How Will CNY Impact Your Business?

If you are doing business in or with China, you might already be familiar with Chinese New Year (CNY) whose celebrations’ date, depending on the Lunar calendar, vary from year to year. What does not change however, is the massive migration of individuals crossing the country to celebrate this special moment with their relatives (actually being the world’s biggest yearly migration).

Having more than 1.3 billion people going in vacation at the same time does not only have an effect on the country’s transportation system, yet also on consumption, logistics and supply chain, making this time a very unique one in the year.

What is the impact of CNY on your business? How to cope with its side effects and take advantage of the opportunities it offers? These are questions successful companies dealing with or in China are familiar with. ASI Solutions, as your key import/export partner, thus offers you some insight on this year’s edition must-know and best practices.

What Is CNY?

Before entering the core of the matter, one should be familiar with what these holidays are about, as well as their scope.

As stated before, their main aim is to offer workers the occasion to go back home to see their family for the New Year’s celebrations. Most of them go back to the countryside where they come from. It is not uncommon to see train stations and airports crowded with people transporting huge amounts of gifts for family members and relatives. They are usually given by elders to younger people, or between friends and relatives. They include food & sweets (fruits, cakes, biscuits, chocolates, candies, etc.).

The evening before CNY’s day is the occasion for Chinese family to gather for the annual reunion dinner. The celebrations are also the occasion for decorating it with red paper-cuts & couplets, as well as offering the traditional Hongbaos (or red paper envelope). The latter are passed out from married couples or the elderly to unmarried juniors or children, and usually contain money.

Key dates :

  • Little Year (Jan. 28th – Feb. 4th): preparations for the New Year.
  • Spring Festival (Feb. 5th – Feb. 15th): CNY officially begins on Feb. 5th.
  • Lantern Festival (Feb. 16th – Feb. 19th): preparations for the Lantern Festival which is held on the 19th.

What Is CNY’s Impact on Consumption?

CNY’s spendings corroborate China’s shift toward a consumption-led economy. This is good news for companies eager to enter Chinese market. It has been noted that high-tech consumer goods are among the favorite products bought during the period (floor-sweeping robots for instance). Sales at restaurants and shopping malls have jumped 10.2% to about RMB 926 billion (USD 146 billion) during 2018 CNY holiday compared to 2017 (Ministry of Commerce). Food being a traditional gift during CNY, brands should put the emphasis on this F&B products.

To take advantage of this increase, it is important for brands to manage their stock in advance because of the logistics disruptions happening during the period. Note that consumers usually start shopping for CNY 2-3 weeks before the celebrations (Criteo).

Services linked to traveling and leisure are also among the preferred expenses. Tourism both domestic and international is obviously booming during this period.

In terms of marketing and communications, one should take advantage of the hongbao (red packet) fever during CNY celebrations. The tradition we covered in the previous section, has evolved with the rise of technology and cyber-Hongbao is now very common.

One can get inspired by the collaboration Tencent QQ has established with certain brands, offering them the opportunity to create branded electronic red packets on their platform. The latter - labelled with luxury brands’ names such as Kenzo, Burberyy or Ferrari – could be shared by users to friends and relatives. Such initiatives increase brand awareness while showing that your brand is familiar with Chinese customs and sensitive to the latter.

Taking the example of Tencent QQ is significant given the fact that most of the purchase are made on mobile devices – rather than on laptops – during the period.

What Is CNY’s Impact on Logistics and Supply Chain?

If you have already been running operations in China, you might be familiar with the huge disruptions the holiday creates in the logistics and supply chain sectors.

Whether you are manufacturing goods in China to import them, or exporting your own products to China’s market, your operations will be impacted.

As workers all leave to visit their family, factories stop for 2 weeks up to 1 month, administrations, customs, and transportation are greatly slowed down, while there is an increase in production and flows of goods prior to the country’s « shutdown ».

As such, one should carefully plan production and logistics beforehand, informing manufacturers and logistic partner well in advance as for the operations to be the least impacted possible.

Read a full article about how to handle your logistics and supply chain effectively during CNY.

CNY being the particular period it is, for companies eager to run operations smoothly in and with China, knowing more about it is essential. Furthermore, as China is gaining more and more power in the world’s economy, the impact is to become global.

As your chosen import – export partner from and to China, ASI Solutions is here to provide you with advice and support regarding CNY and all over the year!


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