December 16, 2022
Manufacturing -
Lunar New Year and your business: What you Need to Know | OneLink Holdings
Asia’s biggest holiday is just around the corner, and it’s important for businesses to understand how it will affect their operations. Here’s everything you need to know about Lunar New Year!
Lunar New Year is one of the most important and widely celebrated holidays in Asia. Every year, businesses across Asia prepare for the festivities and pause operations in observance of this significant occasion. This year, it falls on Sunday, January 22nd for both Chinese New Year and the Vietnamese New Year. As a business owner, it’s important to understand how this holiday will affect your operations—so here is everything you need to know about Lunar New Year!
What Is Lunar New Year?
Lunar New Year is an annual festival that marks the start of a new lunar year according to the traditional East Asian lunisolar calendar. It typically falls between January 21st and February 20th on the Gregorian calendar. In China, Lunar New Year is also known as Chinese New Year or Spring Festival. In Vietnam, Lunar New Year is referred to as Tet, which is short for Tet Nguyen Dan. It is celebrated with parades, fireworks, lion dances, red envelopes filled with money, family gatherings, and feasts. During this period, people will travel back to their hometowns to spend time with their families. This holiday is especially important because it marks a time for renewal and rejuvenation. The legal holiday in China is 7 days, starting from Spring Eve on the 21st of Jan till the 27th of Jan. The Vietnamese people will have a 6-day national public holiday, starting on Tet Eve, January 21 to January 26th.
How Will It Affect Your Business?
Since Lunar New Year is one of the biggest holidays in Asia—especially in countries like China and Vietnam—businesses should expect many employees to take time off during this period. While the official break is only 7 days, many Chinese and Vietnamese suppliers, contract manufacturers and partners shut down for up to 4 weeks.
This can have a negative effect on your business in a number of ways. The first is that manufacturing is put on hold during those 4 weeks or longer (depending on the nature of manufacturing). Furthermore experienced factory workers who have been with the company for extended or long periods of time will get extended leave while the inexperienced factory workers will need to return earlier. This means you are likely to face more quality issues if you are manufacturing closely to either side of the holiday period. Secondly there is an increase in production on either side of the holiday as orders are rushed to be produced and those that are made after the holiday are also being made with a backlog of other orders. Its important to keep in mind the price you are paying over these dates will also increase with the demand.
As the majority of businesses close for the Lunar holiday, so does the transportation industry and various other companies in which international trade and manufacturing rely on. Those that do remain open face a back log of orders and extended delays.
How to Prepare for Lunar New Year Disruptions
1. Plan Ahead
It is never too early to start planning for Lunar New Year. Factories will begin to slow down production during the first and second weeks of January, which is much earlier than most businesses expect. As mentioned above the most experienced workers will start to return to their home towns earlier so the sooner you can get your goods produced, the better. To plan, analyse previous sales history to put together a forecast. Once you have a forecast in place, you can work with your suppliers to ensure you have the products before Lunar New Year. Getting cargo to the ports early is part of planning ahead. You should aim to have cargo at the port ready to be loaded no later than 10 days before the ship date. In the lead-up to the new year, it is common for late goods to be rolled onto the next available shipment, which may be weeks later due to the demand to get goods shipped before the shutdown of ports.
2. Build Strong Relationships
Developing strong relationships with suppliers and manufacturers goes a long way when it comes to Lunar New Year. A well-constructed relationship between suppliers and businesses can help in anticipating those delays and minimizing any disruptions to business operations. It is in the best interest of the business to implement strategies proactively that can ensure effective communication and understanding between suppliers and the business. Establishing trust with suppliers will lead to reliable deliveries during Lunar New Year while also creating mutual understanding between parties that ensures long-term relationships are respected. The shutdown of factories for 4 weeks can create a backlog of orders. Once the manufacturer reopens, they will process orders from their regular clients and prioritise their most valued clients. All these measures should be confirmed in either writing or contract ahead of Lunar New Year to avoid any unseen impacts on your supply chain.
3. Monitor Production Levels
As Lunar New Year approaches, businesses that prepare and sell products for the holiday season must carefully plan their stock levels to avoid running out and to ensure a smooth shopping experience for their customers. By utilizing accurate data tracking systems such as inventory management software, businesses can monitor and manage stock levels with ease during Lunar New Year. This technology allows companies to track detailed information regarding individual product sales trends as well as provide tailored forecasts of customer demand according to lunar new year celebrations around the world to stay one step ahead and better plan resources upfront. By doing so, businesses can be sure that customers can celebrate lunar new year without disruption or inconvenience.
Lunar New Year is a major holiday throughout Asia that has far-reaching implications for businesses operating in the region. While there are certain challenges associated with operating around this time period (e.g., reduced staff availability), there are also opportunities for businesses who understand how best to capitalize on festive activities (e.g., organizing special promotions). By familiarizing yourself with cultural sensitivities surrounding Lunar New Year and planning ahead accordingly, your business can make sure it runs smoothly during this important holiday season!
Written By
One Link Holding team
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