The 7th draft of amendments to the law governing the postal sector are currently being drawn up. Previous drafts have provoked much debate among emergent private companies and the established old state monopoly, China Post.
According to Zhu Gaofeng, former vice minister of post and telecommunications, "The monopoly of China Post is deep rooted, which leads to irregular competition." He was speaking at the annual conference of the China Science Association in November.
The new amendments are likely to lift some restrictions for private express delivery firms, but they do not have much confidence that this will be enough to create fair competition.
At the end of July, industry representatives were invited to discuss the 6th draft for the first time with the Ministry of Commerce and the State Council's Office of Legislative Affairs. Private firms from several cities said the draft simply enshrined protection of China Post's monopoly.
They had originally protested the 5th draft over exclusivity of China Post services for items under 500 grams, additional statutory payments and approvals, and minimum registered capital requirements running into millions of RMB.
An embryonic Shanghai industry association suggested a much lower weight limit for the mail monopoly and that said additional payments were a form of duplicate taxation.
The market share of China Post's express delivery service (EMS) since 1995 has dropped from 97 to 33 percent while private firms, with more flexible operational modes, have enhanced theirs. But the market as a whole remains relatively small and over 90 percent of users are businesses dealing internationally.
To fight competition from private firms, China Post has tried to speed its EMS services up, but this has had mixed results since changes in management practices have been slow.
Experts suggest that private firms should cooperate with international partners to resist China Post's overall dominance. To gain a foothold in the Chinese market, foreign companies need local express delivery firms' resources and advantages; domestic firms need international firms' experience, technology and funds.
They also say the position of the postal service department involves a conflict of interests: it is both lawmaker and executor of the law, manager and operator of the industry.
The 7th draft of the amendments are awaited by the entire sector, since it could either result in a more open and fair market or spell the end for many burgeoning private enterprises.
(China.org.cn by Guo Xiaohong and Li Jingrong December 22, 2004)
