When doing business in or with China, you will experience the national holidays of the People’s Republic. The most important national holiday of China is “Chinese New Year”, or in other words named as “Spring festival”. As every national holiday in China, companies will temporarily close their doors during these holidays.

The official Chinese New Year period, set by the government, regards seven days. However, some sectors will extend these days of holiday depending on the other companies in their specific industry.

For example in manufacturing, factories are taking more extended holidays than offices in the service sector. Most of the retail shops will not close down at all, but the traditional family ran restaurants will. E-commerce will be affected by the closed factories, shipping companies and in addition to that the available stock.

At least a one-month disruption of business

From our experience, we take the Chinese New Year period as at least one-month disruption of trade, services and commercial transportation. We take this in general as it is different per sector and company regarding closing periods. Any company, sector or location could have different durations of the holiday that a part of your suppliers, partners or sources will not be available yet when you start up work again after the holiday passed.

Offices during CNY

During Chinese New Year, offices will close during the official set days by the government. There are small differences seen per sector regarding the duration of the holiday. However, offices close down more or less between 10 – 12 days including weekends.

Middle class
As offices mostly using middle-class employees, you will not find the migration problem manufacturers have. Middle-class is mostly able to pay for fast track transportation to hometowns, already have facilitated the possibility for their family to also migrate to first-tier cities or they already have been raised in first or second-tier cities. Offices of factories open therefore often earlier than the factory and its production lines itself.

Influence by other companies
Although offices will start earlier than production and supply chains. Its productivity is always influenced by suppliers, business partners and/or sources who will still be closed while the office already opens. On the other side, it gives the opportunity to offices to take a moment to set new targets, strategies and find new people as most people change their jobs during Chinese New Year.

Factories during CNY

Factories are influenced the most by the Chinese New Year period. Manufacturers their production lines are operated by their employees. Employees, who mostly live in the manufacturer its dormitories, don’t rent normal houses. Employees are primarily migrant workers coming from area’s far into mainland China. With Chinese New Year, the whole population will reunite with their families to celebrate the festival traditionally. Meaning that most of the migrant workers will need to take days off to be able to reach their hometowns on time. Factory class workers will not have the convenience and budget to use fast-track transportation. They will travel with the slowest trains, cars or even by motorbikes for hundreds till sometimes more than a thousand kilometres away. Therefore, factories will need to close earlier than the official festival days.

Workers don’t return to the factory
After Chinese New Year, there is no certainty of employees coming back. Many former employees don’t inform their employer that they will not return. In lots of cases, only 50% of the employees will come back. Which leads to a shortage of labour and will hold the startup of production again.

Suppliers influence production startup
As different factories mostly using employees from different areas, you can not assume that suppliers of those factories will not cause any delays. As supply chains contain multiple parts and suppliers, only one supplier with labour problems after Chinese New Year can hold an already re-started factory from production.

Combinations of the above problems will cause that factories and their production lines will more or less close 3 – 4 weeks depending on the situation. On the other hand, offices will open earlier and will be able to pre-work and re-structure production lines before starting up again.

Retail stores during CNY

During Chinese New Year, the retail sector is in general not closing down. As the Chinese New Year period will cause and sometimes increase consumption, many retail stores from especially retail chains will definitely stay open during Spring festival. Store workers will mostly receive 300% wages as compensation for working during the holiday period. Which makes it for local staff very interesting to keep on working during Chinese New Year.

Purchasing plans to bridge the trade gap
Most of the retail chain stores make sure their stores will be as less as possible influenced by suppliers closing down and commercial transportation not being available. As normal buyers in Europe and worldwide, buyers are placing orders up front to bridge the supply chain stop of Chinese New Year. Chinese retail stores will do this also to make sure they have enough stock to supply their consumers during this period.

Ecommerce during CNY

As E-commerce don’t need staff in stores, e-commerce companies are only influenced by the stop of commercial transportation (package delivery) and the actual workers of their warehouses. As in the manufacturing sector, all companies experience the same problems, the e-commerce sector we have to separate into normal local SME sellers and e-commerce giants.

E-commerce giants
E-commerce giants such as JD.com or big local sellers using platforms like Jindong are now majorly automated that it doesn’t rely that much on a high amount of workers. Their financial capacity and a network of labour creates for them the opportunity to keep on running during Chinese New Year.

Local SME sellers
Normal local SME’s selling their products via Alibaba platforms such as Taobao. These local sellers mostly don’t have the financial resources or labour network to keep on running during Chinese New Year. Paying 300% wages and finding actual available people to run the operations during Chinese New Year is, therefore, a bridge too far.

Commercial transportation stop
A common problem is commercial transportation. JD.com is a company who have their own delivery service, but they rely here on their workers and countrywide transportation network to be able to operate. In e-commerce, delivery of products will therefore delay.

As the giant online sellers in China offering a significant number of products, we can conclude that e-commerce stays available during Chinese New Year. But in a slowed down version because of the transportation difficulties. However, we see every year that companies are reaching more and more possibilities to erase the trade gap of Chinese New Year.

Industry/supply chain/transportation/Labour during CNY

These are the four key sectors causing most of the disruption in business operations. Every business, more or less, relies on at least one of these four sectors and will, therefore, be influenced heavily by this period.

Comparison with doing business in China
The Chinese New Year period is hereby comparable to doing business in China. No one is able to formulate a clear fixed amount of days or duration expectation for this period. No clear answer and guarantees can be given. But as a business, an estimation will help you to survive this great festival period.