The Chinese Lunar New Year (CNY), or the Spring Festival, is the biggest holiday for the Chinese people. For those who are unfamiliar, this event is similar to Thanksgiving or Christmas in the United States or Diwali in India. It is a week-long holiday during which most employees have time to spend with their families and friends.
But what sets Chines New Year apart is the massive scale of celebrations. Over 500 million workers travel across the country to visit their hometowns, making it the "world's largest human migration." While the Chinese New Year is only a week long, most businesses will be reeling from the sheer volume of demand for several weeks after the event. Chinese New Year, unlike Christmas, changes from year to year. As a result, companies that source their products from China must be aware of the exact dates of the holiday. The Chinese New Year will begin on January 22, 2023.
Chinese New Year Production Time
"Production Timings" are frequently longer during the Chinese New Year period, especially "after" the holiday due to the influx of orders. Even before the holiday, however, the time required to produce the goods is frequently longer, as most importers, particularly experienced importers, tend to buy more in order to "Stock Up." The following factors may influence how far your production timings deviate from the norm:
Factory Experience and Production Planning Skills:
This is one of the most important factors that distinguish well-organized factories from others. Delays during this period can be significantly reduced with good production and raw material procurement planning.
Factory Order Book:
This is difficult to predict for an importer, but delays are also affected by the size of the factory's order book during this time period.
Components/Raw Materials:
Complex products with a large number of components or raw materials have longer lead times, especially after the Chinese New Year holiday, because component suppliers' own orders are piling up. The complexity of the manufacturing process is also a consideration.
Defect Rate & Factory’s Attitude towards Defects:
The "defect rate" and the factory's attitude toward defect repair can both have an impact on production time. Factories that have good quality control and a long-term commitment to quality will spend extra time reworking the defects. The defect rate is naturally higher during this time.
Factory's financial strength/cash flow:
Factories with good "Cash Flow" are often able to purchase their key raw materials before the holiday begins, allowing them to begin production not only for orders paid for prior to the holiday but also for orders received during the holiday period. This means that the raw material suppliers' delays can be avoided.
Factory/Warehouse Size:
Large warehouses are not considered necessary in the "Just in Time" manufacturing world. However, factories with large warehouses and "standardized products" have a much easier time dealing with this period because they can store raw materials and, to a lesser extent, goods (in the case of standardized products) where they are certain of expected demand.
Order Prioritization
Beginning two months before the Chinese New Year holiday, buyers frequently put pressure on factories to ensure that their goods leave China before the holiday. This is not always realistic, but factories may be hesitant to refuse new orders and thus may promise delivery before the holiday.
The majority of good factories are upfront about their ability to deliver goods on time, but there are always exceptions. Furthermore, some factories may intend to deliver the goods on time when they accept your order, but may then have to delay production of your order due to a large urgent order from one of their "higher priority" buyers.
In reality, factories would put goods on the production line "first come, first served," but this is the least important factor. Among the factors influencing the factory's order prioritization are:
New Vs. Repeat Buyer
Factory owners would frequently prioritize "repeat buyers" over "new buyers." This is where having an existing relationship with the factory comes in handy.
Purchasing Power
The buyer's purchasing power may influence when their goods arrive on the production line where deadlines are tight. Large buyers are always given priority.
On the ground presence
If a buyer has a local presence on the ground, either through the company's buying office or through a third-party company representing their interests, it aids in getting their goods on the production line sooner by ensuring that pressure is maintained on the supplier through regular follow-ups.
Relationship with the manufacturer
While not as important as some of the other factors mentioned above, the relationship with the factory can often be a deciding factor when a Chinese manufacturer has to choose between two orders that are otherwise similar. Chinese business culture is based on relationships, and all those dinners and KTV sessions with factory bosses pay off at this time of year.
Factors affecting Product Quality
Most quality issues arise just before and after the Chinese New Year. Some of the reasons for this include:
Lax Internal Quality Control:
During this period, buyers put pressure on factories to meet production deadlines, while workers try to maximize the amount of money they can take home. This is a risky combination because it frequently results in lax internal quality control.
New Workers:
Following the Chinese New Year holiday, a large proportion of factory workers may not return to the original factories for which they worked. Factory workers in China frequently shift between industries. As a result, many of these workers will be insufficiently trained to manufacture the products, resulting in quality issues.
Subcontracting:
To meet peak demand, some larger factories subcontract manufacturing to smaller factories. This can cause serious quality issues because smaller factories typically do not have the same quality assurance systems and processes in place as larger factories.
Unresolved Detected Quality Issues:
Due to the aforementioned issues, issues are frequently discovered during the "pre-shipment inspection." However, there is insufficient time to address quality issues because doing so would necessitate delaying shipping until after the Chinese New Year holiday. In such cases, the client must choose between accepting "quality issues" and being without stock for an extended period of time. Unless there are major quality issues, buyers almost always chose the former option.
Businesses can avoid disruptions and keep their operations running smoothly by having a plan in place.
If you're looking for a sourcing company to help you prepare for the Chinese New Year shutdown, JOG International is here to help. We have a good relationship with our Chinese suppliers and sources, so contact us today for a less hectic start to 2023!
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