The Effect of a Late Spring Festival on Chinese Businesses

Spring Festival is the most important holiday of Chinese people. Usually, the date of the Spring Festival is between Jan. 20 and Feb. 10. During the period between New Year's Day and Spring Festival, Chinese people, in expectation of the big holiday, busy themselves with preparing gifts, scheduling holiday trips, booking flights or train tickets or joining annual parties. Some even consume their all-year vacation quota to extend the holiday.

Spring Festival comes late this year; it will not begin until Feb 18. This throws off the normal January craziness. "The business was slack in January", a friend who is a salesman of an electronic component factory tells me. That's not all. Due to the lateness of the festival, people will actually be on vacation till almost the end of Feb. That means people will be in abnormal working conditions for almost two months. Smart advertisers will not promote their product for business customers at this time.

Usually, Q1 is the weakest quarter for Chinese Internet companies, which depend on online advertising. The abnormal late Spring Festival will make things worse. SINA Corporation (SINA) and Sohu.com (SOHU) have reported weak Q1 forecasts of advertising. It will also impact on Baidu.com Inc. (BIDU).

The impact on Focus Media (FMCN) will be little. Because most people will spend much more money during this period, it's a good time to promote consumer products around Spring Festival period.

Disclosure: Author has no position in the above-mentioned stocks.