U.S. PostNet establishes shaky presence in Guangzhou

The Chinese business-services market can be tough to break into. Just ask U.S.-based PostNet International Franchise Corp. PostNet is still trying to gain a foothold in China, despite early setbacks in Shanghai that occurred when government officials shut down a PostNet franchise. In May, PostNet opened a pilot office in the first floor of the World Trade Tower, which is situated in a prime area of Guangzhou.
This franchised PostNet store is registered to the Guangzhou PostNet Business Service Co., a subsidiary of the Guangdong Yuantian Information Technology Development Co., according to a June 11 story by 21 Shiji Jingji Baodao (Twenty-first Century Economic News). Song Yu, manager of the Guangzhou PostNet Business Service Co., said, "After so many ups and downs, PostNet has finally settled down in Guangzhou. By starting out with this pilot store, I am very
confident that PostNet will be able to expand its business gradually." Shanghai surprise PostNet, with headquarters in Henderson, Nev., is a globally known
business-service brand. It offers services such as express delivery, parcel packaging, short-term storage box rental, photocopying, laser printing, bookbinding, lamination, faxing, computer services, business-card printing and key duplication as well as retail sales of greeting cards, stamps and envelopes. PostNet has already established more than 1,000 branches in 24 countries including Brazil, Italy and Japan. In recent years, PostNet has turned its attention on China. In November 2000, PostNet opened its first store on Urumuqi Road in Shanghai. At a party celebrating PostNet's debut in China, Chen Xin, manager of PostNet's China Marketing Department, proclaimed that
PostNet outlets would soon be as common across the country as hair salons, said the 21 Shiji Jingji Baodao article. Soon after that, however, the Shanghai Municipal Postal Bureau and Shanghai Municipal Administration for Industry and Commerce took action against PostNet, seizing part of its assets and taking down
the stores sign. Because it offered mailbox rental services, mail delivery and express delivery, PostNet was charged with violating China's Post Law and encroaching on the exclusive postal-operation rights of state-owned post offices, the story said. "That was really an unexpected heavy blow to us, and we were suddenly at a loss on what to do," said an executive from PostNet's
eastern China headquarters. "In the end, we had no other choice but to stop operating the business, which yielded good profits but conflicted with the interests of the state postal department." Despite the setback, PostNet still managed to open three chain stores in Shanghai and another in Dalian before moving into Guangzhou. Will the new stores survive?
In the publicity pamphlets about the PostNet store in Guangzhou, express delivery and the sale of Chinese stamps are still included in the list of services, despite the trouble the business ran into in Shanghai. Lin Cong, assistant director of the Department of Industrial Management and Legal Affairs of the Guangdong Provincial Post Bureau, said that the Post Law states that mail delivery falls under the exclusive province of the postal department. Any other institution should not get into the business, he said. "We question the legitimacy of the sale of postal products by the PostNet Guangzhou Store. PostNet has never informed us of this before," Lin said. He continued, "A store may sell ordinary postal objects as a dealer of the postal department after receiving authorization from postal enterprises as well as approval from the postal department. As to the sale of commemorative stamps and special stamps [or stamps for collection], it is considered an illegal operation unless it has
gotten approval and a license from the postal administration and the
related business license from the industrial and commercial administration. "The Constitution stipulates that citizens' freedom of
correspondence and their privacy in correspondence should be protected by the state. And the state mainly carries out such obligations through the postal department . . . . Protecting national information security is the policy on exclusive operation of postal services stands," Lin said. But manager Song explained that PostNets Guangzhou store would not engage in mailbox rental, express delivery and the sale of postal productsnot yet, anyway. "Because we haven't started such services at all, we don't have the problem of lacking approval of the postal administration or infringing on the exclusive operation rights of the postal department, " he said. "Although something unpleasant
happened between us and the postal administration, we will still try to work things out with the postal administration in order to start express delivery, sale of postal products and other services." Postal struggle.
Since postal and telecommunications operations were separated in 1998, China's postal sector has been facing shrinking revenues and narrowing space for development. Except for the fact that mail delivery is still under the tight control of the postal department, the state has been gradually opening up other postal services, said the 21 Shiji Jingji Baodao article. For instance, many foreign express delivery magnates such as UPS Inc., FedEx Corp. and DHL Worldwide Express have already entered the highly profitable express-delivery market through cooperation with domestic enterprises. Although the mail delivery remains under the exclusive operation of the postal department, it shrinks by nearly 10 percent each year due to more popular use of telephones and
e-mails. "At this sensitive time, PostNet will definitely encounter bans from
the postal administration if it tries to start mailbox rental, express delivery and sale of postal products without the approval from the postal administration," said an executive from Guangzhou PostNet. "The atmosphere is quite tense now. So I guess it would be quite difficult for us to get approval from the postal administration for operating express delivery or sale of postal
products." The conflict between the postal department and PostNet shows that
the former has become aware of its own difficult situation, says
industry expert Zeng Tieyong. "But awareness alone is not sufficient. The state monopoly will be broken sooner or later," he says. "The most urgent task for the postal department is to expand business and increase revenue. If they don't take effective measures to raise their competitiveness, they are at a risk of being cornered by rivals inside and outside the country." "Since post-related services only take up a small chunk of PostNet's business, I don't think PostNet will be able to take away businesses from the postal department. Given this, I think the postal department is somewhat oversensitive," Zeng continued. "In addition, there are lots of institutions, either legal or illegal, providing similar postal services as PostNet does. So the future of PostNet also permits little optimism."
Copyright 2001 China Online. Source : World Reporter (Trade Mark)