If your business imports products from China, or if you work with companies that are reliant on Chinese manufacturing, then you are already aware of the most significant – and disruptive – holiday of the year: Chinese New Year. In 2017, which will be the Year of the Rooster, the new lunar year starts on January 28, and every production facility in mainland China and Hong Kong will shut down for varying segments of time between the end of January and the beginning of March. As people across the region get ready to celebrate and take time off, companies that depend on their work, and their goods, need to prepare.
To understand just how dramatic and complicated the Chinese New Year can be for companies here in the United States, consider that in 2012, China became the largest trading nation in the world, and that in 2015, the U.S. imported more than $498 billion in Chinese goods and services. Now imagine all of that productivity and commercial energy grinding to a halt for several weeks, and in some cases longer.
So what can your company do to get ready? You need to plan on multiple levels, in the areas of production, logistics and even human resources. Some small businesses that rely on Chinese imports should plan their orders ahead so that they can continue to meet customer demand, and then can use the downtime for staff to hold professional development seminars or strategic planning sessions.
Here are some key steps your company can consider.
1. Align Production
It is critical to understand exactly when your suppliers will close and re-open, and when they will stop accepting orders in advance of the shutdown. While January 28th is the official date of the New Year, factories will close at different times. In addition, some will be delayed from their stated reopening date, and will often ramp up operations with limited staff.
2. Order in Advance
Predicting your supply needs weeks or even months in advance is never an easy task, but for the Chinese New Year period, it is essential to be as accurate as possible. To allow for production and transportation, you need to place orders well in advance and use strong metrics to ensure adequate supply. Because so many companies are planning advance orders, pre-New Year manufacturing activity is intense, and delays can occur.
3. Plan Your Shipping Strategy
As production ramps up in China, transportation demands also increase, so you will face growing competition for on-time delivery. In addition, Customs clearance agencies here and in China face mounting pressure in the pre-holiday period. To ensure timely delivery of your goods, it is essential to be able to navigate border clearance requirements. Experienced international logistics and transportation experts can help.
4. Make Your Supply Chain Resilient
A flexible supply chain consists of multiple manufacturing points, resilient shipping options and warehousing that is properly distributed from a geographic standpoint. If your company handles enough demand, you can consider seeking supply points in multiple regions of the world.
5. Plan for Staff Downtime
As mentioned, if you have staff who regularly deal with factories in China, they will have extra time around the Chinese New Year. Consider some unique professional development activities to fill the void.
Do you do business in China? If so, what’s your Chinese New Year strategy? Let us know on Twitter @DHLUS.