Chinese New Year, also known as the Spring Festival, is the most celebrated festival in the Chinese calendar. It’s not only celebrated in Mainland China but also influential in areas with major Chinese populations such as Singapore with almost 76 percent of its population being Chinese.
As a result, it can be a difficult time for businesses as a majority of them close for several days, or sometimes as long as a week. The regular business activity suddenly subsides as company’s shutdown. Although, the celebrations officially culminate on the 15th day, most normal business has typically been resumed by day 8 – a lucky number in Chinese culture.
It is important to understand that as China becomes increasingly influential this festivity not only affects those who celebrate it but rather has an international effect particularly with businesses doing business in, or with, China. It’s crucial to be aware of the effects and its implications in doing business particularly with regards to ordering, payment, supply chains and business travel.
Preparations Tips for Businesses Leading Up To Chinese New Year
1. Stock Up On Your Inventory
Ensure you have enough stock to see you through the holiday period, as manufacturers and ports close for days – don’t miss the date for last-orders. Meanwhile, as pre-festival production is increased to fill the ‘New Year gap’, and pressure on suppliers rises, quality can suffer. Quality issues can then continue after the holiday as high employee turnover means that new workers have to be found and trained to replace those that didn’t return – meaning delays are also possible. It’s advisable to increase monitoring and communication in the months leading up to, and after, the holiday in order to minimize any potential lapses
2. Book Your Shipping in Advance to Avoid Insufficient Inventory
Ensure that shipments are booked and at port well in advance of the shipment date. Most Chinese port areas will be closed completely or will be operating in a limited capacity, so they are best avoided as much as possible at this time. During this period of the year, most facets of Chinese logistics are faced with a staff shortage as people return home, and thus transporting goods can also become significantly more expensive.
3. Settle Payments Prior to Chinese New Year
Settle all payments before Chinese New Year as during the week long holiday no payments can be processed to and from China or Hong Kong. Furthermore, Singaporean banks will be closed or short staffed during those dates. To avoid any potential problems with late payment fees communicate with suppliers and plan ahead. This will go a long way to ensuring that effects on cash flow are minimized as far as possible.
4. Avoid Business Trip
Avoid or reconsider business travel during, or around, Chinese New Year. It’s not a suitable time and in most cases ineffective as most businesses are shut down. However, if a visit to Singapore around this time of year is imperative, then be sure to take proper precautions
5. Reserve Cash
Have reserves of cash ready to be utilized in case of an emergency as you will not be receiving significant cash inflows during that period of time.
To conclude, being prepared for Chinese New Year from a business perspective will go a long way to avoiding any significant solvency problems. Knowing how to navigate these challenges in the right way can set your company apart from the rest and can save you many headaches.
At InvoiceInterchange, we could help your business smoothen cash flow during Chinese New Year period through our simple, fast invoice finance facility.