Don’t Let the Chinese New Year Disrupt Your Company’s Supply Chain

If you are doing business in China or other countries, it pays to have some knowledge of the culture. And, if you are expecting delivery of manufactured products, you really must be familiar with the Chinese calendar, especially as it pertains to the New Year. Starting January 25, 2020, China and other eastern nations will celebrate the Lunar New Year and the arrival of the Year of the White Metal Rat. According to the Chinese Horoscope, this rat is clever and tactical, and comes dressed in armor with sword in hand. At Genimex, we recommend taking a cue from this tricky rodent, who is known for his keen vision and problem-solving abilities. We’re providing this short informational page, so you can also be fully armed and protected as you plan for the upcoming months.

This year, the Chinese New Year festivities will last from January 25 to February 4, 2020. You might look at that and say, “10 days? No problem.” But Chinese factories will be closed for an average of three weeks to allow workers in the urban industrial areas to travel back to their rural hometowns to celebrate the holiday with their extended families. Therefore, you can expect productivity to drop off a week or so in advance of the celebrations, and to take another week to a month to ramp up again afterwards.

Business-people often have difficulty imagining factories closing for such a length of time. We figure there must be some plucky entrepreneur somewhere bucking the trend and keeping operations going, and that’s the guy we’ll call to get our orders done. But no. Every factory without fail will close. Ahead of that closure, factories work at peak capacity for weeks to meet their clients’ needs throughout the anticipated downtime. Therefore, placing an order three to five weeks prior to hiatus would be virtually impossible. Ramping up operations after a long break is often difficult, even under the best circumstances. Thus, the 10-day festivities create a two-month slow-down in the business calendar.

Getting production going again after the New Year is often a serious problem in China, because many workers simply don’t come back on time or at all. This means the factories must find and train new workers, which can cause productivity and quality control problems for another month or so. In the worst-case scenario, a fly-by-night supplier may not be able to resume operations and will go out of business entirely. Whatever upfront payments you have made will be lost.   

All this means that your timeline for deliveries could get pushed back two to three months around the Chinese New Year. If you want to get inventory out of China to sell in February and March, you must place that order well in advance. In fact, the time to place the orders to ensure springtime inventory is now.

If, like many businesses, you’re looking outside China to the ASEAN states, you’re going to encounter a similar problem. In Vietnam, the New Year’s celebration is known as Tet Nguyen Dan meaning “The Feast of the First Morning of the First Day.” As in China, millions of workers will leave the major urban centers of Hanoi and Ho Chi Minh City and travel back to their hometowns. Of course, Vietnam is smaller than China, so the distances are shorter. As a result, there may be a marginal advantage to doing business in Vietnam at this time. However, the safe course is to expect that if you are doing business in China or any ASEAN state, you must account for the gaping hole in the calendar from mid-January to the end of February, or even the middle of March.

Providentially, the Year of the White Metal Rat is thought to be good for sailing, with sturdy metal shipping containers traversing calm seas. If you are wise like the rat, you can plan well in advance, avoid questionable suppliers, and receive your inventory without incident. Part of your effective planning should be to partner with an experienced hand at Far Eastern manufacturing like Genimex.

Five decades of experience with Chinese New Year scheduling

At Genimex, we have helped companies cope with disruptions due to the Chinese New Year for almost fifty years. We have developed a proven strategy to mitigate the impact of the Lunar New Year slowdown to ensure that our clients have the inventory their companies require for winter and early spring. For supply-chain solutions throughout the Far East, consult Genimex today by calling us at +1-347-997-4711, or contacting us online.