How Does the Chinese New Year Impact Your Ecommerce Business?

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Lunar New Year, The Spring Festival, or Chinese New Year, is the most important holiday in China. The festival is also celebrated in Vietnam (where it's named Tet), North and South Korea (where it's commonly called Solnal) and Tibet (where it is known as Losar).

When you manage a business on an international level, keeping in the know about the cultural calendar and key dates for the year is vital to ensuring your supply chain is left uninterrupted. If you fail to prepare for international holidays, your business will see the consequences.

Tied to the Chinese lunar calendar, the holiday began as a time for feasting and to honour household and heavenly deities, as well as ancestors. With the popular adoption of the Western calendar in 1912, the Chinese joined in celebrating January 1 as New Year’s Day.

When Is Chinese New Year?

Chinese New Year falls on a different date each year – the date the holiday begins is based on when the first new moon appears. The start of the Chinese New Year usually takes place between 21 January and 20 February, though celebrations go on over a number of weeks.

This year, Chinese New Year takes place on Tuesday 1st February 2022 and lasts for a total of 16 days, beginning on New Year’s Eve. Traditionally, the festivities end on the fifteenth day with the Lantern Festival.

Chinese New Year is one of the biggest celebrations in the world and is celebrated as so. In China, there is a public holiday that spans over 7 days, beginning on New Year’s Eve. During this public holiday, a lot of individuals won’t be working, returning to work at least a week later.

How long Do Businesses Suspend Operations for Chinese New Year?

While the official public holiday in China lasts for 7 days, a lot of factories actually suspend their operations for anywhere between two weeks and a whole month. This is because many people need to travel long distances to reunite with family, so the factories allow extra time for them to reach their loved ones.

During this travel period, known as “Chunyun” or “The Spring Festival travel rush”, millions of people travel to their family members’ homes. It is the largest annual human migration in the world. During this migration there is an extremely high traffic load in China. This can cause further disruptions to businesses and supply chains.

Suppliers in China begin to reduce, or even completely halt, their productions in the two weeks leading up to Chinese New Year before at least a week’s full closure over the holiday. Even once reopened, they often take a week or two before they’re back up to full capacity.

This means the shutdown for Chinese New Year could affect your business for up to, or potentially over, two months.

How Will Chinese New Year Affect Your Ecommerce Business?

If you work with a Chinese supply chain or manufacturer then this is all very vital information for you.

During the Chinese New Year period, factories, suppliers, and couriers will all become unreachable, and production and shipping will come to a standstill, meaning you won’t receive any orders during this time.

Established factories try to fulfil demand as much as they can before they shut down for the holiday. However, it is usual practice that some shipments end up getting delayed until the reopening of factories.

You’d be mistaken in thinking that everything will return back to normal once the factory has reopened. It’s quite common for new employees to be drafted in to help fulfil the high demands in order to get the factories caught up with their orders. It’s also a common time in China for people to embark on a career change and resign from their job in order to make a change for the new year ahead.

What Should Your Ecommerce Business Do to Prepare for The Chinese New Year Shutdown?

It’s super important, first and foremost, to anticipate the disruption months in advance.

While the date of the holiday might change from year to year, the same preparations should take place each year to keep your ecommerce business fulfilling orders as smoothly as possible.

Here are some key tips to ensure you are prepared for the holiday ahead:

1. Plan Ahead

As with any major event or occasion, planning is the key to success.

Make sure you know the timeline of events for Chinese New Year and keep a plan for how you will work around the disruptions, so you aren’t caught off guard.

It’s super important to think about any additional orders you may need far in advance and avoid any last-minute orders as these could not only be delayed but could suffer in quality and will likely cost you slightly more, too.

It’s also advised that you don’t put down any deposits in the run up to Chinese New Year. This is because it is a common time for businesses to decide to close for good, so you don’t want to be caught out and stuck waiting for your money to be returned.

2. Check Your Inventory

Good inventory management is important always, but especially during Chinese New Year.

Be sure to keep an eye on your levels of stock and ensure your demand and sales forecast is up to date.

You may need to order additional stock to cover you for the two months in which supply will be affected. This is key to ensuring you don’t miss out on orders and sales. A delay in processing could allow your competitors to gain an advantage. This can also save you money as the demand rockets in the run up to Chinese New Year, and so prices increase also.

This isn’t feasible for everyone as you may have issues with stock storage – if this is the case compare prices of hiring warehouses or using a 3PL to fulfil your orders.

3. Keep in Touch with Your Chinese Supply Chain

Communication will inevitably be difficult once the festivities begin.

In order to prepare, retrieve as much information as possible from your Chinese suppliers and manufacturers. Ensure you know exactly when the cut offs for orders is, when the factories will be closed and the date, they’re due to reopen.

If you have more than one factory or manufacturer within your supply chain, this can make things slightly more complicated. So, again, have open conversations well in advance and arrange your orders before the disruptions.

4. Quality Control is Key

As you now know, it’s common for the quality of products to suffer in the weeks before and after Chinese New Year. If you ordered your products well in advance, this may not affect you.

If you do receive orders in the aftermath of Chinese New Year, be sure to check the quality extra carefully. Sending out faulty products, or products that don’t meet your standards, can seriously harm your brands reputation. It can also cause a huge strain on your business when handling the returns and customer service enquiries.

5. Diversify Your Supply Chain

This holiday is just one example of how relying on just one international supplier can affect a lot of different aspects of your business.

We recommend diversifying your supply chain, so your business is not disrupted in this way. Having a secondary supplier in a different country can allow you to switch production over when your primary supplier can’t keep up with demand.

Can A 3PL Help Your Ecommerce Business Handle Chinese New Year?

There is a whole new host of considerations to make when going global with your supply chain. Chinese New Year is a great example of this.

Third party logistics providers can provide vast amounts of support.

A 3PL can help by:

• Giving you integrated inventory management software to keep a close eye on your stock levels.

• Providing flexible storage space, so you can increase your inventory whenever you need to without the need to pay for a permanent big warehouse.

• Offering competitive freight rates and shortened lead times.

• Providing an efficient fulfilment process – you will never need to worry about your customer’s order fulfilment process as there are experts available to contact at any time.

If you did want to contact a 3PL, we are always happy to help and discuss how we could help your business grow. Get in touch with Cloud9 Fulfilment today!

We look forward to hearing from you soon,

From The Team @ Cloud9 x