Regulators said to consider consolidation in Chinese postal service
The consolidation between Express Mail Service (EMS) and CNPL has become the main issue in the Chinese postal industry.
Liu Andong, director general of the State Postal Bureau of China, said at a working conference at the end of 2004 that to regroup express and logistics businesses was one of the six key tasks in 2005, and it was a signal of the consolidation.
The National Development and Reform Commission of China, China’s macro-economy regulator under the State Council, the nation’s cabinet, was reported to lead an effort to design a postal reform solution along with the Ministry of Finance, the Ministry of Information Industry, and the bureau. The solution has been submitted to the State Council.
In addition, the commission announced that the solution would be publicly issued within 2005, and it was one of the key tasks over the year.
Word on the consolidation was confirmed by an executive of the Hunan subsidiary of CNPL. CNPL was established on January 18, 2003. It is a state-owned logistics company under management of the bureau, with 31 subsidiaries across the nation and registered capital of CNY 200 million.
The subsidiary’s operating revenue topped CNY 100 million in 2004. The number is planned to double in 2005. The EMS Hunan subsidiary’s operating revenue was almost twice that of the CNPL Hunan branch in 2004.
“After the consolidation, the two subsidiaries will operate as two independent divisions at the consolidated company,” the executive told reporters.
The postal industry is generally optimistic about the consolidation. EMS run by China Courier Service Corporation, a state-owned express company under the bureau, plans to reach a more than 10% rise year-on-year in operating revenue in 2005. The company expects to largely extend EMS service to the nation’s large and midsize cities and gradually capture market shares in metropolises.
At the conference, the director general pointed out, the consolidated company will share resources and strengthen cooperation in the two sectors, express and logistics. It will grow on the basis of both edges.
There is a widely spread discussion in the industry. The consolidation’s final intention is to make postal service public on the stock market, disclosed the executive. The bureau has been eager to fulfill the dream for years. Over the recent two years, it has been in the media spotlight.
Earlier, about four listing solutions were unveiled. The first one is overall listing. It is believed to be rather hard to complete, because not all operations under the postal service network nationwide are moneymaking, particularly, those in Western China have long been a heavy burden.
The second one, spin-off, wins the industry’s favor. Firstly, some moneymaking operations would be put into a listing vehicle, according to this listing solution. At the same time, a major problem arises – profits are not generated under a single operation but the network.
The other two ones are turned down because of complexity and impracticability.
China Courier, the manager of EMS, was founded in 1985. It has shaped a service network covering close to 2,000 cities throughout the nation, with more than 20,000 employees. It has developed into a great force in the Chinese express sector.
(USD 1 = CNY 8.27)
From www.chinawuliu.com.cn, Page 1, Monday, March 21, 2005 [email protected]
