Sourcing Tips for China 2023 New Year Holidays
Sourcing Tips for China 2023 New Year Holidays– The Year of the Rabbit. As always, the Chinese New holidays can bring stress and duress to anyone sourcing goods from China. There are many areas of the supply chain which can be affected by Chinese holidays. These include logistics, customs clearance, covid travel restrictions, product price changes and stock control. By the way, the Chinese New Year is on 23rd January 2023.
This year, it might be worthwhile to give folks some tips and advice on areas where they could face difficulty.
Two areas where that buying from China may need some sourcing tips for the China 2023 new Year Holidays.
- The Supplier in China
- The movement of products from China
The Supplier in China
When planning to navigate through the challenge which the Chinese New Year holidays bring to a supply chain, firms need to break the plan into two sections:
- The China Supplier BEFORE the Chinese New Year Holidays begins.
- The China Supplier AFTER the Chinese New Year Holidays has ended.
What issues can I expect from my China Supplier BEFORE the Chinese New Year Holidays begin?
As the Chinese 2023 holidays approach, many foreign buyers may notice issues with their suppliers in China. These issues can include:
- A drop in the quality of the goods they are getting from the Supplier. This may arise from a rise in complaints from product users.
- Chinese Suppliers may be less tolerant of any changes or amendments to orders.
- Credit terms might suddenly be changed by the Chinese Supplier.
- Prices may increase for the products at the last moment.
So, why are there supply problems because of the Chinese New Year Holidays?
The Chinese New Year can cause many supply problems for firms sourcing goods from the country. Below are some of the main issues and reasons why these issues have arisen:
- Poor Quality Products – In China, workers’ employment contracts with their employers finish at the beginning of the Chinese holidays. So, suppose the employee has decided to work for a new employer after the holidays. In that case, their attention and desire to make high-quality products diminish.
- Increased Product Defects -The Chinese New Year holidays are when workers receive employer bonus payments. Suppose workers are unhappy with the bonus that has been awarded. In that case, some display this displeasure by causing discomfort to their employer by making poor-quality products and increasing the number of customer complaints that their employer will receive.
- Changed Payment Terms – Your China Supplier may seek to change your payment terms. This is because many have cashflow challenges as they have extra employee holiday pay, tax, and supplier payments.
- Unknown Producers – At this time of year, many factories may have maximum production capacity. So, they may ask another factory with spare capacity to make your goods. Therefore, there can be increased defects as some factories may not have proper quality control processes and standards.
- Increased Prices – It is well known that in the run-up to the Chinese New Year holidays, some suppliers in China will try to maximise their profits. They often make unannounced price increases. They know their customers will have little time to move to another supplier. Many use an excuse for raw material price rises. However, it is mainly down to greed as being the main driver.
So, why are there delays with my order from China?
Many importers experience delays with their orders from China due to the Chinese New year holidays. Many Chinese firms face the same challenges that many other post-industrialised countries face, such as staff shortages to make the products. Many people in China start new jobs after China reopens from its holidays. It is common for companies to face shortages due to the holidays. However, for 2023, there are the added challenges of Covid restrictions and potential staff layoffs.
With Staffing issues, many companies in China may do the following:
- Advise their customers that there may be delays in processing any new orders.
- Increase the production times for orders. This may result from the company restructuring itself due to staff layoffs or staff shortages. So factories may increase the production time by up to 25%.
- Lack of Communication regarding 2023 prices. Many factories require the prices of their raw materials from their suppliers before they can calculate their own prices. This is proving difficult for many. Because the materials supply chain in China is currently in a state of flux due to the changing energy costs, Covid restrictions, logistics costs and the price of pork.
- Quality Control Issues – Many Suppliers may not have experienced employees making the products and goods. As a result, they should bring in extra Quality Control Checks to overcome any shortfall due to inexperienced staff. **Tip** – It is advisable to bring in Third-Party QC firms to help with Quality Checks. We recommend Goodada Inspection services.
Tips – Chinese 2023 Holidays How to Reduce Costs and Avoid Stockouts
- Block out the period from 26th December 2022 until 6th March 2023. Be prepared for all possible China Supply Chain challenges to occur during this time.
- Increase the stock reserves of your essential products. While it is industry-dependent, I advise firms to start with 12 weeks of Stock from 23rd January 2023. This gives you almost three months of lead time until you need new orders.
- Try and book some orders with suppliers in other countries. Over recent years many firms have started to source products from other countries. The Chinese holidays are an excellent excuse for firms to give orders to these producers and build their relationships.
- There are often delays with shipping and customs clearance in China. The Chinese 2023 holidays will be no exception. Try and have your goods shipped out four weeks before the Chinese holidays commence. I always advise clients to go for eight weeks so that they can shop around for the best shipping rates.
- Bring in Third-Party Quality Control Inspection firms to check your products and reduce the likelihood of defective products being sent to you. Goodada Inspection Services are an excellent company.
- It would help if you also used these Third-Party Inspection companies to communicate between you and the Supplier. The QC Inspection company can advise you of any company background staff changes or layoffs.
So, Sourcing from China – Chinese New Year Holidays 2023
Aidan Conaty is a director of TCI China and Goodada Inspections.
He can be contacted by email at aidan@goodada.com or be reached at:
- (Europe/ Rest of the World) +353 1 885 3919;
- (UK) +44.020.3287.2990
- (North America) +1.518.290.6604