Purchasing frequency from China: how to avoid freezing capital in inventory

25.10.2026·6 min read·Delivery Pro China

Purchasing frequency from China affects capital lockup and logistics costs. Learn how to calculate the reorder point and choose the optimal delivery schedule.

In brief: The optimal purchasing frequency from China depends on sales velocity, supply cycle time, supplier minimum order quantity, and storage costs. Monthly shipments reduce capital lockup; quarterly shipments lower logistics costs per unit. The right choice is made by calculating total landed cost, not just the unit price.

Why unit price is a poor criterion for choosing frequency

Importers often compare two scenarios by purchase price and freight cost per unit. A quarterly order is larger, so freight per unit is lower, and suppliers often offer a volume discount. On the surface, the advantage seems obvious.

But this calculation omits a cost line that never appears on an invoice: the cost of money sitting in the warehouse. A quarterly purchase means that for three months, working capital is not in circulation – it is frozen in inventory. The higher your credit rate or opportunity cost, the more expensive each extra month of storage becomes.

Added to this is the risk of obsolescence: if the product is seasonal, trend-driven, or has a limited shelf life, large infrequent purchases increase the likelihood of write-offs.

How to calculate the reorder point

The reorder point is the inventory level at which the next order must be placed. It is calculated using two variables: average daily sales and total supply cycle time.

Cycle time includes: - lead time for confirmation and production at the supplier; - receiving, inspection, and consolidation at the warehouse in China; - transit time to the consignee's warehouse; - customs clearance and final delivery.

Add all these segments together – this is your supply cycle in days. Multiply by average daily sales to get the volume of goods that will leave the warehouse while the next shipment is in transit. This is the minimum safety stock. If inventory drops to this level and a new order has not yet been placed, you are heading toward a stockout.

In practice, a buffer is added to the calculated safety stock to account for production delays or unforeseen delays in transit.

How the supplier's minimum order quantity affects the schedule

MOQ – minimum order quantity – often dictates purchasing frequency on its own. If a factory ships no less than a certain number of units and your monthly consumption is half that, you automatically move to a two-month or quarterly cycle.

There are several ways to address this situation:

1. Negotiate a lower MOQ. Factories agree to smaller volumes for a price premium. Calculate which is cheaper: the premium for a smaller order or the capital lockup in a larger one.
2. Consolidate several SKUs into one shipment. If you have multiple items from the same factory or from different factories shipping through the same consolidation warehouse, you can combine volumes to meet the required MOQ without excess stock on any individual line.
3. Split the assortment by frequency. Fast-moving items ordered more frequently, slow-moving items less often. This requires separate tracking but provides more precise inventory management.

Risks of infrequent large orders versus frequent small ones

Infrequent large shipments: - working capital frozen for the entire storage period; - risk of obsolescence or declining demand by the time of sale; - a single large supplier error is costly – inspection is critical; - with seasonal demand, there is a high risk of residual stock after the peak.

Frequent small shipments: - higher logistics costs per unit when transport capacity is not fully utilized; - shorter cash cycle and less frozen capital; - fresher stock in the warehouse, fewer write-offs; - supplier errors are caught quickly and with limited losses.

Neither approach is correct by default. The optimal point depends on the ratio of the shipment's logistics cost to the storage cost for your specific product.

How China's seasonality adjusts any schedule

Chinese New Year is the primary seasonal risk factor for importers. Factories shut down for two to four weeks at the end of January or the beginning of February. In the weeks leading up to the holiday, many facilities operate under heavy load and at accelerated pace, which affects quality. After the holiday, some workers do not return, and factories take several weeks to return to their previous pace.

This means: if your planned order falls within this period, you will either receive the shipment late or be forced to place the order well in advance and hold stock longer than usual. Building a steady quarterly or monthly cycle without accounting for this window means experiencing a disruption once a year.

Similarly, factor in the Labour Day holiday in May (a short shutdown) and Golden Week at the beginning of October.

In practical terms, this means: before drawing up the annual purchasing schedule, overlay it on the Chinese production calendar and shift order placement so that production is completed before the holiday period begins.

How to build your own purchasing schedule

1. Calculate the supply cycle in days – from order placement to receipt at the warehouse.
2. Determine the reorder point: average daily sales × supply cycle + safety buffer.
3. Compare the calculated frequency against the supplier's MOQ. If the MOQ forces you to order more than you need, assess the cost of storing the surplus.
4. Calculate the total landed cost for two scenarios – monthly and quarterly: freight per unit + storage cost + cost of frozen capital.
5. Overlay the resulting schedule on the Chinese production calendar and adjust.

The result is not a universal formula, but a specific schedule suited to your turnover, your product, and your supplier.

Frequently asked questions

What is the reorder point and how is it used in practice? The reorder point is the inventory level at which the next order must be placed. It equals average daily sales multiplied by the total supply cycle time, plus a safety buffer. As soon as inventory drops to this level, initiate a new purchase.

How does the supplier's MOQ affect purchasing frequency? If the minimum order quantity exceeds your actual monthly consumption, the effective purchasing frequency is determined by the MOQ rather than by sales velocity. In this case, it is worth comparing the cost of storing the surplus against a possible premium for reducing the order size, or considering consolidation of multiple items.

Why can quarterly purchases turn out to be more expensive than monthly ones? A large infrequent shipment yields a lower freight cost per unit, but increases the time working capital is frozen. When storage costs and financing costs are added, the total landed cost of a quarterly order often exceeds that of a monthly one – particularly when the cost of capital is high or inventory turns quickly.

How do Chinese public holidays affect the purchasing schedule? Chinese New Year halts production for two to four weeks. Orders whose production falls within this period are delayed or rushed, with a risk of reduced quality. The annual purchasing schedule must be built with this and other holiday periods in mind.

See how DPC organises the supply chain from the supplier in China to the point of receipt.