How Chinese New Year 2023 Affects Your eCommerce Business

Chinese New Year 2023 (CNY) will formally start on January 22nd. But as an online retailer, the time leading up to CNY can also be your busiest. You’ll have a lot on your plate, from putting holiday marketing into action to preparing for 2023.

There are some critical logistical situations to consider during the holidays. Many businesses get blindsided by factory closures in China as the nation observes the Lunar New Year.

The Lunar New Year is to China what Christmas is to the United States and other western countries. While many employees enjoy a long holiday, the festivities can last for several weeks.

China is one of the major forces in the world economy and one of the most significant trading partners for many Western nations. The Asian country makes up more than 30% of the global GDP, which is higher than the combined contributions of the US, Japan, and the Eurozone. It is also the biggest exporter in the world.

Additionally, if the nation experiences a complete shutdown ( which happens around Chinese New Year), it will severely impact the worldwide supply chain. Businesses that import goods made in China will feel the brunt of the shutdown.

Government, construction, and manufacturing halt all operations for a week during the Chinese New Year holiday. Except for perishable commodities, ports and customs will only employ a small number of employees.

This year, COVID-19 is still a risk, especially for travelers. Chinese tourists are already facing limitations due to concerns that a new variant may emerge. Another potential roadblock will be dealing with new travel restrictions limiting people’s movements and transporting goods.

Even if you don’t believe that the Chinese New Year does not affect your business, your supply chain may still be indirectly impacted. Therefore, you must take the necessary steps as soon as you can to plan for potential logistical issues.

Why Chinese New Year 2023 is Important

Chinese New Year, also known as the Spring Festival, is a unique and vibrant celebration with intriguing historical origins. It significantly influences current Chinese culture and has an impressive cultural and traditional background.

During this time of year, everyone focuses on getting home to their families. For Chinese New Year 2023, people in China enjoy a 7-day break known as “Golden Week.” Everyone wants to celebrate and relax for a long time.

It is customary to purchase gifts, food, clothing and travel during the Chinese New Year holiday. This period is associated with shopping because buying new things is considered an embodiment of a fresh start in the new year. The Spring Festival is a significant and successful sales period throughout China and Southeast Asia.

Retail sales for consumer goods during the Chinese New Year festival generated ¥36 billion in income last year. This is also considering that the market saw a year-on-year decrease from years prior. If your eCommerce business can get ready in time, the Chinese New Year 2023 celebrations present a lucrative opportunity to boost earnings.

How Chinese New Year 2023 Affects eCommerce Operations

The Chinese New Year will greatly impact your eCommerce business if you work with Chinese suppliers.

CNY celebrations will officially begin on January 22 and continue for seven days till January 27. However, this does not mean that the entire event lasts only seven days. The Chinese New Year period may last much longer than you anticipate.

Here are some key factors on how the holidays in China can affect your business operations:

Manufacturing and Supply Delays

Almost all industries in China will shut down their factories and workshops. Suppliers will gradually halt operations in the middle of January. This allows factories to save more money while giving employees more time to spend with their families.

You might need more factories to find a reliable source for sourcing products. If your supplier goes on vacation, you might need to wait until after CNY.   This will cause a holdup for your orders and purchases.

Since staff from China are on vacation,  expect delayed communication and updates. Order management, production, and shipping may all be put on hold with no clear restart date.

Out-of-Stock Products

Chinese manufacturers usually offload their excess stock by the end of the year so they can start working on new products.

Additionally, some factories may close from January 10 through February 15 because they typically receive fewer orders at the end of the year.

This becomes a challenge when you need products sent to your warehouses during that period. Your supplier will likely send your goods in 15 or even more days. This may be due to factories having sold out of their inventory or not having enough staff to produce and ship the goods.

Late Shipments

Most companies try their best to prepare for the factories’ time-out by raising their production before the holiday since the Chinese New Year shutdown occurs every year.

This frequently results in excess shipments that must be made just before the holiday. There is a potential risk that your cargo could get delayed in the buildup to the Chinese New Year. As employees leave early for CNY, there will be fewer active personnel.

Of course, the pandemic and the resulting difficulties in global logistics have forced businesses to embed supply chain resilience into their operations. They’re creating backup plans to start their planning process much earlier.

Preparing Your Business for Chinese New Year 2023

Awareness of the CNY shutdown is the first step in ensuring your business runs smoothly despite delays. Although the schedules for the holidays always vary by a week or two every year, it’s always a great idea to plan for these challenges. You can also avoid shutdowns and shortages if you take more time to perfect your inventory estimates.

Increase Your Stock

You can estimate the quantity of safety stock to keep your business running while supplier factories are closed. Refer to sales and inventory data from prior years. Exercise caution and avoid panic buying in response to plant shutdowns.

Examine any extra products you may already have on hand to prevent ordering things you don’t need and having a stale inventory.

Ensure that your sales and inventory statistics are accurate before placing your buffer stock order. From there, you can build a network of fresh or short-term backup suppliers in case you want larger volumes.

Communicate and Be Transparent with Suppliers

Since most mainland Chinese suppliers are used to Chinese New Year vacations without incident, it is advisable to be transparent with them about any potential issues. Keep in mind that major shutdowns for CNY also occur in areas like Hong Kong and Taiwan.

Inquire about potential delays from your supplier, and then work together to devise strategies for successfully overcoming them. Before January 22, ensure you and your team are on the same page regarding communication expectations.

After that, anticipate a communication blackout over CNY. Make sure to inquire about a specific timeframe for when operations will return to normal.

Consider Other International Suppliers

You may want to work with a local supplier on a temporary contract basis during the CNY shutdown. While this may incur bigger costs, you can ensure delivery deadlines and reliability.

Make sure to research your contractual duties with your current suppliers before making any supplier switch decisions. Your current supplier may also be operating in other locations. Ask your supplier if they can transfer some of your manufacturing to another site if you require inventory shipped and delivered on time during the Chinese New Year closure.

Consider alternate delivery choices if you can’t or don’t want to switch vendors. Some overseas shipping firms try to continue running normally during CNY, so they might be able to complete your deliveries on schedule.

The Chinese New Year 2023 holiday can be stressful for many companies that depend on Chinese suppliers, but it doesn’t have to be. Your company will operate well through the Chinese New Year if the proper preparations are made. 

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