China poised for new postal law

China could pass new legislation for postal services as early as Friday (24th April)with major global express delivery players worried that the new law will continue to restrict them from competing in the growing Chinese express delivery market.

Companies such as DHL, FedEx, TNT and UPS, have been lobbying the Chinese government for years as it worked on a new law governing mail delivery. Concern about the legislation has heightened in recent months, amid fears that the global downturn could lead to a revival of protectionism in many countries.

A draft of the law was published for comment last year, and now appears to be finalised and is likely to be passed when the current meeting of the standing committee of the National People’s Congress closes Friday.

Foreign businesses are particularly concerned about an article in the draft which states “Foreign companies may not invest in the business of domestic express delivery of letters,” with state media reporting that the provision has not been taken out from the latest version of the law.

The Conference of Asia Pacific Express Carriers, which represents the four big global express-delivery companies, in the past has urged the Chinese government to allow a level playing field in the domestic market. Yao Xin, the organization’s chief representative in Beijing, said it is still researching the issue, and declined to comment before the law’s passage.

Existing Chinese law already gives the national post office a monopoly in delivering letters, so China’s position has been that there is no real change for foreign companies. Most of the foreign delivery firms have been operating in China since the 1980s through joint ventures or other local operations. They fear the new regulations will make it harder for them to compete with the state-owned postal service and other domestic companies.

Express delivery is a growing business in China at a time when traditional postal services are flat or declining: the volume of express-delivery items rose 26% in 2008 and 21% in 2007, according to government statistics.

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