Chinese New Year, also known as the Lunar New Year or Spring Festival, goes beyond cultural festivities for Asian communities. Increasingly, it is emerging as a focal point for marketers across the globe.
This year’s celebration starts on February 10th to February 17th, 2024. Preparations for the holiday typically begin three weeks before the actual holidays, and the celebration activities will usually last until the Lantern Festival on February 24th, 2024. This Year of the Wood Dragon, enterprises have the opportunity to align actively with the symbolic attributes of strength, power, and success.
Beyond its cultural importance, this annual event significantly impacts the economy through a widespread shutdown known as Chunyun in Asian nations. This closure, known as the world’s largest mass migration, temporarily slows down economic activities as offices and factories close during the festivities, putting pressure on transportation systems and affecting e-commerce businesses internationally.
Reports revealed about 1.595 billion passenger trips during the 40-day Chunyun period from January 7 to February 15, 2023, marking the most substantial migration in China in the past three years. This presented positive implications for the country’s economy.
China downgraded its COVID-19 management from Class A to Class B starting January 8 in the same year, unleashing heightened demand for family reunions, tourism, and sightseeing during the first Spring Festival after the change, leading to increased trans-regional movement. Before the pandemic, the Spring Festival travel rush in 2019 recorded a total of 2.98 billion passenger trips.
How the CNY shutdown affects the supply chain
The Chinese New Year (CNY) shutdown consistently and significantly impacts the global supply chain, affecting manufacturing and international trade. During this period, factories often pause or reduce production due to a reduced workforce, and some businesses opt for a complete holiday shutdown.
Given China’s crucial role in global exports, the effects of the CNY shutdown have a worldwide impact, which may intensify this year due to ongoing global supply chain turmoil since the pandemic. Cross-border e-commerce businesses experience massive downtime as a result.
Here’s a timetable for the anticipated Chinese New Year 2024 and how it affects business operations:
- Early to mid-January: Factories begin to slow down production.
- January 18 – 25: Businesses suspend manufacturing and operations, leading to a surge in shipments from major Chinese ports as they rush to transport goods.
- January 26 – February 9: Employees start to leave for the holidays, resulting in limited operational capacity at ports. Logistics activities start to wind down.
- February 10 – 17: Chinese New Year is observed. Factories are businesses are closed.
- February 27 onwards: Workers gradually return to factories and operations resume, returning to normal.
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What happens to e-commerce businesses during this critical period?
The Lunar New Year, akin to Christmas in Western countries, brings prolonged festivities in China. As a global economic powerhouse and a major trading partner, China contributes over 30% to the world GDP, surpassing the combined impact of the US, Japan, and the Eurozone.
Being the world’s largest exporter, a complete shutdown during the Chinese New Year significantly disrupts the global supply chain, affecting businesses importing goods from China. During the holiday, government, construction, and manufacturing cease operations for a week, with minimal staffing at ports and customs, except for perishable commodities.
With the CNY holiday lasting approximately two weeks, during which many B2B businesses and manufacturing facilities face prolonged production times due to a reduced workforce, lead times for those relying on Chinese suppliers, manufacturers, and logistics services, are significantly affected.
Here’s what happens to businesses during this slowdown:
Production impact
Manufacturing operations often experience slowdowns and potential complete shutdowns during the CNY. As a result of the reduced workforce, production times are extended.
There is a potential scenario where employees may not resume work immediately or, in some cases, may not return at all following the holiday period. This situation forces factories to quickly replace them, leading to lower quality outputs from untrained staff on the production line. This possibly results in products failing to meet the expected standards.
Factories may not be able to remake the subpar products due to time constraints. In some cases, they may ship them along with the rest of your order, leading to extra costs if urgent replacements are required.
Logistics and shipping challenges
Businesses rush to fulfill orders before factory closures, resulting in a high volume of shipments needing to be dispatched before the holiday. Early departures by workers exacerbate potential delays. In addition, increased drayage and trucking costs along with possible flight cancellations, can further disrupt transportation and logistics.
Difficulty maintaining sufficient inventory levels
Effectively managing inventory can be challenging during the Chinese New Year (CNY) shutdown. To address this, consider the “days of stock” metric. This indicates the desired duration for inventory availability. This metric also plays an important role in forecasting demand accurately.
For example, if your usual stock duration is 14 days and your manufacturer shuts down for 30 days during CNY, adjust it to 30 days for those four weeks. This ensures enough inventory to cover the extended downtime and prevents disruptions.
Businesses can make informed decisions and maintain adequate inventory levels throughout the period by factoring in the CNY closure.
Communication and prioritization
The reduced staff and limited working hours during CNY pose communication challenges for businesses dealing with Chinese suppliers. Order prioritization, which is influenced by factors like client relationships and product nature, adds complexity to the supply chain.
Potential delays from order prioritization stress the delicate balance in supply chain management that businesses need to maintain. The impact varies with product nature, market demand, and overall supply chain flexibility. These challenges highlight the necessity of navigating supply chain intricacies for resilience, particularly during critical periods like CNY.
Global supply chain disruptions
Global supply chains are significantly impacted by the CNY shutdown, which extends beyond China. One notable effect of the shutdown is the occurrence of blank sailings in ocean shipping, leading to a reduction in transportation options.
