*This content is brought to you by Investec Import Solutions
By Adam Orlin*
Chinese New Year, for 2017, falls on January 28th which is much earlier than usual. As a celebrated event in the country, all production (and other) facilities shut down over this week. If not managed correctly this can delay all products due to be shipped out, for longer than the actual shut down period. So, for any business that works with China, it becomes imperative to understand and manage this shut down period, to ensure no risk to their own business or production cycle.
Many factories in China actually shut down at least a week prior to the celebrations and as such, it is important that companies take into account these working cycles. Orders must be placed at least 30-45 days before the Chinese New Year – given the assumption that production time for orders can take 2 weeks or more. So the question is, as a local business, have you planned for this? Have you requested a holiday schedule from your overseas manufacturer, to allow for the correct end-of-year planning?
Furthermore, as all sustainable import and export business understand, it is crucial to take note of shipment quantities (and lead-time) when planning your own business schedules. This ensures cargo is delivered on time, without disruption over the South African festive period, as well as the Chinese New Year celebrations.
As a result, pre-planning for this annual shut-down should include understanding of the fact that cargo is shipped by Full Container Load or Less Container Load (FCL/LCL) and that this can have a cost and time implication. Factoring this in can go a long way to ensuring that containers are loaded in time and full loads are pre-planned, which reduces transportation costs and minimises any delays.
Of course the import schedule, after the actual holiday period, must not be forgotten. Consider this, in most cases, suppliers increase prices at the start of the New Year, which will directly impact import schedules and costs, as a result. Placing future orders, earlier, can also help avoid any increased costs and to ensure a business is able to manage this increase, correctly.
For any business who truly wants to manage the cost of financing imports, working with a reputable finance partner helps facilitate any import transactions. This allows the business to continue to focuses on the day-to-day running of the company. Not only this, but a finance partner can also alleviate pressure on the business – by using the import process to free up working capital. Given that a significant amount of money, from the business, is often used in imports, (all at once), available working capital can be used to grow the business, in other ways.
As we head towards the end of the year; it becomes crucial to understand how to unlock this value chain. Managing the import process, and associated finance components, effectively, within the overall supply chain cycle, will not only save businesses money, but endless frustrations and delays. The import process is not an easy one. Business have to understand how to keep sight of their products throughout the supply chain, all the way through to having insight into landed costs, and import tariffs – all while ensuring this does not effect on cash flow – no wonder businesses often feel intimidated.
However, by partnering with the right company, businesses will get access to a single point of contact throughout the import process. For many organisations this can mean the difference between maintaining effective business growth or stagnating. In addition, a high value import specialist is able to finance the cost of goods, as well as all the forwarding and clearing costs. For a business limited by cash flow, this is a game changer. Having that one point of contact to oversee the entire process, means the decision makers can now stay focused on meeting their core deliverables.
Certainly there are always broader industry issues at play, but with the increasing competitive market – not only in the local sector, but from international companies (who are often cheaper) – if your business wants to remain relevant, then finding the right partner will become a critical step.
So this holiday, if you want your businesses to mitigate any kind of risk, which could have a negative implication on your business revenue, then plan ahead to avoid any financial short falls that could have easily been avoided.
- Adam Orlin, Head of Investec Import Solutions
