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Every year, Chinese New Year (CNY) brings a major slowdown across China – almost all factories shut down and shipping disruptions. This can mean significant challenges for businesses that outsource products from China, especially if you are running an e-commerce store. If this Chinese New Year is your first rodeo, let us guide you to keep your supply chain on track while minimizing the negative impacts.
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Big Migration During CNY
Chinese New Year will begin on 28th January 2025 (Chinese New Year’s Eve). Usually, businesses and factories in China close for about three working weeks, which gives our friends and colleagues time to travel back home and spend the holiday with their families.
If you’re trying to picture the scope of the migration movement during the Chinese New Year holiday, Baidu (often called China’s version of Google) put out this cool interactive map that shows the movement patterns around the country. Here’s a look at the migration map from 2015:
Image Source: Baidu’s Qianxi
Challenges During Chinese New Year
1. Factory Closures
Image Source: Bloomberg
Many factories in China shut down for a few weeks during the Chinese New Year, which can cause delays in the production and shipment of goods. This can result in missed delivery deadlines and increased inventory costs for businesses that rely on products made in China.
2. Labor Shortages
Image Source: ThinkChina
A lot of Chinese people take time off during these holidays and even ask for extra days off to travel back home. Hence, there may be a shortage of labor available to load and unload cargo, which can slow down the movement of goods.
3. Higher Prices
Image Source: Darcy Services
Due to high demand and limited supply, suppliers may raise prices. Additionally, the surge in demand for delivery services during this period may lead carriers to increase their rates, taking advantage of the market conditions. As a result, businesses that rely on imports and exports could face higher operational costs.
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4. Limited Stock Availability
With many factories closed during Chinese New Year, the availability of certain products may be limited. It can be hard to plan the inventory if it’s not sure when production will resume.
Tips to Minimize Challenges
1. Stock Up Early to Avoid Out-of-Stock Issues
Before and during CNY, Chinese factories close for a long break, often from mid-January until after the holiday. This means production slows down or stops completely, leading to stock shortages, especially for popular products.
What to do?
- Start ordering earlier in the season—ideally, by early January—so that you can have enough stock to cover the demand during the holidays.
- Talk to your suppliers well in advance to confirm their holiday schedules, and ensure they can fulfill orders before the holiday closures kick in.
2. Prepare for Shipping Delays
Besides factory shutdowns, logistics are also heavily impacted during Chinese New Year. As workers leave early for the holidays, there may be fewer hands to handle shipments, which can lead to delays in your orders reaching their destinations.
What to do?
- Plan your shipments ahead of time to make sure your products are on their way before the holiday rush.
- If possible, consider using different shipping methods, like air freight, instead of relying solely on sea freight during peak times.
- Stay in constant communication with your logistics providers to understand potential delays and manage your expectations.
3. Communication Slows Down
During the CNY period, many businesses in China close their offices and their employees take extended breaks to spend time with family. This means communication with suppliers could be delayed or completely halted for weeks, potentially causing holdups with orders, production, and shipping.
What to do?
- Make sure to have your orders finalized well before the holidays to avoid long delays.
- Keep an open line of communication with your suppliers and make sure they have clear deadlines for when they will resume operations.
- Prepare for slower responses and be ready to adjust your timelines accordingly.
4. Plan Your Promotions Early
Chinese New Year is also a shopping season, with consumers looking to buy gifts or stock up on holiday-related products. This is a great time to run promotions, but it also means your sales could be affected if you’re not prepared for the logistical slowdowns.
What to do?
- Start your promotions early, ideally before the Chinese New Year holiday rush, to ensure you capture customers before the supply chain slows down.
- Make sure your supply chain can meet the demands of your promotions—nothing’s worse than running a campaign and then having to cancel orders due to stockouts.
5. Diversify Your Supply Chain and Backup Plans
Relying entirely on one supplier or one country for your products can be risky during Chinese New Year. A factory shutdown or shipping delay can seriously disrupt your business. To ensure continuity, consider diversifying your supply chain and having backup options ready.
What to do?
- Look for multiple suppliers, and consider sourcing products from other regions or countries in addition to China.
- If possible, consider working with local suppliers in Singapore or other countries that have celebrated CNY (for example, Malaysia, Taiwan, and Indonesia) to avoid potential disruptions from China-based suppliers.
Chinese New Year can pose serious challenges for Singapore businesses that rely on Chinese-made products. From factory shutdowns and stockouts to shipping delays and poor communication, there’s a lot to navigate. But with careful planning—such as stocking up early, communicating well with suppliers and logistics partners, and diversifying your supply chain—you can minimize the impact on your eCommerce operations. The key is flexibility and preparation, so you can continue meeting customer demand even during this critical holiday period.
