Chinese New Year 2020: How 1 Week Impacts 5 Months of Your Supply Chain

If you’ve imported from China in Q1 or Q4 before, you’re well aware of the hiccups that come along with Chinese New Year. You know that CNY sends manufacturing and logistics into a frenzy and will undoubtedly affect your supply chain.

In 2020, the Year of the Rat, Chinese New Year starts on January 25th, 2020. Manufacturing comes to a slow halt in the weeks prior, however, production schedules are affected months in advance.

The complications and slow-downs continue weeks after the end of CNY.

The impacts affect importers differently, but it’s always better to plan ahead. Chinese New Year planning is not something you want to put off until late Q4.

Why Should I Care About Chinese New Year?

Although Chinese New Year is only 1 week on paper, the effects are felt weeks before and after.

Every factory throughout all of China, and in some surrounding SE Asian countries, shuts down. 

Every. Single. Factory.

But, that’s not all…

Months Leading Up to CNY

In the months leading up to Chinese New Year, raw materials suppliers will stock up on materials based on previous and current forecasts. That oftentimes leads to a shortage of materials for the factory’s upstream supply chain.

Without being able to purchase the raw materials needed for production, they’ll be very selective with what orders they take on. They’ll prioritize their largest clients and orders and put the smaller ones at the bottom of the queue.

This also happens to be when the demand is the highest of their clients. Going back to Econ 101, if the demand increases and supply stay the same or go down, then prices go up. All importers are scrambling to get their orders to hold them over for CNY.

This spike in shipping demand will also lead to an increase in shipping costs and blank sailings will start in late 2019 / early 2020.

Suppliers will also typically choose to not take on new business as they already have enough on their plate. You may encounter some suppliers telling you outlandish MOQs and/or pricing. This is so they can weed out the smaller companies and those that are just price shopping.

Keep in mind that they typically stop taking new orders about 60-90 days before Chinese New Year, so get your orders in sooner rather than later.

Weeks Leading Up to CNY

Factories start winding down production about 3-4 weeks prior to January 24th, 2020 and their production queues start to get filled out as early as November 2019. 

Once 2020 hits, suppliers won’t typically take on new orders. If they do choose to do so, keep in mind that you run the risk of it not being complete until after they’re back to work.

Production will start to wind down on January 1st, 2020 through January 15th, 2020 and workers will start to leave around January 14th, 2020. Factories will start to shut down when factory workers start to leave, but some stay open with limited staff to complete orders.

By January 18th-20th, 2020 don’t expect your suppliers to respond to your emails. If they haven’t confirmed that production is completed by then, expect it to be complete at the end of February/early March.

Post-Chinese New Year

Chinese New Year may end on January 30th, 2020, but the effects still linger for about a month.

During and after CNY, many factories will experience a high turnover rate in factory workers. Some will decide to go work at a factory with other family members. Many will choose to find a factory closer to their family. 

This typically leads to 2 things:

  1. Longer ramp-up time for factory production.
  2. Quality control issues due to lack of experience.

Factories will have their returning workers coming back around February 2nd, however, it usually takes 2-3 weeks to fill the spots that don’t return and ramp production back up. 

By the last week in February most factories should be back to their regular production volumes. Some factories further out from the cities may take a bit longer to get back to normal, but shouldn’t be later than early March.

Two to three weeks after Chinese New Year, you’ll see shipping costs also start to go down as they’re normalizing their routes.

How to Prepare

  1. Plan and Accept the Crude Reality

  2. Create a Forecast

  3. Consider Larger Orders & Order Early

  4. Establish Quality Measures Early

  5. Diversify & Expect the Unexpected

Plan and Accept the Crude Reality

Don’t think that your supplier is “different” than any of the other factories in China. They will follow the same outlined timeline, above. It’s important to accept that nothing will be made in January and that the supply chain is affected months before and after CNY. Suppliers will not respond to you during CNY as this is often one of the few times they get to be with their family.

Plan ahead of time and keep the above risk-event graph in mind.

Create a Forecast

This may be difficult for many SMBs, especially for new Amazon Sellers, but it’s critical. Planning your inventory and sales forecast out 6-7 months in advance can save your business. Nothing would be worse than selling out during peak holiday season, then not being able to fulfill your inventory for another 4-5 months.

You can check with a local warehouse to store your items or check with your Noviland Account Manager to see if this is an option.

Consider Larger Orders & Order Early

Shipping costs are expected to increase dramatically during Q4 of 2020. Companies are rushing to get their larger orders in before CNY. Demand spikes will come with price increases. The IMO 2020 is imposing aggressive regulations to cut emissions on January 1st, 2020. Expect to have that impact your shipping costs.

Placing larger orders earlier on will ensure your supplier will be able to get the materials at a reasonable price, keep your shipping costs lower by spreading out the shipping costs, and allow you to get the rates prior to the release of the General Rate Increases (GRIs) in late Q4.

Larger orders will also be prioritized by suppliers.

Establish Quality Measures with Your Supplier

This is one point that can’t be stressed enough. With suppliers rushing to get products out of the door, make sure you have a trusted third-party inspection company by your side. 

Establish your Key Quality Indicators with your supplier and third-party inspection company to get the best bang for your buck when it comes to quality control. 

Diversify & Expect the Unexpected

Chinese New Year is a time where factories do a lot of planning for the rest of the year. They may refocus the types of products they want to make and discontinue your line. Keeping a diversified network of available factories is important. If you’d like to get quotes from other trusted factories, you can start here.

The point of contact that you had at the factory, may no longer be there after CNY. Make sure you have at least 2 points of contact to your supplier and ask your POC their plan.

Summary: 1 week holiday = 5 month impact

As you can see from this article, Chinese New Year is so much more than a week-long holiday in China.

Factories close in early January ‘20 and get back to normal in late February ‘20. The supply chain is affected as early as November ‘19 and as late as March ‘20.

Start planning out your forecast if you haven’t already started and keep a close eye on the quality of goods received. Don’t forget to download your QC Key Quality Indicator Guideline.

Make sure you speak to your Noviland Account Manager about your forecasts to work out a plan for Chinese New Year. 


Francois Jaffres is the COO of Noviland.com, a rapidly growing sourcing & purchasing solution making sourcing from overseas factories simpler. He has worked with over 500 businesses to source from China, has a background in Industrial Engineering, and is very active in the Amazon Facebook Groups. He currently splits time between Campbell, CA and Pittsburgh, PA. 

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