Chinese New Year is not just the most anticipated holiday of the year—it is also an important time for companies to get their work done. Since the holidays may become disruptive to business operations, companies need to plan ahead of time. This New Year is also a perfect moment for foreign businesses to renew “guanxi” with Chinese people. For this reason, foreign owners should observe Chinese customs with business partners and employees during the CNY period.
Have you read our article about 7 Mistakes to Avoid While Doing Business in China?
This year, the State Council announced the CNY period to run from January 24-30, 2020. It is the world’s largest human migration, as millions of Chinese gather together and return home for the celebration.
Importance of Chinese New Year
The New Year holiday in China takes place depending on the lunisolar calendar. Regardless of that, Chinese New Year shares the same ideals of luck, prosperity, and success with nations that celebrate the New Year on January 1st.
Interestingly, zodiac signs are well-known to Chinese people, and these signs may affect your business partner’s strategic decisions as well. The year 2020 is the Year of the Rat, and according to astrologers, this year will be about progression and new opportunities for projects. Hence, 2020 is bound to bring good fortune for businesses and entrepreneurs.
CNY is an occasion not only for family reunions and colorful festivities but also for business banquets. Therefore, you should expect standard business meeting etiquette from your Chinese clients, suppliers or service providers. This simply means clearing payments including your receivables and debts.
Overall, it is important for foreign businesses to take regard of the Chinese business culture while looking forward to CNY.
Planning your business for CNY
Deal with orders and supplies
It will be difficult to deal with orders and supplies during the holidays. This is because production chains and delivery ports begin to close down one or two weeks before the holidays. In this case, you have to plan on delivering any cargoes to the port no later than 10 days before the shipping date.
Furthermore, it can be frustrating to deal with the Customs Office even when you are planning to import goods into China. Due to the holiday period, the Customs Office in China will slow down the processing of goods. Besides that, the customs authorities will charge you more for the whole period of storing your deliveries at the port. It is no question that transporting goods can be expensive, knowing that Chinese logistics will mostly experience staff shortage during peak seasons.
Prepare your inventory stock
Managing your inventory stock before CNY could be really helpful to you and everyone involved in your business. You should ensure that you have enough stock on hand to last the duration of CNY. To do this, you need to create an inventory forecast for your manufacturers or suppliers so that they will be able to process your demand, especially after the holidays.
Preparing inventory will prevent your company from over-ordering products which often leads to unexpected costs. On the other hand, you will also be able to identify quality issues beforehand and thus, reduce the risk of a delayed shipment.
Settle payments earlier
Since no payments can be processed during the week-long holidays, it is advisable to settle all outstanding accounts payables and receivables. Keep in touch with your stakeholders including investors, customers, manufacturers, and suppliers beforehand to minimize problems with your cash flow.
Due to holiday circumstances, it is best to have an automated cash flow system that can manage your payments efficiently. Using a digital accounting solution like Kwikdroid will help your business avoid any payment oversights. It will also ensure that your company’s financials are in order.
Give gifts or red packets
Your employees may consider CNY as a highly-awaited time for rewards and recognition. The Chinese corporate custom of giving out red envelopes or “hongbao” is one way of showing recognition to your Chinese staff. Companies usually give these out with the 13th-month salary or annual bonus.
A red packet symbolizes appreciation for your employees’ hard work and loyalty. It also gives a strong sense of gratitude for their contribution to your company. Furthermore, there are times when local companies also set aside a budget for giving gifts to trusted manufacturers or suppliers.
Bring in good luck
As the Chinese New Year approaches, business offices are encouraged to conduct a general clean-up. The de-cluttering and cleaning of one’s workspace follow the famous Chinese concept of feng shui. Feng shui is an ancient art based on the flow of energy in the universe (chi) and the patterns of yin and yang.
The art of feng shui teaches how or how not to place objects in your offices or houses such that it can bring positive or negative effects. So, if you want more profits for your business, place a purple or red artifact on its southeast corner to attract wealth. On the other hand, you can avoid attracting negative energy if you place your office desk in its optimal position where it can view as much of the room as possible.
Chinese people believe that feng shui techniques can bring harmony at work, relieve stress and improve productivity. If you are to open a new office this year, the elements of feng shui may help you bring in a bit of good luck.If you want to know more about doing business in China, contact our team for inquiries and follow us on social media to get the latest news!
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