The State
Postal Bureau (China Post) is having problems protecting its
express delivery service.
Because of the high-speed development of international delivery
giants in the home market, China Post decided to use the term
"exclusive operator" in its letter delivery business.
In
a recent announcement, China Post said all express delivery
companies should be registered with the bureau before May 6.
These companies would only deliver goods "weighing more than 500
grams" or they would have to charge more than China Post.
The bureau said all the companies must stop "illegal" services
after the May deadline.
China Post, which carries out duties of both a government organ and
a commercial organization, has exclusive rights in letter delivery,
a bureau spokesman said.
China Post must provide service to all Chinese, no matter in poor
or rich regions. In some very remote areas, China Post is relied
upon as the major communications bridge between local residents and
the outside world.
But providing these universal and valued services has not proven
profitable. China Post has lost money and needs subsidies from more
successful businesses like EMS (express mail service), the bureau
spokesman said.
EMS' exclusive operation in certain businesses is a legal right
granted by the government.
China Post has taken a series of steps to try to stop the "illegal
operation" of other express delivery companies.
The move irked express delivery companies, especially joint
ventures with top international companies.
The world's top four express delivery service providers, UPS, FedEx, TNT and DHL, have all launched joint
ventures in China and recorded good business growth due to their
wide-ranging delivery network and efficiency.
The companies criticized the bureau's steps, saying the bureau is
"protecting a monopoly" and "will hurt the whole economy."
Li
Limou, a representative of the express delivery companies, said
China Post should not confuse letter delivery service with express
delivery service.
Li, also vice-president of the China International Freight
Forwarders Association (CIFA), which has 539 member companies, said
China Post's move will drag on the development of express delivery
business in the long run.
The rapid development of express deliverers has fueled growth of
China's exports and imports, Li said.
China's foreign trade accounts for 25 percent of the nation's
annual revenue, and the express delivery contributed greatly by
sending commercial contracts, documents and product samples.
Li
said more than 60 percent of the shipments his member companies
delivered are on China Post's banned list.
So
if these companies were only allowed to deliver goods more than 500
grams or charge higher than China Post, many of these firms would
die, Li said.
He
said his member companies have approval from the Ministry of
Foreign Trade and Economic Cooperation (MOFTEC) and are
operating according to the ministry's stipulations.
Spokespersons for both MOFTEC and the Ministry of Information
Industry (MII) said they have no further information about the
conflict.
Industry Opinions
The conflicts between China Post and express deliverers go back to
the early 1990s.
When China Post launched EMS business in 1985, it was the sole
express delivery provider in the country.
Overseas express delivery providers also expanded China's market by
setting up joint ventures with local partners.
It
is difficult for China Post's EMS to compete with them on
international deliveries because the joint ventures have better
transportation instruments, richer management experiences,
far-reaching delivery networks and high work efficiency.
"Time is money" is the slogan many trade companies list as the top
discipline.
Since the overseas express delivery companies offer faster delivery
speed and cheaper prices, it's no wonder many large companies are
turning from China Post to them.
Lu
Tingjie, vice-president of the Beijing University of Post and
Telecommunications, said the conflicts between the post office and
express delivery companies extend overseas.
He
said the US Government has re-defined common letters and commercial
letters.
The letters between people are called ordinary letters and
delivered exclusively by the post office.
Commercial letters, however, are bills, advertisements,
company-to-company notes, receipts and notice letters, Lu said.
He
said the delivery of commercial letters should be opened
gradually.
China's Post Law was enacted a decade ago but did not differentiate
between different kinds of letters.
The government should revise the Post Law to amend and update some
articles, industry insiders said.
For the time being, China's express delivery business is being
managed by two government bureaus, MOFTEC and MII. Both will not
give up their control on the profitable business willingly, they
said.
Zhang Chunjiang, MII's vice-minister, said recently that the
government is considering setting up a subsidy fund for telecom
businesses.
But the post sector, which is closely related to the telecom
business, needs a subsidy more urgently, said Liu Liqing, China
Post's director-general.
A
subsidy would enable China Post to make capital while giving space
to other express delivery operators, experts said.
(China
Daily March 29, 2002)