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Expecting a delivery from China in February? Here's how to navigate Chinese New Year 2015

Alexandra Cain
Business Journalist

Alexandra Cain writes regularly for the small business sections of The Age, Sydney Morning Herald and Australian Financial Review

Alexandra Cain
Business Journalist

Alexandra Cain writes regularly for the small business sections of The Age, Sydney Morning Herald and Australian Financial Review

Everyone loves the spectacle of Chinese New Year – the dragons, the lanterns, the banquets. But if you run a business that relies on goods supplied from China, it’s essential to plan for the most important holiday on the Chinese calendar to avoid delays in receiving orders. Here’s our business survival guide for the Chinese New Year celebrations.

The first thing to keep in mind for Chinese New Year is its timing. As Chinese New Year follows a lunar calendar, in 2015 celebrations for the Year of the Goat will start on 19 February and end on 25 February. But although this is the official period for celebration, it’s often hard to get hold of people throughout much of February and the first half of March. So don’t be surprised if you’re trying to contact your Chinese suppliers and it’s hard to reach them during this time. The same goes for suppliers in other countries that also celebrate Chinese New Year such as Taiwan, Vietnam and the Philippines.

Chinese temple against blue sky

Placing orders

Given this downtime, one of the most important things you will need to manage with your Chinese suppliers is timing of orders. It’s vital you work with suppliers early to ensure your orders are placed well before the start of February. It’s also prudent not to expect to receive any inventory from China during February and early March.For those in fashion, placing orders early also means considering the entire supply chain. If your garments are being produced by one factory, with swing tags coming from another, ensure you’ve thought – and timed - the whole process through. 

Volume decisions

Given you’ll be ordering early, one of the important things to manage is order volumes. This can be tough if you have to place your orders before your customers give you an indication of their requirements. But this dynamic can be managed with a little forethought. Review previous years’ orders to form a view on how much you need to order this year. It’s also smart to talk to your customers about their needs before you place your order, so you don’t end up under- or over-stocked.

Extra infrastructure

Because it’s likely you will be receiving additional supply to cover the Chinese New Year period, you’ll also need to think about warehousing this extra stock. So contact your warehouse or supply chain partner and work out a strategy with them to ensure you can store products safely for longer than usual.

Freight forwarders

Work closely with your logistics partner to get an understanding of their new year plans. Talk to them as early as possible to find out their expectations on shipping delays and factor their advice into your ordering plans. You might also need to consider airfreight during the Chinese New Year period, rather than shipping goods with sea freight, which will take a lot longer.

Cash flow

Having to place orders well in advance, pay for extra warehousing space and also potentially pay extra for airfreight will have an impact on your cash flow. When you’re doing forward planning take this into account when determining your cash requirements.

It’s likely you will need to factor in a bigger gap between paying for stock and being paid by your customers. One way to approach this might be to request extended payment terms from Chinese suppliers. At the same time, you might be able to negotiate shorter payment terms from customers before, during and after the Chinese New Year period.

If cash is really going to be an issue for your business during this time, make sure you let your bank know. Another approach might be to ask your bank for a higher overdraft during this period, the costs for which should also be factored into your budget.

Contingency plans  

If you're in a position where you haven'€™t left enough time to plan for Chinese New Year, you might need to find local suppliers to cover stock requirements over this period. This is a good idea regardless of the festivities, just in case supply is ever disrupted from your usual Chinese business partners. Bare in mind though, that local suppliers may also celebrate Chinese New Year – so best to forward plan even your contingency plan, if you’re producing goods over this time.

Small talk

Finally, don’t forget it’s polite to wish people “kung hei fat choy”, which means “Happy New Year”, during the festivities. Your Chinese suppliers and business partners will appreciate it if you learn a little of their language and customs, which will go a long way towards securing good business relations after the new year celebrations have come to an end.

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