As the Chinese Lunar New Year draws near, both foreign and local companies in China are following the tradition of holding year-end parties to entertain employees and boost morale, with lucky draws and gifts.

Many workers, though, have found their benefits shrinking as a result of dwindling corporate profits.

At a recent year-end party in Guangzhou, Guangdong Province, German chemical and pharmaceutical firm Bayer AG handed out travel coupons for New Zealand and Xinjiang Uyghur Autonomous Region, worth 30,000 yuan ($4,826) and 20,000 yuan respectively, to its lucky draw winners, according to an article published on January 14 by iRead Weekly, a Beijing-based magazine.

In 2010, however, the first prize had been a luxury cruise to Europe. "I feel the year-end parties have been getting more and more economical in recent years," an unnamed employee told iRead Weekly.

Luxurious banquets are considered essential at big corporations' year-end gatherings in the country, and are also considered to be an economic indicator. But some accountants and auditors at the Guangzhou office of KPMG, one of the global Big Four accounting firms, were disappointed recently to find that the roast suckling pigs at their company banquet were considerably smaller than before, the magazine said.

The dessert - a mousse cake at last year's dinner - was replaced this year by a cup of tea. "And it was cold," an unnamed employee remarked.

At Swiss food giant Nestlé SA, everyone at their Guangzhou branch at least got a prize in the 2013 lucky draw, the report said. But this was partly because the prizes included meager items such as Nestlé coffee.

In Shanghai, assistants in shops selling gold jewelry in the city's New World Shopping Center told local media portal eastday.com earlier this month that their customers were also cutting down.

More foreign companies are following the Chinese tradition of buying small gold bars for their employees just before Spring Festival, they said, but this year they were buying 10-gram ones instead of the 20-gram bars they bought in previous years.

Smaller bonuses

Companies in China faced the double pressure of diminishing overseas demand and a slowing domestic economy in 2012, forcing them not only to cut back on corporate perks, but also to slim down employees' annual bonuses, a recent survey showed.

According to the survey, released on December 25 by Beijing-based recruitment firm Career International Consulting, 32 percent of the respondents decided to cut annual bonuses for 2012, with 10 percent deciding to keep the bonus amounts unchanged.

For the remaining 58 percent who chose to raise the bonuses, 41 percent said they would keep the increase under 10 percent, the survey said.

The survey polled over 1,000 firms, both Chinese and foreign, in 11 key industries.

Owing to the sluggish stock market and subdued manufacturing activity in 2012, 63 percent of companies in the financial sector and 49 percent in the manufacturing sector cut employee bonuses in 2012, the survey found.

In contrast, 70 percent of the country's real estate firms raised bonuses last year, thanks partly to a rebound in the property market in the second half of 2012 as well as better prospects for the industry in 2013, the recruiter said.

Feeling the pain

"Originally, I planned to take my workers to Hainan Province for a holiday, but in the end I decided to take them to a spa in Jimo (a small city near Qingdao, Shandong Province) in order to save money," Lu Cong, general manager of Qingdao Yuntong International Logistics Co, which has less than 50 employees, told Xi'an Evening News in early January.

Affected by the weaker macro economic environment both at home and overseas, Lu said he would feel fortunate if the firm's performance in 2012 were the same as in 2011, and as market prospects will continue to be uncertain this year he will cut whatever expenses he can, the newspaper reported.

"In 2012, the international logistics market experienced a slowdown in terms of recruitment, partly due to a decline in trade between China and the US. This led many companies to look for more stability, and hold back their recruitment," Sue Wang, logistics senior consultant at executive recruitment firm Antal International's Beijing off­ice, said in a research note sent to the Global Times Wednesday.

According to Antal's latest recruitment trend survey released on January 14, the Chinese executive recruitment market is declining. Only 59 percent of the surveyed companies are hiring managers in January, down from around 70 percent in the July/August survey last year.

"I think it's because of the decline in (corporate) profits that we're seeing this stagnation in emerging markets," Max Price, a partner at Antal International China, told the Global Times Wednesday.

"Basically, the level of salary increases being paid to new employees … has been far too high to be sustainable," and that eats into the profits as well, he said.

Multinational companies (MNCs) in China have been cutting back on bonuses more than their Chinese peers, according to the Career International report, which found that 39 percent of surveyed MNCs reduced their year-end bonuses last year, compared with 27 percent of surveyed private Chinese firms and 24 percent of surveyed State-owned enterprises.

UK-based home improvement retailer B&Q, a unit of Kingfisher, recently announced that it will close down its Hankou branch in Wuhan, Hubei Province on February 9, the Global Times reported Thursday.

"According to Kingfisher's financial report for the third quarter of 2012, although B&Q saw its sales grow 2.6 percent from a year before, its retail loss amounted to 3 million pounds ($4.8 million)," the report said.

For MNCs in China, when they see the salaries are getting too high, they stop hiring and start internal training for their current employees, said Price.

"Candidates are still expecting 30 to 50 percent in (annual) salary increases, and companies only want to pay between 15 and 25 percent," Price noted.

While Price forecast that economic growth in China would be slower this year than in the last five years, he said that some specific sectors - such as luxury goods, retail and healthcare - are coming out stronger from the economic slowdown in 2012.

Kaushik Basu, the World Bank's chief economist, said Wednesday that the bank expects Chinese GDP growth to recover to 8.4 percent in 2013, up from 7.9 percent in 2012.