10 Strategies for Avoiding Chinese New Year Disruption •
Spring festival or Chinese New Year is the most prominent time of the year for Chinese festivities. Consequently it’s a time when Chinese and global supply chains are disrupted and there is a need for strategies for avoiding Chinese New Year disruption in manufacturing.
Despite being a weeks holiday in China, the delay in factory output for China based manufacturers, partners and suppliers, can last for up to a month. Over this period, virtually everything closes down including the offices, ministries and factories, as well as customs and ports who usually work with less staff. Because of this, organising your orders over this year’s Chinese Spring Festival could be extra challenging.
As with European Christmas holiday, Chinese Spring Festival happens annually and there’s no way to dodge it. However unlike Christmas, Chinese New Year falls on different dates, therefore extra contingencies need to be planned for to ensure you have the sufficient stock.
We are fast approaching Spring Festival, and a reminder to our customers and contacts that Chinese New Year falls on 1st Feb 2022, and the most of our suppliers are already in the process of scaling back their output as they prepare for the holiday.
The majority of factories are expected to return by 10th February
Supply Chain Planning: Chinese Spring Festival 2022
1. Try not to make last minute plans – think about lead time Spring Festival often represents the busiest time of year for factories as they try to get ahead on orders, and goods out and shipped. It is essential to be know the lead times associated with your product. Try not to leave organising the break in production to the last minute during Chinese New Year. This makes the logistics a more stressful operation. If you’re unable to get your order made in time, be aware that quality may start to dip if delivery time is reduced.
2. Understanding your Supplier
Larger suppliers tend to have a more regimented work arrangements when compared to smaller suppliers. Small manufacturers offer their workers greater flexibility and longer holidays.
Another factor to consider is the impact of certain services that are supplied by small companies. Examples could be tool making or surface finish companies – such companies will often close for longer periods, and can have significant impact on new product development.
4. Labour shortages
A common problem for factories is losing workers over the holiday. It is important to understand that this can have an impact on production and potentially quality as new employees are trained up.
5. Post Chinese New Year planning Try to not only organise for the period just before Chinese New Year, but for the time afterwards, as the knock on effects of Chinese New Year might well have knock on effects until Easter. To make sure your company has enough stock it’s a good idea to create a plan of existing, future and possibly unexpected business orders.
6. Check your inventory for avoiding Chinese New Year disruption in manufacturing: Ensure your inventory is optimised with the right factories, alongside organising the a plan to ensure you can meet supply options that meet your supply chain forecasts.
7. Be aware of production: Keep a good eye on your operations over the Spring Festival break as well as beyond it, because it sometimes it takes time to get back to normal.
8. Create rock-solid logistics: Try to book shipping earlier: everyone will try to get goods shipped pre the SF to avoid the long break. As a result, booking a boat becomes extremely difficult under the current circumstances
- Both air freight and sea freight rates have spiked. The World Container Index has increased by 1% which makes 40’ container US$9,409, which is 80% higher than the same time in the last year
- The world 3 largest shipping alliances have suspended or are going to cancel 44 voyages from Week 2 to Week 5, which will only make the situation even worse
- Although ports are still open, current restrictions such as mandatory quarantines and testing continue to slow down transport and causes delays. For urgent orders, make sure you have created an alternate logistical plan, either by using air freight, sea-air, ship to rail or other ideal combinations.
- Work with a reliable local logistic partner, for example; one supplier asked a local shipping company to deliver the goods to the port, but the driver did not want to queue and did not make it before the deadline, as such, the boat was missed.
- Always make backup plans when choosing the sea ports or air ports, or even shipping lines
- Manage customer’s expectation on delivery time: warn them of the true situation or potential delay in advance:
9. Maintain Strong Relationships: Attribute extra hours and support helping to maintain rock solid relationships across the company infrastructure with your Chinese logistics partners and factory suppliers. Strong relationships will allow you to help negotiate better contracts, deliverability and order size over the long run. Strong relationships are an essential part of business in China, and could be crucial in whether your goods leave before or after a holiday. For avoiding Chinese New Year disruption in Manufacturing ensure you have those relationships, because if you don’t and others do – you will be waiting.
10. Covid & The Winter Olympics
Whilst workers are free to travel back to their hometown’s, there is no guarantee they will be able to get back, and we know many people are not travelling this year. With covid circulating in China, this could well lead to a significant increase in factory closures and we have been advising all customers to schedule long term orders to manage this. In addition to covid, the Winter Olympics could have an impact on power allocation to factories in the region further extending the downtime.
According to Chinese zodiac, 2022 is the year of the Tiger, and it belongs to the Water year based on Chinese Five Elements.
People born in 1938, 1950, 1962, 1974, 1986, 1998, 2010 or 2022 belong to the Year of the Tiger.
The Tiger is a natural born leader and can rise to the top of their workplace; they do still need to work hard to achieve this though and it does not come to them just by sitting back and doing nothing. They are not interested in any professions that are too bureaucratic or technical and do not like to obey orders. Tigers can be very stubborn and pigheaded.
Chinese New Year is February 1st, 2022.
Xin nian kuaile! (新年快乐! )
Gong xi fa cai! (恭喜發財! )
We’re really look forward to more global normality for 2022!
For more information on product manufacturing and supply chain management – call us on: 01225 460 388 or find out more by emailing email@example.com