The Chinese New Year (CNY) of 2020 starts on Saturday, January 25th, 2020, which is earlier than most years, and lasts for 7 days. While most people are aware of Chinese New Year, and the coming disruption to all production, every year I see many eBay Amazon sellers/importers caught completely off guard.
As if the rush to get your shipments for Christmas was not enough, you now have to make sure that your supplier orders are ready well before your suppliers close for CNY 2020. During this holiday, all factories are shut down, without exception!
While the official holiday only lasts for about a week, most factories are closed for an entire month, with disruptions lasting even longer.
In saying this, the general trend is that the CNY holiday is becoming shorter. Chinese manufacturers understand that this is a major disruption for both them and their customers. Many suppliers are also perfectly aware of competition from other countries like Vietnam, Malaysia etc how a month-long supply chain disruption is not exactly a big selling point. Based on importing for the last 30 years, my best guess is that factories will limit their closure to around 2 weeks in the coming years.
If you are new to importing, production is very often halted one or two weeks before the Chinese New Years Eve.
While the Chinese New Year Eve is set on January 25th, 2020, most suppliers start to wind down operations one to two weeks in advance.
As such, the CNY puts a halt to mass production, and even sample orders, far earlier than many eBay Amazon sellers anticipate.
Just one component and or materials subcontractor closing doors a few days earlier can result in an unexpected and early shutdown of the whole supply chain.
This is often why different companies close their doors on different dates. Get confirmation from your supplier on their schedule well in advance to prevent delayed orders.
And then after CNY, production is normally halted for a minimum of another two weeks.
While the official holiday only lasts for roughly 5 working days, plus two weekends, most workers remain in their home provinces for an extra week or two.
This is why most suppliers are not back in business until two, sometimes even three weeks after the Chinese New Years’ Eve.
You will have a hard time reaching any representatives, including the salespeople, on CNY eve and the following days for this reason.
Getting operations back to normal can take up to a month (or more)
Eventually, everything gets back to normal. Hopefully. Some manufacturers struggle to get back to a normal mode of operations in the weeks after the Chinese New Year.
The primary reason is some workers simply don’t return for whatever reason.
Depending on the number of workers who just don’t show up, this can cause severe disruptions across the supply chain. Finding, and training, new workers provides new challenges of its own. Skilled workers are often replaced by rookies.
This is one of two reasons, why the risk of quality issues is at its peak right after the end of the Chinese New Year. Every task takes time to master.
This is just one of many reasons why you should never relax your quality assurance and inspection procedures. The other reason for an increase in Post-CNY quality issues, as above, is the large number of orders a (moderately successful) supplier, and its subcontractors have stacked up.
This may include a backlog of orders from early December and onward, depending on the production time needed. This is stretching the suppliers’ capabilities to its maximum.
Plenty of suppliers, even those who are not so busy, just use the general Post-CNY stress as an excuse for being slow and providing poor quality.
How to avoid severe delays due to the CNY
Counting on tight schedules is never wise, so make sure that you confirm when your supplier halts production and accept new orders. Try to have a minimum 2-week buffer between the end date of the production, and the date they close.
Avoid placing last-minute orders in January: Remember what I mentioned about the risk of quality issues Post-CNY? The same applies to the January rush, leading up to the CNY.
Don’t make deposit payments prior to the Chinese New Year: Some suppliers never open again. If they do intend to shut down, they’ll most likely do so at the time of the CNY.
Do Hong Kong-based suppliers also close for CNY?
The Chinese New Year is a public holiday in Hong Kong, just like in Mainland China. However, most companies only close for a few days, rather than weeks.
That said, most Hong Kong-based companies have their manufacturing facilities in Mainland China, Vietnam or other countries in the region. As such, they face the same disruption as everyone else.
Does the CNY affect ocean and air freight?
Ports remain operational during the CNY however freight forwarders are closed during the CNY for at least a week. Further, they cannot pick up products that are locked up in the factory warehouse until their employees are back. Yet, the CNY is not disrupting ocean and air freight to the extent it does with manufacturing.
Do all countries in Asia celebrate the lunar new year?
The lunar year holiday is celebrated in Vietnam (also called Tet), and in the Chinese communities in South East Asia, mainly in Thailand, Malaysia, Singapore, and Indonesia.
As such, the lunar new year is directly impacting businesses importing products from China and Vietnam.
That said, manufacturers in Southeast Asia, Japan, Korea, India, Europe, and the Americas also procure materials and components from suppliers in Mainland China, and to a lesser extent from Vietnam. As such, the CNY and Tet do have a major global supply chain impact – far more so than any other holiday or celebration in the word.
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