As we fast approach Spring Festival, we’re just reminding our customers and contacts that Chinese New Year falls on 22nd January 2023. The majority 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 the 5th of February at the latest.
For those new to business in China – here are some key points to take into consideration:
Chinese employees tend to only enjoy holidays specified by the state, and the only flexibility on holiday comes with Spring Festival. This is the big holiday of the year, and most people aim to get back to their ‘hometown’ and celebrate with family and friends. Everything closes, and you will need to plan around it and well in advance.
Spring Festival is a traditional time when debts are paid off, and also when company bonuses are paid. Whilst we would always encourage a strict adhearance to payment terms, it is very imporant that all scheduled payments due just before the holiday are paid – and ideally some pais slightly early as a gesture of good will. This is not a time to delay payment and will impact any relationship you are trying to develop.
There can be a lead time impact for the unprepared. Check your stock levels well in advance, and be aware of the impact if a supplier is unable to complete an order scheduled pre-holiday. This is not a time for last minute orders.
Whilst freight costs have been declining in recent months (from massive highs in 2022) freight rates can spike just before holiday, so be prepared to pay more just before the holiday.
There can be a significant difference in closure times, with smaller factories tending to provide more generous holidays than the larger more established companies. As such, it is vital to ask and not assume the dates your supplier will be closed.
Understand the impact of sub-contactors on your product. Once again, these can often be smaller companies and will offer their workers longer holiday – as such the lead time impact might be significantly more than the dates advised by your supplier. Think carefully before trying to make a short term change in supply chain partners to compensate for this.
With many workers heading back to their hometown’s there are always a proportion of employees that decide not to return to their jobs and this can have an impact on production re-starting. Be aware this could have an impact on lead times and is another reason to plan ahead to avoid excess pressure on new employees leading to quality problems.
It is strongly advised to avoid any visits to China close to the holiday – we would suggest a minimum of 2 weeks before and after the holiday should be avoided. This allows suppliers to focus on production rather than entertaining, and you will also avoid travel issues with every seat taken.
According to the Chinese zodiac, 2023 is the year of the Rabbit – people born in 1951, 1963, 1975, 1987, 1999, 2011 and 2023 belong to the Year of the Rabbit. They are believed to be vigilant, witty, quick-minded, and ingenious and compatible with Goats, Dogs, and Pigs.
If this is your year – bring luck by wearing red underpants… !
For more info on How to Negotiate with Chinese Suppliers for Small Businesses and Product Manufacturing – call uson 01225 460 388 or find out more by email@example.com
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