving factories and other business scrambling to fill vacant positions which further delays production times. Employees will frequently depart from their jobs without notice, and simply never return to their old place of employment after the holiday, leaving holes in a businesses work force and hindering their operational proficiency until the positions are filled.
If you need help preparing for the upcoming Chinese New Year, Odyssey is ready to assist your organization to help you make the best decisions for a smooth import process. If you have any specific questions about your supply chain and the best approach when dealing with these issues (or, taking advantage of the related opportunities), Odyssey is here to help.
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