“Golden Week” in China: the impact on business

Every year in early October, China freezes in a festive rhythm: "Golden Week" (Golden Week) - the main national holiday associated with the Day of formation of the PRC. For residents of the country, this is a long-awaited time of holidays, travel and family meetings. And for business and foreign economic activity – a period of testing: the yuan is growing, factories are closed, and logistics is overloaded.

Let’s see why this happens and how companies prepare.

What is Golden Week?

• Celebrations are held annually with 1 October 7.
• These days, most of the factories, offices, warehouses and government agencies go on vacation.
• Many businesses add a few more days of rest - as a result, a break in work can reach 10–14 days.

For the domestic market, this is the peak of consumer activity (tourism, trade, entertainment). For international business, there is a serious pause in production and logistics processes.

Why the exchange rate rises before the holidays

1. Increased demand for the yuan and dollar.
   Exporters rush to pay for logistics, purchases of raw materials and components, and importers – to close orders before the holidays.
2. Cumulative effect.
   During September, the burden on banks and payment systems increases many times. Cross-border payments are increasing dramatically.
3. Speculative.
   Financial players pre-plan demand growth, which further pushes the rate.

The result: in recent years before the Golden Week, the yuan and dollar have traditionally strengthened, while the ruble and other currencies, on the contrary, weakened.

Logistics during the holidays

• Overloading transport companies. By October 1, everyone is in a hurry to send cargo. Seats on airlines, in containers and on motor vehicles end in advance.
• Warehouses are at their limit. There are delays in cargo consolidation and paperwork.
• After the holidays – the effect of the “bottleneck”. While factories and logistics are back in mode, cargoes can stand for another week or more.

Production and factories

• Most factories are completely closed. Even if the equipment works, there are no staff.
• Key production processes are postponed until mid-October.
• Suppliers of components and raw materials also rest, so it is impossible to fulfill orders.

How businesses prepare

1. Pay orders in advance.
   September is the time to close all key deals to fix the course and get priority in production.
2. Book logistics for at least 2-3 weeks.
   This is especially true for air and container shipping.
3. Keep a stock of merchandise.
   If the business depends on regular deliveries, it is worth increasing warehouse balances in advance.
4. Inform customers.
   Transparent communication helps to avoid discontent: warn about possible delays and changes in deadlines.

Impact on international business

• Importers face rising costs. Both goods and delivery are more expensive.
• Exporters are temporarily losing partners. Supplies to China stand up and deals are delayed.
• Financial markets react with volatility. This affects the exchange rate and the cost of production.

“Golden Week” in China is not only a cultural phenomenon, but also a factor that directly affects world trade.

• The exchange rate is growing due to hype demand.
• Factories and logistics are overloaded.
• Any “overdue week” can turn into unnecessary expenses and failure of deadlines.

Best solution for business - act ahead: pay for orders in September, fix the course and reserve logistics. A holiday in China will not be a problem for your business.