The Chinese New Year (CNY) is often overlooked in the United States, but if your business relies on Chinese shipping and manufacturing, you need to prepare for the upcoming shutdown in China to avoid delays that could be catastrophic to your businesses. Fortunately, this article on the How to Prepare for Chinese New Year 2021 has everything you need to keep your business in stock in the year of the ox!
CNY 2021: Chinese New Year Business Preparation
Chinese New Year (aka the Lunar New Year or the Spring Festival), is the is the most anticipated and celebrated holiday season in China, and many parts of Asia. This public holiday typically falls sometime between January 21 and February 20 annually, and comes with seven days off of work for all employees.
Manufacturing plants close; shipping and transportation slows, and everyone goes home for several weeks. The business halt in China, Hong Kong, and across Asia has major repercussions on North American businesses that are not prepared for the resulting manufacturing and shipping shutdown.
What to Expect from Chinese New Year: CNY 2021 Timeline
Chinese New Year 2021 begins on February 12, and runs until February 22. So, you can expect Chinese suppliers to slow down or halt production a week or so before. The resulting factory shutdowns in China typically lead to weeks of mass demand in the U.S. from businesses stocking up on inventory before the manufacturing shutdown, and making up for two weeks worth of delayed overseas shipments.
Though many of us have worked through Chinese New Year shutdowns before, few of us have experienced a CNY shutdown during a pandemic. This year it’s important to note the challenges COVID-19 will add to the CNY shutdown, and the possible unexpected consequences it may have on the global supply chain.
Chinese Production Halt
As stated, the Chinese New Year is a public holiday in mainland China, Hong Kong, and many countries in Asia, including the Philippines, Singapore, South Korea, Vietnam, Indonesia, and Malaysia.
You can expect factories to close and employees to go on holiday for at least two weeks, including management, transportation planners, and production overseers. You can also expect production to come to a halt, and for communication to go unanswered until after the holiday ends.
Increased Shipping Delays from Asia
Chinese New Year shutdowns happen every year, so most businesses prepare for supplier delays by increasing their production before the holiday. This practice is prudent strategy, but it also leads to an overload of shipments that need to ship prior to the holiday.
As in the U.S., many Chinese workers will be leaving early to get a head start on their holiday, meaning fewer available employees, and a significant chance that your shipment will be delayed in the buildup to the holiday.
Regional COVID-19 Shutdowns and Restrictions
The world has been dealing with the COVID-19 pandemic for more than a year, but CNY 2021 will be the first Chinese New Year shutdown in which Coronavirus lockdowns will be an additional challenge.
As of this writing, there are multiple Coronavirus lockdowns in mainland China, parts of Asia, and Southern California, the nation’s primary gateway for ocean trade with China. Exacerbating the issue is the ongoing delay at the Port of Los Angeles, where container dwell times now average more than five days.
Though it’s hard to predict how and when COVID-19 will affect your business, it is possible to navigate the uncertainties that the pandemic brings, and strengthen your supply chain prior to the Chinese New Year shutdown.
5 Ways to Prepare Your Business for Chinese New Year 2021
Knowing that you need to prepare for the Chinese New Year is half the battle. Now all you need to keep your business running smoothly is to follow through on these preparations.
Understand the Timeline
Chinese New Year officially begins on February 12, 2021. It is critical to understand exactly when your suppliers will close and reopen, and when they will stop accepting orders in advance of the shutdown. One supplier closing a few days earlier than expected could result in an unexpected and early shutdown for your entire supply chain.
Though February 12, 2021 is the date of the Chinese New Year, suppliers begin to shut down operations up to a month in advance. Best practice dictates that you ask your suppliers about their CNY production schedule, shipping lead times, and when their offices and will be closed. Below is a geneal timeline for the 2021 Chinese New Year holiday.
- Late January – Chinese suppliers begin to slow down production.
- Early February – Employees with Chinese suppliers begin to leave for the holiday.
- February 11 – All employees have left the factory.
- February 12 – Chinese New Year.
- Late February – Employees with Chinese suppliers start coming back to work.
- March 4 – Most employees have returned. Production starts again.
- March 11 – Operations at Chinese Suppliers are back to pre-holiday norms.
Try to Get Ahead of Schedule
Now that you know this years Chinese New Year schedule, you can try to get ahead of it. Start by placing orders in advance, and using strong metrics to ensure adequate supply.
Don’t forget, many companies are planning advanced orders, so pre-CNY holiday manufacturing activity is intense. It’s best to allow for a two or three-week buffer between the production end date, and the date your supplier plans to close for the holiday.
Just in case the delays are worse than expected, it’s best to build up a surplus of inventory before the holiday hits. Focus on your most popular inventory, and items that are less popular but have the potential to run out quickly.
Coordinate With Your Supplier
Consider that most suppliers in Asia have successfully navigated the Chinese New Year shutdown multiple times the past, and have a plan to navigate it in the future. Thus, it’s a good idea to talk with them openly about potential problems, and alternative options.
Consider Alternate Supplier Locations
For those businesses with a diverse supply chain network, the Chinese New Year would be a great time to switch production of certain inventory items to an alternate location that is less affected by the CNY shutdown.
One way to diversify and strengthen your supply chain network is to contact Flowspace.