Businesses, being aware of the shutdown, often rush to fulfill orders before factory closures, resulting in an overload of shipments. This rush, combined with the likelihood of workers leaving early for the holiday, can cause delays in deliveries due to the increased volume and reduced workforce.
In response to the challenges presented by the pandemic, businesses prioritize resilience by implementing proactive measures. This includes developing contingency plans and establishing robust inventory planning processes to mitigate potential disruptions in their operations.
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CNY shutdown survival checklist: Before, During, and After
The holiday can, of course, disrupt your operations – but only if you allow it to. The key to overcoming and optimizing this annual downtime is effective forecasting and proactive planning before, during, and after it.
Ensure you are well-prepared with the necessary knowledge and initiatives to initiate a successful business year during the Year of the Wood Dragon using this checklist:
Before suppliers shut down:
- Discuss anticipated shutdown and return schedules with suppliers.
- Inform customers about the temporary shutdown and expected reopening dates.
- Plan strategically for post-CNY production competition and logistics.
- Place Purchase Orders (POs) for raw materials in advance.
Quick insights:
Think and plan ahead. Engage suppliers in conversations about their planned closure and reopening, acknowledging potential variability. This ensures a tentative timeline for post-CNY communication.
Efficient, transparent communication. Before CNY, communicate with customers by sharing expected supplier shutdown and reopening dates. Review product demands and start planning for post-CNY purchase orders.
Estimate inventory needs and plan orders in advance. For a production scheduling advantage, place raw material Purchase Orders (POs) before CNY. Waiting may lead to competition for both raw materials and production capacity.
During your suppliers’ holiday break:
- Strengthen customer ties. Reconnect and discuss future projects.
- Plan post-CNY orders, visits, audits, and new products.
- Use your flexible schedule for in-house tasks, team engagements, and projects.
Quick insights:
The CNY shutdown can be a very quiet period for most businesses, putting employee interactions and production to a halt. Take this opportunity to focus on building relationships with customers, discussing future projects, and generating innovative ideas.
Utilize the flexibility in your schedule to revamp projects and connect with your business team. Backtrack and complete overlooked tasks, prepare for the year ahead, update inventory, and stay engaged and productive.
Stay engaged and be productive. Prioritize communication and employee engagement to maintain motivation and achieve business goals.
Upon their return to work:
- Conduct post-CNY product inspections and supplier audits
- Schedule meetings/visits with suppliers
- Execute production schedule for the upcoming year
- Maintain the same level of product quality and supplier performance post-CNY
Quick insights:
Scheduling visits and inspections enable businesses to uphold product quality standards and ensure that their suppliers remain accountable. Additionally, engaging in meetings with suppliers post-CNY allows for open communication, alignment of expectations, and an opportunity to stay updated on their operations.
Related: The B2B Marketer’s Survival Guide for Black Friday and Cyber Monday
Unlock opportunities in the CNY lull: Partner with a reliable lead-generation provider
The annual Chinese New Year (CNY) shutdown presents significant challenges for suppliers, resulting in delays and disruptions to e-commerce operations. To ensure business continuity, it is crucial to implement proactive planning, early ordering, effective inventory management, and maintain open communication with suppliers.
However, for enhanced effectiveness in navigating the CNY shutdown, businesses can consider outsourcing and collaborating with a trusted lead generation services provider such as Callbox. Renowned for our expertise in the APAC market, we possess extensive knowledge in lead generation and in-depth familiarity with the diverse market.
Here’s how lead generation service providers like Callbox can support e-commerce businesses and help the supply chain survive during the said seasonal downtime:
- Multi-touch, multi-channel lead generation: Callbox helps maintain your online brand presence and enables lead generation across various channels like website forms, social media ads, emails, chatbots, or even telemarketing – depending on your target audience and preferences. This prevents a complete pause in engagement and captures potential customers who might be browsing during the shutdown.
- APAC-centered expertise: As an APAC-centered lead generation services provider that has been in the industry since 2004, Callbox has decades of experience working with e-commerce businesses during CNY shutdowns, understanding the unique dynamics and consumer behavior during this period. This can translate into tailored campaigns and effective strategies.
- Market research and analysis: Callbox conducts thorough market research to provide valuable insights into consumer trends, preferences, and behavior during the CNY period. This information assists e-commerce businesses in making informed decisions about their products, marketing strategies, and target markets or audiences. By aligning their operations with market demands, businesses can optimize their supply chain and maximize sales opportunities.
- Post-CNY planning and strategy development: Callbox can help companies formulate strategic plans for the post-CNY period. This includes activities such as identifying priority markets, gaining insights into customer needs, and devising targeted campaigns to generate leads and boost sales once operations get back to normal.
- Streamline operations and efficiency: By leveraging Callbox’s proficiency in lead generation, e-commerce businesses can streamline their operations and achieve heightened efficiency in this “quiet time”.
This involves refining order processing, reducing lead times, and enhancing resource allocation. Operating more efficiently enables businesses to effectively manage inventory, minimize delays, and maintain a seamless flow of products during the shutdown period.
Callbox’s APAC region-centered expertise enables us to understand market dynamics, customer preferences, and cultural nuances specific to the region enabling us to craft highly targeted telemarketing and lead generation strategies for maximum effectiveness, even in the CNY shutdown.
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