Chinese New Year's Impact on Your China Supply Chain

As procurement professionals, we are all aware that holidays such as Christmas and Thanksgiving in the United States can lead to business delays due to scheduled closures. However, have you also accounted for potential disruptions caused by holidays observed in China? For anyone involved in supply chain management and sourcing from China, understanding the impact of these holidays is crucial.

We have previously outlined key Chinese holidays in our overview, with the Spring Festival (also known as Chinese New Year) being the most significant in terms of its effect on sourcing and supply chains. This holiday, which generally falls between late January and mid-February, marks the start of the lunar new year and is celebrated by over 1.4 billion people worldwide.

The festivities last around 15 days, during which customs such as giving red envelopes, decorating homes, and gathering for family reunion dinners are widely observed. Regardless of where they are, Chinese people make every effort to return home for the New Year—even when travel becomes extremely challenging. Some even undertake long-distance motorcycle journeys when flights and trains are fully booked. It is estimated that nearly 2.89 billion trips will be made during this period, all for the sake of spending precious time with family.

Consequently, many factories and businesses in China shut down for at least a week to allow employees to travel and celebrate. This leads to slower production, delayed deliveries, and logistical disruptions for companies sourcing directly from China. Business does not return to normal until after the Lantern Festival. During this period, administrative and office-related work also slows down significantly.

Potential Supply Chain Disruptions
Based on years of local procurement experience, we generally advise companies to avoid scheduling shipments too close to or during the Chinese New Year for the following reasons:

• Factory closures: Most factories suspend operations for an extended period, making it difficult to arrange production and shipping. This can delay orders and disrupt supply chain timelines.

• Limited transportation capacity: During the Spring Festival travel rush, passenger transport takes priority, and logistics resources become stretched. Even with advance bookings, containers may be rolled due to vessel overbooking, leading to cargo delays.

• Reduced workforce: A significant number of factory and logistics workers take time off, resulting in labor shortages that slow down production and shipping, creating uncertainty in export arrangements.

Recommended Strategies
To minimize the impact of the holiday season on your supply chain, we recommend:

1. Plan ahead: Based on the Lunar New Year date (which varies each year), confirm production schedules with suppliers at least 1.5–2 months in advance and maintain close communication with freight forwarders to allow sufficient lead time.

2. Stagger shipments: For larger orders, consider arranging partial production and shipment ahead of the holiday to avoid last-minute congestion.

3. Stay in communication: Maintain periodic contact with key partners during the holiday to stay informed about resumption plans and production recovery.

If you are arranging procurement plans around the spring period, we recommend reaching out early so we can collaborate on building a more resilient supply strategy. With our local expertise, we can help you navigate seasonal fluctuations smoothly.