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How you can Safeguard your Sourcing During Chinese New Year

Chinese New Year is the first day of the New Year in the Chinese calendar, which differs from the Gregorian calendar. It is also known as the Spring Festival or the Lunar New Year. Because it depends on the moon, the date of Chinese New Year actually changes each year, but it will always fall some time between 21 January and 20 February, this year it falls on 5th February. Every year is represented by a zodiac animal sign and 2019 is the year of the Pig. It is China’s most important festival and holiday time.

How it effects manufacturing

The official government holiday is only one week, however that is not relevant. As an acceptable rule of thumb, most service oriented companies in international trade industry like sourcing, quality control, logistics, etc. would close for roughly 2 weeks. While the official holiday only lasts for around a week to ten days, most factories are closed for an entire month. Typically, Chinese offices and factories close for about three working weeks, allowing workers time to travel back home to spend the holiday with their families.

As if the rush to get your shipments in time for Christmas is not enough, you now have to make sure that your goods are ready well before your supplier close the shop for CNY 2019. During this holiday, all factories are shut down. Without exception.

In some industries, this can cause a turnover rate of 30%, causing a massive headache for factory owners. The other balance is labor wage increases. Many factory workers expect a significant pay increase the longer they stay at a factory. If they don’t get a increase in pay, they’ll be more willing to jump ship to another factory, often bringing along trade secrets from their previous factory.

Another factor affecting the length of the holiday is whether the worker is from a far-off province or from within the same or nearby province. The latter may leave a bit later while the former group would try and get on an earlier train.

What should foreign importers do?

You should have your products ready for shipment ten days before the official public holiday. Otherwise, there is a high chance that you won’t be able to ship your goods until the end of the holidays. Increase the order quantities on your last few orders that will ship before Chinese New Year. Padding your inventory before the holiday will also help you avoid potential backorders if post-holiday production is delayed or affected by serious quality issues.

Conclusion

Advanced planning is necessary to make sure you have enough inventory to last a few extra weeks because it is next to impossible to get any product out of China during this time.

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