New China postal legislation to strike at express sector
The Chinese express industry is facing the same sort of crisis which could strike that of India’s – new regulations designed to protect the national Post Office. The latest legislation being proposed by the Chinese authorities could extend the monopoly of the state owned mail operator China Post to include all domestic deliveries of private letters.
According to the European Express Association (which represents the major express carriers) these moves are a violation of the horizontal rollback provision in China’s WTO commitments.
The industry has suggested a system similar to that in the EU with an initial weight and price definition, along with subsequent reductions in those numbers. Although Chinese officials have said that international express would not be subject to the monopoly because of a special provision, the foreign industry opposes any differentiation in the rules for international and national express operators.
The hardest to be hit will be local, intra-provincial and national couriers. The latest draft of the law proposes that the 350g limit is reduced to 150g – a move that industry figures believe will have little benefit to the document delivery companies – and that all city couriers should have a registered capital of 500,000 yuan and 1 million yuan for inter-city service providers. This would cause many franchised operations to close, especially in smaller towns and cities, playing havoc with national networks.
It is not only the domestic express operators which are concerned. The ‘Big Four’ (DHL, UPS, FedEx and TNT) believe that the postal law could potentially lead to a very difficult operational environment in China, which would severely limit the potential growth of the sector and that of their customers. This is important as they have spent many millions investing in the domestic market which they believe to have the greatest potential.
