China’s postal service reform plan arouses concern of private sector

A reform plan for the country’s postal service has been approved by the State Council, but the unclear definition of universal service and competitive service has aroused the concern from the private sector.

According to the plan, the General Post Administration will serve as a regulatory organization and a new company, the China Postal Service Group, will be set up to take over the operational functions from the original postal service administration and hold the controlling shares of postal savings banks.

But the reform plan has not touched such issues as how to divide the universal service and competitive service, how to divide the services by postal service group and EMS service by private sectors.

The plan has put foreign enterprises and non-governmental enterprises on jitters. The world’s big four EMS giants of DHL of Germany, UPS and FEDEX of United States, and TNT of Netherlands all issued statements, expressing the hope of introducing competition mechanism. As early as last year, non-governmental enterprises in Shanghai filed complaints with the National People’s Congress and the Ministry of Commercial, appealing for breaking down monopoly in EMS.

According to China’s WTO commitments, foreign capital may start wholly-owned logistics EMS in China starting from December 11, 2005. In fact, foreign EMS giants have occupied 80 percent of the international EMS market at present.