Businesses shut down for the Chinese New Year
Any supply chain that involves Asian links, especially Chinese links, is subject to disruption in supply as businesses shut down for the Chinese New Year (CNY).
During the CNY celebrations most Chinese companies remain closed, resuming operation as late as one to two weeks after the specific CNY date. And even after companies reopen, they rarely have enough manpower to produce at full capacity as many employees don’t return to work in time.
For the workforce, however, CNY is a welcome vacation, giving employees a longer break from work than in most parts of the Western world. Chinese normally use their vacation to travel home to spend the CNY celebrations with their families who often live far away. Traveling to one’s hometown can be cumbersome as trips easily take 3 to 7 days by train or bus. With an entire nation on the move, “going home” may quickly become a nerve-wracking endeavor and travelers are advised to prepare for crowded train stations, bus stops and airports. On the bright sight, however, many of the big Chinese cities like Shanghai or Beijing will be less trafficked and main spots in the city center less crowded since most of the locals spend CNY in their out-of-city hometowns.
Western companies with close ties to China are advised to plan well in advance to minimize disruptions in supply and should factor in airfreight or sea freight delays. For those companies which solely rely on Chinese vendors for their inventory, it is necessary to consider one of the following options:
1) Increasing the company’s inventory for the CNY season.
2) Searching for possible (non- Asian) suppliers to be able to switch to a second source for the CNY period.
3) Using up, if possible, older inventory or reduce production altogether.
The CNY period, on the other hand, presents opportunities to boost sales for those businesses which import their products to China. With consumer spending reaching similar levels to the holiday season spending in the US, CNY is quickly becoming a success story for many importers.
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