Crimped by the weakening of ringgit and the dramatic plunge in crude oil prices, local businesses are bracing for a tough Chinese New Year (CNY) season.

 

To cope with the economic slowdown, most businesses employ a “small profits, quick turnover” strategy to ramp up their CNY sales ahead of the Feb 19-20 festival.

 

This is done by slashing prices, resulting in lower profit margin but bolstered by high volume sales.

                                                           

Some of the small- and medium-sized Chinese grocery stores have to absorb the extra costs instead of passing it on to their consumers.

 

A number of small wholesale stores have taken the initiative to reduce their stock purchases to avoid possible unsaleable items.

 

Nevertheless, big shopping malls are not expecting the pinch much and are upbeat in their CNY sales as they see themselves as the main venue for consumers to purchase their Lunar New Year necessities.

 

“The crowd this year is thin compared with past years,” lamented Nu Lycie Wholesale Store sales manager Lai Mun, 38 ( right ), when met by Malaysiakini .

 

Nu Lycie is located at Jalan Sultan in downtown Kuala Lumpur, and along with other stores, has started to stock up CNY items with the festival just three weeks away.

 

Lai said she reduced her CNY stocks this year by 20 percent, in the wake of increasing costs.

 

She explained this was also because of lower investments by manufacturers, with a marked reduction in the variety of their CNY products.

 

In another shop at Jalan Sultan, preserved meat seller Chia Rong Guang, 50, said he too had to reduce his inventories by 20 percent.

 

“We expect sales to fall this year, hence we will try to sell all our stocks rather than being stuck with them,” said Chia.

 

Discounts to spur consumption

 

Meanwhile, Happy Planet Wholesale Store owner Hiew Choong Hai has opted to launch a comprehensive discount campaign, with prices of all the items in his shop slashed by between 20 percent and 70 percent.

“We need to give out big discounts, especially during the economic slump so that we can attract more customers and spur consumption.

 

“Although we earn less, our stocks sell faster. This is a better strategy. Of course, we have to make a profit, but so long as we can cover our costs, it is not so much a problem,” stressed Hiew.

 

Perhaps because of the discounts, Hiew said, his shop saw huge crowds in recent days.

 

According to Federation of Sundry Goods Merchants Association of Malaysia president Hong Chee Meng, grocery stores dare not raise prices of CNY goods for fear of a consumer backlash.

 

Hong said most of the businesses would rather earn less, instead of nothing at all.

           

“With the downturn in the market, businesses can offer big discounts or ‘buy one, free one’ strategy to stimulate consumption,” Hong said when contacted by Malaysiakini .

 

On the other hand, Malaysia Shopping Malls Association adviser Chan Hoi Choy is not too perturbed by the slowing market because CNY is a big day for the Chinese community and generally consumption will not go down much.

 

“We did not specifically reduce our CNY stocks because shopping malls are still the main place for people to purchase their New Year necessities,” Chan said when contacted.

 

He agreed that the weakening of ringgit has forced prices of imported goods to shoot up, especially clothes and cosmetics of international brands.

 

“But for local goods and clothes, we did not increase prices. At the same time, we will not give special discounts for our new stocks either,” revealed Chan.