Chinese New Year - how it affects purchases and delivery times

A great celebration - not only in China

The Chinese New Year (or Lunar New Year) is a major holiday in China and many other Asian countries such as Thailand, South Korea, Taiwan, Vietnam, the Philippines and Malaysia. In these countries, it is an important time to celebrate the New Year with family and friends and to take part in traditional activities such as exchanging gifts, decorating the home and shooting fireworks. In 2023, the celebrations will begin on 22 January and continue until 5 February.

Major impact on the supply chain

Factories typically shut down operations for 1-2 weeks and sometimes longer. This has a major impact on global supply chains as China is the world's largest producer of a wide range of goods on which companies all over the world depend. It is not just factory operations that are affected. Transport companies, ports and customs are all working with reduced staffing levels unless they have closed completely. Here are some of the potential impacts on your business:

• Higher costs due to fewer available containers
• Limited support and customer service due to fewer employees on duty
• Delayed deliveries
  

Effects both before and after the New Year

As many importers want delivery before the factories close, bottlenecks occur for 1-2 weeks before the New Year. It is also easy to think that everything will return to normal as soon as the New Year celebrations are over. This is usually not the case. It is common for employers to give employees more time off to travel to their home towns and many factory workers take the opportunity to take an extra week off afterwards. When they return, there is often a substantial backlog that needs to be dealt with. It can therefore take a month or more before production is back up to full speed. 

Plan to avoid disruption to your business

Here are some tips to keep in mind:

• Keep track of your suppliers' average delivery times and plan accordingly
• Analyse sales data from the same period in previous years to plan and order the right quantities in good time
• Contact your supplier and set up a joint plan
• Consider working with more than one logistics partner to spread the risk of problems
• If you use shipping by boat, choose a destination port that has fewer imports and shorter lead times if needed. As many companies are shipping at the same time, bottlenecks may also occur at the destination.

Sometimes a dip in cash flow can make it difficult to pay the supplier earlier than you had originally planned, for example if you want to ensure delivery before the Chinese New Year. In this case, we at Waylog can help by paying the supplier directly, so you pay us once you have received and sold the goods. Contact us if you want more information on how it works.