Chinese New Year: Six dos and don’ts for businesses

The biggest and most important holiday for the Chinese is here: Chinese New Year. All across the country, people are ushering in the year of the Pig with festivities and traditions, most of them to do with wealth and prosperity. Here’s a quick look at some things business owners should get right.

1. Red packets or hongbaos.

DO…

Give them out. In China, guanxi, or personal relationships, is a crucial part of doing business. And there is no better time than Chinese New Year to strengthen your connections.

The thing is, cultivating and maintaining guanxi goes beyond the business partners. Give red packets or hongbaos to your employees (as a bonus, perhaps) to show appreciation and, at the same time, motivate them. Give hongbaos to the cleaning lady at your office, or the security guard at your apartment. Even a small amount can go a long way – the key is to show that you are sincere and making an effort to develop a relationship for the long term.

It can be tricky trying to decide how much to give, but here is a quick guide to market rates:

• Elders give children ya sui qian (压岁钱) to scare away ghosts and bless: 500 yuan or more

• Bosses give employees li shi (利事) as a way to wish for everything to go smoothly in the new year: 100 yuan or more, to be given on the first working day after the Chinese New Year holiday

• The same li shi is given to service personnel, including cleaners and security guards: 20 yuan or more

Better yet, jump on the e-hongbao bandwagon. Last year, some 688 million people in China sent hongbaos to their relatives and friends through messaging app WeChat, even turning it into a game of who can open them the fastest.

In fact, this feature played a huge role in helping WeChat’s mobile payment solution take off in its initial years, catching up with online payment platform Alipay even though the latter has been around for much longer.

DON’T…

Give hongbaos at the “wrong” time. Or more accurately, don’t expect every single employee to come back to work post-holiday.

Sometimes, the homesick bug bites. Many workers, having gone back to their hometown for the annual family reunion, may find it hard to leave home again, especially when they know they are unlikely to return for a long period of time.

Based on our experience, at least one third of a company’s workforce do not go back to work after the holiday. This is especially the case with blue collar workers, and when employees receive their hongbaos or bonuses before the holiday. Having to deal with a sudden staff shortage can be disruptive for business operations.

One way to get around this problem would be to give out the red packets or bonuses after Chinese New Year, as a means to “entice” the workers to come back.

2. Factory shutdowns.

DO…

Stock up before Chinese New Year. The official holiday may be just a week long, but many factories actually close for the entire month. Supply chains around the world actually plan around the Chinese New Year holiday. So it is crucial that you don’t miss the date for last orders or last deliveries.

Working with a trusted and experienced manufacturer will help to minimise the impact of the shutdown (which goes back to the point about the importance of cultivating guanxi). Suppliers that are well organised and reliable will be able to provide you with the relevant information in advance, and offer help in planning. The last thing you need during this stressful period is for your manufacturer to bail on you.

DON’T…

Expect great quality in production during this period. In the lead-up to Chinese New Year, workers are usually up to their neck with orders to fill the “holiday gap”. Unfortunately, pressure rises – even more so when last-minute orders stream in – and the quality of the work is affected.

To avoid delays caused by a lack of quality, step up communication and inspection efforts before and after the holiday.

3. Travel.

DO…

Plan well and ahead for deliveries. Just like Uber’s surge pricing during the peak hours, sea freight rates can get very expensive with the Chinese New Year in tow. Plan ahead and ship ahead of time to avoid delays.

Smaller shipments, for instance, should be at the port two to three weeks before Chinese New Year and booked for a spot on the ship at least two weeks in advance, while larger shipments should be booked five to six weeks prior.

DON’T…

Travel for business during the period. Or be prepared to be stuck in the world’s largest annual human migration.

The no-travel rule applies not just to goods, but people too. Some 3 billion trips are expected to be made this year during the festive period as hundreds of millions of people make their way across China to reunite with their families in the travel rush.

Besides, most businesses will be shut, which means it is unlikely that much work will be done. Spend time with your family. That’s what the rest of China will be doing.

Happy new year!