From February 17 to March 3, the Chinese will mark the most significant celebration in their culture, the Chinese New Year. During this time, manufacturers will shut down operations, affecting the supply of commonly sourced goods from the market. The production slowdown is expected to persist for up to a month after the holidays.
Factories, avoiding inefficient low-capacity operations, typically resume full production only once bulk orders arrive. The slow return of workers, many of whom travel to their villages, causes additional delays.
With more than 20 percent of its imports coming from China, Kenya is often highly vulnerable to Chinese holiday-related supply chain slowdowns. For this reason, it is always prudent for Kenyan businesses that import goods from China, to build up inventory buffers for January-March, so as to avoid operational disruptions and stock-outs.
Shutdown and reopening dates vary for different manufacturers. Importers need to confirm the specific dates with their suppliers and ensure goods leave the factory at least 10 days before the official holiday.
Pre-booking container space at least two to four weeks before the shutdown, can also help businesses to avoid paying higher rates for last-minute shipping. Factor in two to three weeks of extra lead time for shipments, as backlogs are common when factories reopen.
Most importers from Kenya do not raise their orders directly with the manufacturers in China.
Instead, they raise orders through retailers who display goods from various factories as samples in their shops. Ordinarily, most of these suppliers, who act as intermediaries between the importers and the manufacturers, will ask for a deposit from the importer in Kenya, which they will use to raise an order with the manufacturer, then ask for the balance once the order is ready.
However, during the Chinese New Year, suppliers will ask importers to make the full payment upfront, as contractual obligations forbid them from carrying outstanding credit balances into the New Year.
For an importer based in Kenya, raising the full payment upfront on short notice can be an uphill task. Partnering up with reputable companies that provide cargo financing, can be a solution for this challenge.
Look for logistics companies that can agree to pay your supplier in China, use your cargo as the collateral, then allow you to collect your goods from their warehouse, once you are ready to pay what you owe them.