If you sell online, the Chinese New Year may have a big impact on your small ecommerce or Amazon business. Read on to learn about the Chinese New Year and find out how to keep it from hurting your sales.
What is the Chinese New Year?
The Chinese New Year is the Chinese celebration of the new lunisolar year, aka the Lunar New Year. It can start anytime between January 21st and February 20th.This year, the holiday starts on February 16 and ends on March 2. During this holiday, Chinese people celebrate family and togetherness. It ushers in the new year while leaving the old one behind. Fireworks, food, and parades are all essential to the celebration.
Although the holiday itself lasts about ten days, its effects last longer.
Also, the Chinese New Year doesn’t just affect China! If you have a supplier in South Korea, Vietnam, Malaysia, or Indonesia, the holiday will still affect your business, as these companies also celebrate the Lunar New Year.
Why Does It Affect Our Ecommerce Businesses So Much?
Factories Shut Down—In the 1970s, economic changes jumpstarted the growth of cities in China’s coastal regions. Many people who were looking for jobs had to move far away from their rural homes to the cities for work. During the Chinese New Year, hundreds of millions of factory workers travel back to their rural homes to celebrate. Because of this, every factory in China shuts down.
Then, They Have to Play Catch-Up—Even after factories reopen, their production will be in overdrive. They will be playing catch-up with all the orders from before the Chinese New Year that they still need to fill, not to mention all of the new orders. Slow manufacturing and shipping may persist until the end of April or even early May. This has a big impact on spring and summer products.
Job-Switching—The Chinese New Year is also a prime time to switch to another job. Oftentimes employees simply won’t return to work after the holiday is over and won’t warn their employers they are planning to do so ahead of time. This means extra delays in hiring and training those replacements. It can also mean poor-quality work.
How to Avoid the Negative Effects of the Chinese New Year
If you’re an Amazon seller, ecommerce business, or any retail business with a Chinese supplier, you’ll need to alter your habits to stay afloat during the celebration season. Here’s some tried-and-true advice:
Be Prepared for Your Manufacturer to Shut Down
Many companies don’t even announce that they’re shutting down—they just assume you know. Be prepared for total lack of communication for at least a week, even if they don’t warn you ahead of time. Also, expect that your supplier will give their employees extra time to travel back to the city to be with their families for the holiday itself. Often, they’ll shut down up to ten days before the holiday. Since the holiday starts on February 16th in 2018, your factory might shut down as early as February 6th.
Don’t make the mistake of depositing a payment right before the Chinese New Year. During weeklong holidays, no payments can be processed to and from China or Hong Kong. Make sure you settle all your payments before the holiday. This way, you’ll avoid late fees.
Don’t Travel to China
Don’t plan a visit to your supplier right before the Chinese New Year. Every factory will be preparing for the pre-holiday rush, and travel will be inhibited by hundreds of millions of Chinese workers going home. If a trip is inevitable, the absolute closest to the holiday you should visit the country is a month before. You definitely shouldn’t visit during the holiday, because you won’t be able to see your supplier.
Don’t Be in a Hurry
Don’t be surprised if there are shipping problems before the holiday. The demand to get on a cargo ship at this time is very high. This results in higher shipping fees and later shipping dates. In extreme cases, your cargo may be bumped from being shipped due to all the other shipments needing to get out before the holiday.
Having a Plan for the Chinese New Year
Perhaps the most crucial part of keeping your business afloat is having a plan.
As a general rule, give your supplier plenty of time to complete your order before the end of December. They will also be experiencing an excessive rush before the holiday, so it’s good to give them a two-week buffer, just to be safe.
Make Sure You Won’t Run Out of Inventory
It’s also a good idea to have additional inventory on hand. Observe your sales trends of previous years to ensure you are ordering plenty from your supplier. If you’re an Amazon seller, check your historic Amazon sales report. If you use an Amazon fulfillment service, check your inventory numbers through their interface. Keep in mind factors such as seasonal variations and year-on-year increase in demand.
Communicate with Your Supplier
After you place your order, follow up with your supplier to make sure your order can be filled before the holiday. Also, if you have a strong quality manager and inspection plan, you won’t run the risk of receiving low-quality goods right before Chinese New Year. Increase monitoring and communication with your supplier in the months leading up to and after the holiday to minimize low-quality items or severe shipping delays.
Although manufacturing will likely be shut down for a whole month, other departments within your supplier may be closed less time for the holiday. Take advantage of the services those departments can provide. Sales and engineering departments might be open; administrative functions often keep operating a week or two longer than others. This gives you a great opportunity to really focus on samples, research, and price and contract negotiations. It’s also the perfect time to work extra hard on new designs and marketing.
If you follow these steps, you should be able to succeed as an Amazon seller, ecommerce entrepreneur, or business operator in spite of the Chinese New Year. It will definitely take some extra work. But with each year, you’ll gain more experience and it will soon become second nature!
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