If you are sourcing products from China, there is one big holiday you need to be aware of and plan around – Chinese New Year.
It’s a really fun time of year if you’re Chinese since it’s your longest holiday; but if you’re into sourcing and production for Amazon, then it can be a very challenging time. The purpose of this blog is to help you best navigate through that!
To give you a quick background on Chinese New Year, it is a different date every year as they follow the lunar calendar. The upcoming new year date will fall on February 12th, 2021 and this year will be the year of the Ox.
The 2020 CNY was January 25th, which is why you need to check each year as they can be quite different in relation to when your factories will be off work and your production inevitably comes to a halt.
Every year has a different animal, with 12 different animals in total.
If you want to check which animal you are, Google the year you were born and “Chinese animal” or consult a diagram like the diagram below:
Some quick meaning behind the Year of the Ox (2021):
This year is going to be lucky and also perfect to focus on relationships, whether we are talking about friendships or love. In the Chinese Zodiac, the Ox is very hardworking and methodical.
So in the year of the Ox, let’s dive into it.
The Top 5 Things Sellers Need to Stay Ahead of Leading up to Chinese New Year
1. Check Capacity of Your Factory:
The first thing you should do is email your contact at the factory and ask them two questions:
1) When is the office closing for CNY? 2) When is the factory closing for CNY?
The two dates are different as the office is only likely to be closed for 7-10 days as they are quite often local workers from the city. However, CNY is the largest people migration in the world with over 100 million people traveling across the holiday period. Factory workers often ‘migrate’ to their place of work from another province.
For their CNY holiday, it is common for factory workers to take between three and four weeks off for a holiday. This means that no goods can be produced during that time.
This also causes a backlog of orders prior to CNY and a delay in lead times after CNY. So… a one month holiday can result in up to a 60 day halt in production of your goods if not managed correctly.
Once you know the dates the office and the factory will be closed, you want to ask your sales contact:
‘What is the latest date I can place an order to still get shipment before CNY?’
It’s also important to note, whatever date they tell you… add another 15-20% on top of that as there are always delays around CNY. Nothing ever goes smoothly as sometimes workers pack up and leave early, which manufacturers cannot plan for.
Once you have your dates, don’t just take their word for it, check in during the production process to make sure everything is on schedule. The last thing you want is an email right before you were expecting your goods to ship saying sorry we can’t make this one out before CNY.
To summarize, we need to have written dates from our manufacturer for:
1) The date the factory workers finish work
2) The date the office closes and reopens
3) The last date I can confirm order to get shipment before CNY
2. Avoid This Time to Produce, if You Can
Now, I don’t mean to be negative, but whenever I have ever had quality issues with an order (it doesn’t happen often), it happens on goods which have been produced right before the Chinese New Year.
This is purely because workers are excited and in a rush to go back home, so the sooner they can finish their orders, the sooner they can go home. As a result, they rush their orders and can sometimes take “shortcuts.”
These shortcuts are where mistakes happen if the factory doesn’t have strict quality procedures in place.
To protect yourself against this, it’s very important to do pre-shipment inspections. You should be doing this for all orders anyway, but it’s critical to do this on all orders shipping in January or February.
Because factories’ capacity can also be an issue with a backlog of orders, they can raise their prices as a result of the demand. So if you haven’t locked in your prices and are getting fresh quotes, you may pay a higher price than normal because you are producing in their ‘high season.”
Finally, there can also be quality problems after CNY. Often, different workers return to the factory, a large majority of whom are new, have never made your type of product before, and need to be trained.
Pre-shipment inspections are super important for orders after CNY as well.
3. Double Check Freight Forwarders’ Capacity and Pricing
As a result of the increased volume of orders going out just before CNY, shipping companies experience an increase in demand for transport containers. Because freight forwarders’ pricing is dictated by supply (available cargo space on shipping vessels) and demand (number of containers being booked for shipment), this is typically the most expensive time of the year to ship goods.
Before confirming any orders with your supplier, it’s best to double check the pricing for shipment from your freight forwarder too. If the price is significantly higher than what you’re used to paying and negatively affects your profit margins, you may want to consider shipping your goods after CNY when the prices come down.
If your goods are already complete, this is where having a stellar relationship with your supplier comes in. You may be able to utilize their factory for free storage and then ship out once the shipping prices stabilize.
In addition to shipping prices, Amazon warehouse and 3PL storage are becoming full and expensive as well, so it’s best to check with your chosen fulfillment company if they can even take your order at that time.
Now, if you have to ship your goods because you are running out of stock, then go for it. I only bring up these points in case you have a choice and your goods are not urgently required.
4. Do You Send a Gift to Your Supplier for Chinese New Year?
Luckily for us, Christmas comes before CNY. Why is this beneficial? Well, we can find out if our supplier sends us a Christmas gift before deciding if we should be returning the favor.
If you would like to send a gift (regardless if they send you one), I would suggest sending something that resembles your hometown. For example, a t-shirt from your local sports team or perhaps your town is famous for hot sauce or local tea and has merchandise to reflect that. These kinds of gifts are all greatly appreciated, as they resemble where you are from. It has meaning to you and to your supplier.
It’s not essential to send a gift, however it is important to wish them a happy Chinese New Year of the Ox. This can be via a physical card, an e-card, or even a custom-created graphic in an email footer so they can see it on each correspondence.
In addition to sending a gift or well wishes, now is also a perfect time to build on your relationship with your manufacturer. This can be achieved by communication through the WeChat application. You can ask your contact:
Are they are excited for the upcoming CNY holidays?
What are their plans?
Do they have a big family?
What type of food will they be eating?
Can they send you photos and videos so you can see?
This will go a long way to strengthen your relationship and may result in meaningful benefits for 2021.
5. Forecast Orders
Based on all of the above info, the best way to prevent potential quality problems, delayed orders, higher costs, and inflated shipping prices is to plan ahead and give your supplier a forecast of your orders at the start of the year.
Depending on if your items are seasonal, you may want to give your supplier a forecast order at the start of 2021.
A forecast order is how much you anticipate you are going to order over the course of the year.
It is not a commitment but a forecast. If you have been doing business with your supplier for at least one year, then they know if your forecast is accurate. If so, they will be inclined to support you (based on that good relationship you’ve built) and book your production slots for the year so that your items will be manufactured in those designated times, therefor avoiding the CNY rush.
For example, you could say…
“We forecast we will order 2,000 units in March, June, August and October. Please save us the designated production slot to manufacture our orders with your production line manager and we will try to confirm the exact order quantity closer to the time. It could be a slightly lower or slightly higher volume than we projected, but we greatly appreciate your support in guaranteeing our production slots.”
Wishing you all a great year of the Ox! If you would like to see a video on this subject as well as other best sourcing practices be sure to check out my Amazon sourcing playlist on YouTube.