With Chinese New Year arriving earlier than usual this year, now is a good time to review some of the interesting aspects of this holiday period and how it impacts the worldwide logistics environment. Here are five things to keep in mind as the holiday kicks off:
- Chinese New Year may not be celebrated outside of Asia, but it’s a huge national event for the country and its citizens. In fact, it’s the most important social and economic holiday in China. Originally tied to the lunar-solar Chinese calendar, the holiday was a time to honor household and heavenly deities as well as ancestors, according to History.com. During this period (which this year runs from January 27-February 2, give or take) the entire attention of the household is fixed on the celebration, business life rolls to a halt, and home and family become principal focuses.
- It has a knack for catching importers off guard. That’s because the weeklong holiday shuts down every single production facility in the entire country, for varying time frames. “In a worst case, and rather likely, scenario,” ChinaImportal points out in Chinese New Year 2017: How Importers Can Avoid Delays, “the Chinese New Year can result in severe delays.”
- Production in China comes to a screeching halt. Roughly one to two weeks before the event kicks off, all suppliers start to wind down their operations, according to ChinaImportal. “As such, the [holiday] puts a halt to mass production far earlier than many buyers anticipate,” the site points out, noting that even just a single component and materials subcontractor that closes its doors a few days earlier can “essentially result in an unexpected, and early, shutdown of the supply chain.”
- Payments won’t be processed in a timely fashion. To add to these difficulties, during the weeklong holiday no payments can be processed to and from China or Hong Kong, according to China Business Review’s Understanding Chinese New Year and Its Implications for Foreign Businesses. “Often the most suitable course of action is to settle all payments before Chinese New Year, to avoid any potential problems with late payment fees,” the publication points out. “Communicating with suppliers and planning ahead will go a long way to ensuring that effects on cash flow are minimized as far as possible.” (While it’s too late to make any strategic moves right now for the 2017 holiday, you can use any “lessons learned” to better manage this time period in 2018.)
- It usually lasts more than just a week. That’s right folks, unlike U.S. holidays that tend to stretch out for a day ahead of and/or after the actual date, Chinese New Year often finds production halted for at least two weeks after the festivities have wound down. “While the official holiday is only lasting for roughly five working days, plus two weekends,” ChinaImportal notes, “most workers remain in their home provinces for an extra week or two.” This reality directly impacts China’s export environment. In many cases, for example, shipping lines will hold off on leaving port until their vessels are full—a goal that can take some time to fulfill if workers aren’t back from vacation yet.
Odyssey is here, ready to help
Even if you didn’t prepare adequately for the upcoming Chinese New Year, Odyssey is ready to help your organization manage this holiday period and 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), please reach out to your Odyssey representative.