China makes its holiday plans
21 January 2008
Dealing with China means being aware of its customs, business ethics and …..when it's on holiday. Gordon Wong reports on how China is changing when it works.
With our own holiday season just behind us and a new year underway, many companies with manufacturing facilities in China or reliant on components from the country will be looking at their supply chain management planning for 2008. It’s important to factor in the changes brought about by China’s new national public holiday plan which came into effect on Jan 1st this year. The plan was introduced by The National Development and Reform Commission (NDRC), the country’s top economic planning agency.
In much the same way that Western operations practise shutdowns, or at least slowdowns during their own established holiday periods, such as Christmas, Thanksgiving, etc., China business revolves around a number of festivals, including Lunar New Year, National Day and May Day. Lunar New Year (Chinese New Year) is the most significant of these, with many factories choosing to shut down completely for one, two or more weeks. As an aside, for inhabitants of neighbouring Hong Kong, this period has often resulted in noticeably cleaner air during and following this period, but that’s another matter, perhaps for another column.
Since China’s accession to the World Trade Organisation (WTO), reformers have made changes to lock their country’s economic policies onto the global market-oriented course, often to the benefit to industries such as electronics manufacturing. The country’s system of legal holidays has now also been reformed.
Three 'golden weeks' were introduced by the government to help lift the economy out of the Asian financial crisis in 1999. But, with several straight years of double-digit economic growth, this has increasingly been seen as unnecessary. Recently, there have been repeated calls by political leaders and society in general for adjustments to China’s system of legal holidays. The 'golden weeks' were: the Spring Festival (Lunar New Year) early in the year; the National Day (October 1); and May Day (May 1) holidays.
In the revised plan, the May Day ‘golden week’ holiday is shortened from three days to one day, while the three-day National Day holiday and one-day Spring Festival holiday remain unchanged. The Spring Festival will start one day earlier from the eve of the Lunar New Year, China's most important traditional festival.
The New Year Day, Tomb-Sweeping Day, Dragon-Boat Festival, May Day, and Mid-Autumn Day now become holidays of three days each. The government will continue to move the weekend days adjacent to a national holiday to form a longer holiday period so that people will have three days or seven days off in a row.
The NDRC said the new plan would uphold Chinese traditions, make public holidays better distributed, and reduce the number of people travelling on the new public holidays. Immigrant workers from all over the country are attracted by the opportunities offered by the factories in China’s major cities and high-tech economic zones. Problems created by massive travel bottlenecks as millions of Chinese head for their hometowns during ‘golden weeks’ were among reasons cited for the changes, so there are domestic as well as more global reasons for wanting to tweak the country’s holiday patterns.
Companies employing staff in China will be affected by the new paid holiday regulations also announced by The State Council, which state that all employees of government agencies, enterprises and public-service institutions will be entitled to take paid holidays after serving the same employer for one year.
Employees who have worked less than ten years will have five paid days off a year, those who have worked for ten to 19 years will have ten days, and those who have worked for 20 years and above would have 15 days. National holidays and weekends will not be included as paid holidays.
The regulations also stipulate that employees should have their full daily salary guaranteed during paid holidays and that those who keep working should be paid three times as much.
Why is all this relevant? Well, on a purely logistical basis, if you have just enjoyed Christmas and New Year, and are trying to organise to visit a production line in Shenzhen or Suzhou as part of your ramp-up, or perhaps want to arrange a February or March business meeting in Shanghai or Beijing to discuss your China budget plans for 2008, then be prepared to have to re-arrange your plans to take account of the Chinese New Year slowdown. Similarly, if you expect your supply of components, pcbs or assembled electronics products to be delivered on time during Q1, be ready to ask your suppliers that their and your schedules have accounted for the Chinese New Year slowdown.
So, if you operate in China, or at least do business there, you’ll probably feel the need for a break after digesting all these changes, but not to bother as it will soon be Easter.
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