Chinese New Year 2020

Chinese New Year is the most important holiday in China. Most entrepreneurs, manufacturing in China for the first time, don’t understand the significance of this holiday, so we prepared this blog to help explain it.

WHAT IS CHINESE NEW YEAR?

The United States and other western countries follow a Georgian Calendar and celebrate New Years every January 1^st. In China, they do things a little differently. The Chinese Calendar follows a lunar model, so the first day of the month aligns with the new moon. This means that the Chinese New year can begin anywhere from January 21^st to February 20^th. In 2020, the first day of the Lunar New Year will be on Saturday, January 25^th.

HOW DOES THIS AFFECT MY MANUFACTURING?

Unlike the one-day celebrations found in western countries, China celebrates the New Year over several weeks. Businesses and factories in China usually close down at least a week before New Year’s Day, giving their employees plenty of time to travel and visit their families. Most of these factories and offices will remain closed for at least 3 weeks, waiting for their workers to return.

Unfortunately, as many as 30% of these workers don’t return. This leaves factories understaffed and unable to operate at full capacity until they hire and train new workers (which could be at least a month). You should expect the shut-down to cause major production delays and know that the frantic attempt to get products shipped before the holiday increases shipping costs and delays at the port.

You should also consider the interconnectedness of factories. The factory you work with could be sourcing their materials from a supplier that shuts down a week earlier than they do. Situations like this can halt the creation of your product until the supplier reopens. Even if you manufacture in a country outside of China, the factory you’re working with may be relying on a Chinese supplier and you could still run into this problem. Some factories and suppliers are diligent and make sure they have enough material to stay open through the holiday, but others may not be.

Because of the significance and length of the holiday, many factories are reluctant to start new projects in the weeks leading up to the Chinese New Year. If you’re planning on starting a new manufacturing project in December or January, you may want to reconsider.

HOW TO BE PREPARED TO AVOID MAJOR SUPPLY CHAIN DISRUPTION

Here are several ways to prepare for Chinese New Year so the holiday does not disrupt your supply chain:

Place orders early! – Give the factories a minimum of 60 days to complete your order. In 2020, Chinese New Year falls on January 25^th, so try to get your order placed in or before November.

Ship your products before the rush! Getting your product shipped at least 2 weeks before the holiday will help you avoid increased cost and delays.

Place larger orders than normal (if you have the available funds) to ensure that you won’t run out of product while waiting for your factory to reopen.

First time manufacturing a product? Prepare in June – Give yourself more than enough time to make sure your product meets your quality standards. If you submit an order just before the November deadline and run into a quality control problem, production will be forced to start over. This delay means you won’t receive your product until after Chinese New Year.

Use the Holiday to create hype – If your situation requires you to place your order late, try to take advantage of the holiday by creating hype around sold out products or process pre-orders.

The best way to handle Chinese New Year is to prepare for it. At Blacksmith we always advise our clients on how to best deal with the holiday — if you have any questions, we’re happy to help. Contact us HERE.