Have you heard the cautionary tale about the importer who lost a large amount of money when their supplier missed a deadline because of Chinese public holidays? Or the one about the sudden drop in product quality after three or four orders? We all hear the horror stories and we all hope that our own importing business will not suffer a similar fate.
Clearly, having good relationships with your Chinese suppliers, sound contracts and a quality control system in place will help to protect your business. You may be surprised to learn that understanding the impact of Chinese public holidays on your supplier’s business will also help you to reduce the risk of missed deadlines and product quality degradation on your business.
In this article we explain how Chinese public holidays may impact your delivery timelines and product quality and provide you with five simple actions that you can put in place to minimise the risk to your business.
Public holidays are generally non-working days for most workers. This means that the China-based workers in your product supply chain will not be at work on the legal holidays. Including Chinese public holidays in your work calendar helps you plan business meetings and delivery schedules.
Get the official calendar of Chinese Public Holidays and factor it into your business planning. The official calendar of holidays is released in early December of the previous year.
There are two “Golden Week” holidays in China, the Spring Festival (Chinese New Year) and the National Day Week. If you do not understand how these holidays are celebrated in China you may only add a week to your lead time for your customer to account for a “Golden Week” holiday. This could be a costly mistake. Many manufacturers will close their factories for a longer period of time adjacent to these major holidays. If you are ordering a product for delivery close to the Spring Festival or National Day week, it is best to check with manufacturer that they have taken the holiday into account when agreeing to the delivery date. If you plan to place an order close to the holiday, make sure that someone will be at work to take your order.
Find out when your manufacturer will be taking holidays and factor it into your lead times.
Be aware that the manufacturer will be trying to get as many orders filled as possible in the lead up to the holiday period. To handle the volume of work they may choose to subcontract it out. Your order may be one of those that is subcontracted out, which may impact on product quality.
Include a clause in your supply contract that specifically prevents the manufacturer from subcontracting your work to others.
Be aware that your manufacturer is likely to have suppliers producing components of your product (e.g. raw materials or packaging) who will also be on holiday at this time. This increases the risk of delay during this period.
Include a clause in your supply contract that specifies the delivery date and includes a penalty to the Chinese manufacturer if they fail to meet that date.
The manufacturing industry employs many seasonal workers. They take the opportunity of “Golden Week” holidays to travel to back to their home towns to be with their family over the holiday period. Some of these workers may choose not to return to work in the same manufacturing region. This may result in your supplier losing skilled staff with knowledge of your product. The quality of your product may be reduced as your supplier trains new staff.
Include a clause in your supply contract that includes a penalty if the quality falls short of what is promised by the contract.
Check out these handy links for more information on this topic
Information about Chinese Public Holidays may be found here at Travel China Guide. When planning for the year ahead, remember that holiday dates are confirmed as official in early December of the previous year.
Dan Harris at China Law Blog has lots of useful advice on clauses to include when developing a supply contract or manufacturing agreement.
Learn more about doing business in China
You can learn more about doing business in China from Graham through a do it yourself Import Assistance package from QPS Importers. Graham has been importing quality goods from China since 2009. He enjoys passing his knowledge on to other people who would like to import from China. He attends both sessions of the Canton Fair each year. If you are planning to attend and you’d like some help or advice beforehand or while you’re over there, get in touch with him now to discuss your requirements.
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