The Year of the Dragon is here. Celebrations for the Lunar New Year will kick off this weekend, and factories across Asia will be halting production for the holiday. Though the pause has become a regular fixture of global commerce, every year U.S. home retailers fret about the impact it will have.
The issue is more than just academic. Even though Mexico recently surpassed China as the top exporter to the U.S., home furnishings products are still predominantly sourced there and Vietnam and Taiwan, all countries where the Lunar calendar is used. And though other big manufacturing nations—like India, Pakistan, Indonesia and the Philippines—may not be as observant in such celebrations, China still sets the pace in the global importing game.
Traditionally, China’s Lunar New Year celebration stretches on for weeks as massive numbers of workers travel from the urban areas where they’re employed back to their rural hometowns, shutting down production and shipping. As a brand, if you didn’t get your goods out of the country before the holiday, well, you’d just have to wait.
In recent years, the panic among American retailers in advance of the manufacturing juggernaut’s annual shutdown has by and large eased. But there are still those in the business who wake up with night sweats, wondering if their goods will arrive as expected. In 2024, there are four good reasons to remain calm.
Timing: This year’s celebration comes later than usual, beginning on February 10 (compared to January 22 last year and February 1 the year before). That’s a big factor impacting American importers’ schedules. With this later timing, chances are that most of what needs to be in stores for the spring has already left China and is on its way.
China’s diminished role: Even as it remains the most common origin of home goods, China no longer dominates the marketplace as it once did. Particularly for furniture, production has moved to Vietnam, Indonesia, the Philippines and even Mexico. Categories like decorative accessories, gifts and housewares have seen similar shifts. After political battles over tariffs and the logistical nightmares of the pandemic, U.S. importers have balanced out their sourcing models and are not nearly as dependent on China.
Soft business: When the home business exploded during Covid, nearly every American company was desperate for goods, and the several-week-long pause in shipments was devastating for a supply chain that had no built-in buffers. Now business is much softer, and shipments coming in weeks later than normal are not such a deal-breaker for sales. Some American importers will also welcome the chance to work off current inventories.
Factory inventories are still high: Even if inventory levels at American retailers and importers are pretty much back to normal after the post-pandemic excess, that may not be the case with the Asian factories that supply them. Some executives who have traveled to China recently say they are still seeing factories overloaded with goods. In these cases, suppliers are only too happy to shut down their production for a few weeks—sometimes up to a month if the inventory situation is particularly dire.
In other words, this season is always a source of anxiety for American businesses, but there’s good reason to believe that they won’t get burned by the Year of the Dragon. Fingers crossed!
Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.