While U.S. retailers muse over the disappointing holiday season, Chinese retailers are now in the dumps because dismal sales for the Chinese New Year, which begins January 26, 2009. This year is the Year of the Ox. Traditionally, the Chinese buy lavish gifts and host banquets to celebrate the Lunar New Year. But this year, spending is way down.
In China, where many businesses count on the equivalent of a Christmas shopping boom for a big share of annual sales, the blow will hurt. It could further depress China's falling growth rate just as Beijing is rolling out a multibillion-dollar plan to boost consumer spending.
"We would estimate spending would be off 20 to 30 percent this year, which is rather critical for quite a large number of retailers and certainly restaurants," said Sam Mulligan, director of market research firm Data-Driven Marketing Asia, which surveyed 4,500 consumers in five major cities in December. "All of these areas are going to be hit hard."
Mulligan said 35 percent of all Chinese entertainment spending and 40 percent of sales of premium beer and liquor takes place over the weeklong Lunar New Year holiday.
At the International Exhibition Hotel in Dongguan, a manufacturing city in China's south that has been battered by the drop in exports, companies that splurged on lobster for employee parties in 2008 are ordering pork this year. A hotel saleswoman said bookings of banquet rooms are still above 90 percent, but companies are spending about half as much per table this year, about 2,000 yuan ($290).
Companies also are scaling down employee lotteries — a common feature of holiday parties.
Many companies are still having banquets, but they are changing the menus to reduce the cost. Instead of ordering lobster, one large company is ordering pork instead. Traditionally, the Chinese give gifts of cash in red envelopes called hongbao (a sample of the Taiwan style is pictured above) to relatives and business associates. But this year, sales of the red envelopes are way down. And that's a sad thing to see for the New Year. Kids look forward to getting lots of red envelopes filled with "lucky money" for the new year: if the amount is a multiple of 8, it's even luckier.
(Photo of traditional hongbao via Taiwan Government Information Office)
