The Guizhou branch of Poly Real Estate Co holds its year-end party at a local hotel in Guiyang, Southwest China's Guizhou Province, on January 18. Photo: CFP
It's coming around again to the time when companies start to organize their year-end parties.
These annual gatherings are usually intended for employees to let off some steam, but they are also a vital source of revenue for the companies that specialize in organizing them.
But this year, the country's economic slowdown seems to have dampened the party spirit, and companies that provide party services are lowering their expectations.
Because it's traditional for companies to have their year-end parties around Christmas and New Year, it's normally a heavy task to organize them and there is a shortage of staff, Ma Weihua, a project manager with Shanghai Pintee Cultural Communications, told the Global Times.
The company's core business is to design, plan and organize meetings and promotions for customers, including the year-end party business.
"One person had to take care of several cases simultaneously and all 20 staff members had to work overnight overseeing the parties," Ma recalled of his team's experience last year.
But this year, Ma said that he has received fewer orders. Customers are also finding ways to economize, for instance by not ordering expensive shows for their parties this year, he said.
Fewer orders, less money
"So far we have only got three orders for year-end parties," Du Yang, a marketing manager with a Beijing-based cultural media company, told the Global Times on November 11. This is less than half the number of orders he had received by the same time last year.
Du said that as well as fewer orders, customer's budgets are also falling.
"Most of the customers' budgets are between 30,000 and 50,000 yuan ($4,815-8,025) for this year, only one-third of what they were last year," Du said.
For example, BigPizza, a domestic pizza chain store, had a budget of 400,000 yuan for last year's party for its 100 staff members.
But this year, the budget is only one-quarter of that.
Year-end party business accounts for 30-40 percent of the overall business revenue of Du's company.
With the faltering economy this year, not only are customers arranging fewer parties for their staff but also fewer meetings, he said.
The total revenue of Du's firm reached 12 million yuan last year, but so far this year it has reached only about 4 million yuan, forcing the company to turn to the high-end wedding business, he said.
"We have a lot pressure this year as customers are trying to economize," Zhang Hu, the founder and general manager of another Beijing-based culture and media company, told the Global Times Sunday. The year-end party business accounts for 60 percent of Zhang's company's business.
Clients in the real estate and auto sector have been cutting their party budgets this year, according to Zhang.
The annual party budget has been cut by almost half by financial institutions such as venture capital, private equity and securities brokerage firms, Xu Ke, a project manager at New Alliance, a public relations firm 90 percent of whose clients are in the financial sector, told the Global Times Sunday.
It has recently been reported that 3,000 securities brokers have left the sector over the last two months due to the sluggish stock market, which has led to a lower trading volume and falling brokerage income.
China's economic growth slowed to 7.4 percent year-on-year in the third quarter, the lowest growth rate since the first quarter of 2009, according to official statistics.
"We have eight orders now, fewer than last year. But we hope the situation will get better by the end of November," said Luo Jianhong, a marketing manager at a Beijing-based jazz dance school, which also organizes annual parties for customers including PICC Property and Casualty Co and logistics company Sinotrans.
"The reservations for year-end parties so far are not as many as last year," said Li Ru, a saleswoman at Hot Spring Leisure City, a tourism resort in north Beijing's Changping district and a popular place for annual parties.
Not all bad
A Tianjin-based firm specializing in events and entertainment performances said that they had already got 29 orders from customers for their annual parties this year.
While many companies are cutting their budgets for year-end parties, some healthcare and pharmaceutical companies are spending more this year, Guo Wen, general manager of Tianjin Ailun Vision Image Co, told the Global Times. For instance, Tasly Group has increased its budget to 800,000 yuan for this year's party, up 30 percent from last year's, said Guo.
Xiao Difan, marketing and sales director at Minyoun Suniya Hotel, a five-star hotel in Chengdu, said that there has been a slight fall in reservations of meeting rooms for annual parties compared to last year.
But the amount that clients are spending does not seem to have changed that much, Xiao noted. The hotel has received 10 reservations for year-end parties in December and January, and the customers include local branches of Ping An Insurance and China Minsheng Banking Corp.
Xiao also said that one reason for the drop in reservations might be that next year's Spring Festival falls relatively late, and some companies might be delaying their reservations.
In 2012, the Spring Festival was in January, but next year the holiday will run from February 9 to 15 according to the Chinese lunar calendar.
Need to save money
Earlier this year, Amazon China decided to wait until after the Spring Festival to hold its annual party, as hotels charge less for meeting rooms and gatherings after the festival, said a member of staff at the online retailer on condition of anonymity.
"We are not even sure whether a party will still be held this year," she told the Global Times, noting that the company's China business is not making profit yet. The economic slowdown is also a factor, she said.
Bank of America Merrill Lynch China has a budget of 150,000 yuan for this year's annual gala, but all the money will be out of the directors' own pockets to save on company costs, said a member of staff at the bank who wished to remain anonymous.
He said that the situation is better than last year, when the annual party was canceled due to cost-cutting measures.