How Does the Chinese New Year Shutdown Affect Your eCommerce Business?

If you have international partners or supply chains, it’s not only polite to know about their cultural calendar. It is vital to ensuring your supply chain keeps ticking over.

Yes, seasoned importers know all about the pitfalls that come with not being fully aware of what’s going on with their overseas partners.

One of the biggest and most unavoidable disruptions to many global supply chains is Chinese New Year.

Don’t underestimate the impact this celebration can have on your eCommerce business if you work with China-based suppliers or manufacturers. While the country enjoys their biggest festival of the year, you need to plan well in advance to avoid delays, increased costs and stock shortages.

When is Chinese New Year?

Chinese New Year – which is also often referred to as Lunar New Year or Spring Festival – falls on a different date each year.

The start of the Chinese New Year usually takes place between 21 January and 20 February, though celebrations take place over a number of weeks.

For 2022, Chinese New Year falls on Tuesday 1st February

The date the holiday begins is based on when the first new moon appears. The day before Chinese New Year is a cause for big celebration, with families gathering together for a reunion dinner. Another tradition is for them to give their house a thorough clean to clear the way for good luck during the year ahead.

How long does Chinese New Year last?

Chinese New Year lasts for a total of 16 days starting from New Year’s Eve.

In China, there is a public holiday that lasts for 7 days, again starting from New Year’s Eve. During this time, most people will not be working at all, returning to work at least a week later.

Traditionally, the festivities end on the fifteenth day with the Lantern Festival.

How long do factories shut down for Chinese New Year?

While the official public holiday for Chinese New Year lasts for 7 days, many factories actually shut down for anywhere between two weeks and a whole month.

It’s important to note that this is China’s most important holiday of the year. Many people need to travel long distances to reunite with family, so factories allow extra time for them to reach their loved ones.

In fact, it is said that the Chinese New Year travel period – known as ‘chunyun’ – is the largest annual human migration in the world, as millions of people head to family member’s homes.

Suppliers in China will begin to stop or reduce production in the two weeks leading up to Chinese New Year before at least a week’s full closure.

Even once factories have reopened, they often take another few weeks to ramp back up to full capacity.

So, the shutdown could affect your supply chain for up to, or even over, two months.

How will Chinese New Year affect your eCommerce business?

This is all vital information for you if you work with a Chinese supply chain or manufacturer.

During the New Year period, you will not be able to get in touch with any factories, suppliers or couriers you might work with in China. Production and shipping will come to a complete halt, so you won’t receive any orders during this time.

Most good factories try to fulfil demand as much as possible before they shut down for New Year. However, it is usual that some shipments end up getting delayed until factories reopen.

Again, don’t think that everything will return to normal once the factory has officially reopened! A lot of the time, new employees are drafted in to help them catch up with orders again. It’s also a common time for people to change jobs or hand in their resignation as they make a change for the year ahead.

With reduced staff numbers or a high number of new starters, this can mean that quality suffers or mistakes are made.

What should your eCommerce business do to prepare for the Chinese New Year shutdown?

When working with suppliers in China, you should anticipate the disruption Chinese New Year can cause you months in advance.

While it may be a slightly different day every year, the same preparations should always be made to keep your eCommerce business fulfilling orders as smoothly as possible.

Follow this checklist to ensure you are fully prepared…

Plan ahead

This can’t be emphasised enough. As with any major event or occasion, planning is the key to success.

Always make sure you know the timeline of events for Chinese New Year and have a plan in mind for how you will work around it so you aren’t caught off guard.

Count backwards and place any additional orders well in advance to ensure you are covered well before the holidays take place. Avoid last minute ordering at all costs – these will not only likely be delayed, but could also suffer in terms of quality and will likely cost you more, too.

It’s also advised that you don’t pay any deposits in the run up to Chinese New Year. This is a common time for businesses to decide to close for good, so you don’t want to end up waiting for your money to be returned.

Check your inventory

Good inventory management really will be your best friend during this period!

Keep a keen eye on your stock levels and ensure your demand and sales forecast is up to date.

If you need to buy additional stock to cover you for the two month’s affected by Chinese New Year, do so. This is key to ensuring you don’t miss out. It’s also especially important if you are planning new season Spring stock for fashion fulfilment – a delay could allow your competitors to get ahead of you.

Shipping costs also often increase in the lead up to the factory shutdowns. Like factories, most Chinese freight forwarders won’t be operational for a few weeks, so demand rockets for those looking to get orders shipped out in time. Save money by getting your orders shipped well in advance.

Unfortunately, stock storage could create a roadblock here. If you don’t have the flexibility to store additional stock on a short term basis, it can make it difficult to prepare in advance.

Keep in touch with your Chinese supply chain

Communication will inevitably come to a halt once the Chinese New year festivities begin.

So, in the months leading up to the annual shutdowns, get as much information as you can from your Chinese suppliers or manufacturers. Make sure you know exactly when they will be accepting orders until, when they will be closing and when they will reopen.

If there are numerous factories or manufacturers in your supply chain, this can complicate matters further.

So again, have conversations well in advance and arrange your order months before disruptions kick in.

Pay extra attention to quality control

As we have already mentioned, it’s common for quality to suffer in the weeks before and after Chinese New Year.

If you order your products well in advance, this may not affect you so much initially.

However, if you do receive any orders in the aftermath of Chinese New Year, check the quality extra carefully. Sending out products that don’t meet your standards can seriously damage your brand’s reputation, not to mention the strain the extra returns and customer service enquiries could create for your business.

If anything doesn’t seem right, get in touch with your manufacturer straight away to arrange replacement items as soon as possible.

Diversify your supply chain

Chinese New Year is just one example of how relying on one international supplier can affect your whole supply chain and fulfilment process.

This was magnified even more when China was first to be hit by a Covid-19 lockdown. Supply from China ground to an absolute halt as factories couldn’t reopen as normal following New Year.

Many eCommerce businesses are now beginning to see the benefits of having a diverse supply chain to reduce the risks associated with importing from one area. Having a secondary supplier in a different country can allow you to switch production over when your primary supplier can’t keep up with demand.

Can 3PL help your eCommerce business deal with Chinese New Year?

When going global with your supply chain, there is a whole new host of considerations you need to make. Chinese New Year is the perfect example of this.

Using a third party logistics provider can be a huge support during this time. Along with giving you integrated inventory management software to keep a close eye on your stock levels, a 3PL can also help by…

• Providing flexible storage space – so, you can increase your inventory when you need to without having to pay for permanently bigger warehouse space
• Expert freight forwarding advice – benefit from competitive freight rates and shortened lead times
• Efficient fulfilment process – when dealing with an international supply chain, you don’t have to worry about your customer’s order fulfilment process – 3PL have experts in the warehouse that you can contact any time

Read more about the key advantages of using a third party logistics provider on our blog.

P.S, if you want to contact 3PL, we are always more than happy to chat about how third party logistics could help your business grow

More eCommerce and order fulfilment advice from the 3PL blog…

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