Can you imagine a holiday where everything—and I mean everything—shuts down for at least a week, sometimes more? Businesses are put on hold, workers travel to be with their family, and celebrations continue for weeks on end?
The Lunar New Year in a Global Retail Context
In the United States, this kind of concept is very foreign, but in mainland China and Taiwan, and much of Asia (including Indonesia, Malaysia, North Korea, Singapore, South Korea, and Vietnam), Chinese New Year, also known as the Lunar New Year, is a time for weeks of celebration. The entire country takes a pause to celebrate with family and friends, enjoy delicious meals, give gifts, and watch colorful fireworks light up the night sky.
Given that China is the world’s top manufacturer of products, retailers must factor in Chinese New Year as a pause in their production schedule. Production significantly slows in January and factory workers often leave weeks before CNY to make it home to families in rural villages in time to celebrate. Factories then completely shut down production for at least seven days. The Year of the Rat will see factories shut down from at least January 24th to January 30th, 2020.
Businesses who rely on China for manufacturing are all too familiar with this disruption. And while it may seem like little can be done to work around this significant break in your production schedule, there are measures that should be taken in order to keep things moving smoothly.
1. Know Your Deadline Well in Advance
Even though CNY is only officially five working days, factories may slow their production up to two weeks in advance of the holiday. Make sure to be in contact with your suppliers to know their schedule and act accordingly. Given an average production time of 30-45 days, place your order so your production starts in late November.
No one likes to say no to business and let a customer down. Your agents, vendors, factories are saying “Yes” to business with you, but usually under certain conditions. Make sure you respect their deadlines if you expect the best outcome on the other side of the holiday closure.
2. Communicate and Collaborate with Your Suppliers
In normal conditions, you may have more flexibility when it comes to exploring different options suppliers might give you. However, when you’re working rapidly to get things in the production schedule before the holiday, it pays to be decisive and clear about what you’re looking for in a finished product. It helps to be cognizant of your suppliers’ competing priorities and deadlines, so if your priorities change, it’s important to keep them abreast of any changes to your priorities as well. Once the factories shut down, they go dark, so all communication should happen throughout the process of getting the orders in and approving and/or rejecting samples.
3. Institute a Quality Control Plan
While CNY is cause for celebration, it’s also a time for high-turnover at those factories. About a third of factory workers don’t return to their jobs. Factories then must hire and train new inexperienced staff, leading to potential quality issues. By instituting a QC inspection plan ahead of time, you have the measures in place to catch quality errors before products make it to inventory.
4. Know Your Risks Before You Place the Order
In the same way that many factory workers don’t return after the Spring Festival, many factories go out of business at this time. Many sources recommend holding your deposit until the factories are back to work due to this reason. In general, given retail’s razor-thin timelines, it’s best to prepare for the worst outcome. It’s imperative for you to go into the holiday being fully aware of what your liability is, your contract’s terms and agreements, and where your orders fall in the production calendar. If certain milestones aren’t met before the factories go dark, you may choose to bump a certain product from a big marketing push or have backup merchandise lined up.
Finally, the Chinese New Year timeframe used to be clean-up time for retailers. Your emails will slow and leave a more time open to set up the coming year for success, so take advantage of it! As long as the world center for manufacturing remains in Asia, businesses will need to plan for and work around Chinese New Year. These four steps will put you well on your way to handling the downtime effectively. For our supplier friends—We’re wishing you a happy and prosperous New Year!