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3rd February 2021

What to consider for Chinese New Year 2021

When does Chinese New Year Start and how does it affect me? 

Chinese New Year, also referred to as CNY, begins on the 12th of February this year in 2021, a whole 18 days later than it was in 2020. To explain further the public holiday lasts until the 17th with the festival officially concluding on the week of the 22nd. With that in mind you should plan to be affected for over 3 weeks due to the time allowance given for employees to travel home and back. In addition many factories shut for a number of weeksManufacturing sectors can often see the effects up to 6 weeks afterwards. 

While your business may not be based in China, part of your business process, particularly sourcing components or raw materials, may take place there or go through it. That’s why taking the largest yearly Chinese celebration into consideration is definitely a smart move. So what are the main things you need to be cognizant of during this time? 

First off: 

The effect of the pandemic on the celebrations 

Whilst many workers typically jump at the opportunity to travel home during Chinese new year people are being asked not to go to rural locations, and the 14 day isolation rules take most of the pleasure out of the occasion. Which means many will choose to return to work earlier after the official 7 day holiday. 

However, whilst the pandemic may mean less people are travelling, as China acts to discourage movement around the country during it’s largest celebration, this doesn’t mean things are likely to get up and running any sooner. Any uptake in employees returning to work earlier is likely to be outweighed by logistical problems from the pandemic. This can be down to extra checks at borders or quarantining of supplies due to spontaneous outbreaks.   

Understanding the holiday 

While it’s only scheduled to be a one-week long event, it often runs into 3 to 4 weeks of factory shut downtime. During this time, essentially nothing will be going in or out of China, and your components or raw materials are no different. 

CNY is also typically the biggest time for job resignation and relocation. Employees that were previously working for your manufacturer may decide not to return after the celebration. You can’t be certain exactly how many jobs will be left open. Therefore, you won’t know exactly how long your production will be delayed until after the holiday. 

So, like all good strategies, you’ve got to plan for before and after the event. Pre-plan and think about quantities that are needed. Additionally, make sure you think about the potential delays that may occur in the weeks/months following CNY. Remember, you can never be too prepared.  

Strengthening Relationships  

Having a good partnership will allow you to gain a better understanding of exactly what they need from you and when, in preparation for CNY. You can also find out what measures they have in place to accommodate the holiday. However, it may be difficult for you to build a relationship right now. That’s because they will have their heads down trying to ensure everything is running smoothly in their preparations. However, this is something for you to keep in mind in preparation for next year’s CNY.  

It is also important to be aware that quality may begin to suffer in the lead up to CNY. This again is where having a strong relationship with your manufacturer will come in handy. Having trust in your supplier to continually deliver excellent quality products will help ease some of the stress that CNY is likely to bring.   

On a side note, if you are in the market for a new Chinese supplier or manufacturer, make sure you ascertain their ability to handle CNY before signing any contracts. You don’t want to end up with a company notorious for going off the grid completely during this time and leaving you in a panic.  

Think Ahead, Plan Ahead, Order Ahead 

One of the best ways to start planning ahead for Chinese New Year is by creating a forecast for the months you know will be affected and then a few after. 

  • Forecast as accurately as possible how much product you’re going to need during the time the factories will be closed.  
  • Be able to give your suppliers and manufacturers accurate numbers of what you are going to need and they can plan accordingly.  
  • Consider using a company that has factories in several different countries so CNY isn’t the be-all and end-all for you during this time. 
  • Increase your inventory beforehand so if there are any slip-ups or your shipments don’t make it onto their scheduled ships and vessels, you’re not in deep trouble.  

To give you a clearer image, most shipping containers coming from China to the U.K. can take anywhere between 20-40 days to arrive. In addition, electronic components, for example, can have typical lead times of 3-12 weeks, sometimes 20+ weeks. That’s why planning according to your industry is crucial. 

10 Days Pre Shipment 

Whether you’re shipping stock to or from China, we advise getting your products to the ports at least 10 days before they’re due to be shipped out. This is because in the lead up to this holiday period, there is going to be a race to get cargo loaded onto the ships before final shipments. Shipping companies are known for taking advantage of the Chinese New Year. They raise prices and making it into a bit of a bidding war as to who gets their products shipped first. The last thing you want is your cargo to get bumped onto the next departing ship. This may leave your orders delayed by potentially weeks or months. 

Putting quality management in place 

Due to employees returning at different times this can place added pressure on those working especially as they get back up to speed with lagging orders. This can naturally result in a drop in product quality compared to the rest of the year. 

Will Brexit and the EU play a role? 

We have already seen that panics at the borders can occur at short notice due to the unpredictable nature of Covid-19. For example before Christmas when lorries were left stranded in the UK after the emergence of the kent strain. So the knock on effect of any supplies through Europe could experience a double whammy. It also leaves those importing goods with less choices to bypass the effects of the Chinese New Year by going to the continent where they may have additional tax implications or experience slower movement of goods. This makes it crucially important that you plan ahead this year. 

On the plus side: An Opportunity 

As remote technology continues to soar there are great ways to establish closer relationships with suppliers across the globe including China. Perhaps you can even find small ways to celebrate with them. As the dust settles after Chinese New Year this can be a great time to build more intimate relationships with trusted suppliers, and plan even further ahead for Chinese New Year 2022.  

Related article: Building great supply chains 

Chinese New Years is quickly approaching so if any of your production happens in China, it’s best that you get planning sooner rather than later. If you have any questions about the Chinese New Year impact on suppliers or manufacturers, give us a call on 0115 772 2825. 

 

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