China Post is struggling to become profitable

The State Postal Bureau (China Post) is struggling to become profitable as it adapts to the market economy.
Once the most profitable government arm, the bureau has suffered huge losses in recent years as people increasingly turn to the telephone and e-mail for communication instead of writing letters.

Starting next year, the bureau will have to survive without any government subsidies or assistance from associated companies in the telecoms sector. The bureau aims to become profitable over the coming year.

The EMS (express mail service) business is the major revenue source of China Post, but is under severe competition from international and domestic delivery companies.

Fedex and UPS, the world's two top express delivery companies, both have the right to run direct flight to China.

The two companies are now planning to jointly enter China's domestic express delivery market.

In a bid to compete, China Post launched its own air delivery centre in Shanghai just before UPS began direct flights between the United States and China on April 1. Starting from July 1, China Post plans to increase EMS delivery speed.

Over 70 per cent of Chinese cities will then receive EMS parcels within 24 hours, according to China Post.

By renting more planes and using more air routes, China Post will provide 24-hour delivery to most of the country by the end of the year, said Liu Liqing, director general of China Post.

The bureau recently signed a deal with China Southern Airlines, the country's biggest air service company. Under the agreement, China Post will become the goods delivery agent of the airline and China Southern Airline will help deliver parcels for China Post.

Customers will also be able to buy air tickets from China Post's outlets all over the country.

Analysts say China Post can no longer rely ordinary mail to be its major source of revenue. Supported by over 60,000 post outlets around the country, the bureau has aims to become the biggest express mail provider.

Retail services are also within China Post's business range.

China Post began providing one-day cash remittance services on July 1, offering a challenge to the banking sector.

With the service, cash can be received within 24 hours without the need for a savings account.

"The 24-hour cash remittance service is more convenient than the same business provided by banks. Its low service charge and convenience will surely attract many customers and challenge the banks," said Tao Liming, a financial expert with China Post.

The bureau may also lend remittance money to other financial institutions, he said.

With these reforms, China Post is gradually becoming a more market-oriented commercial organization.

Catering for customers' need and providing new services will allow the bureau achieve its financial ambitions.

But business insiders also warn that China Post must avoid depending on monopolies to survive.

China Post recently accused many private express delivery companies of breaking the law by delivering letters. According to regulations, China Post is the only legal carrier of letters.

But the private companies claimed that the definition of letter was not clear enough and China Post's statements had harmed their reputation.

The dispute between China Post and private delivery firms has not yet been settled. Both sides agree the law should be clarified to overcome the problem.

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copyright 2001 by chinadaily.com.cn. all rights reserved.
The State Postal Bureau (China Post) is struggling to become profitable as it adapts to the market economy.
Once the most profitable government arm, the bureau has suffered huge losses in recent years as people increasingly turn to the telephone and e-mail for communication instead of writing letters.

Starting next year, the bureau will have to survive without any government subsidies or assistance from associated companies in the telecoms sector. The bureau aims to become profitable over the coming year.

The EMS (express mail service) business is the major revenue source of China Post, but is under severe competition from international and domestic delivery companies.

Fedex and UPS, the world's two top express delivery companies, both have the right to run direct flight to China.

The two companies are now planning to jointly enter China's domestic express delivery market.

In a bid to compete, China Post launched its own air delivery centre in Shanghai just before UPS began direct flights between the United States and China on April 1. Starting from July 1, China Post plans to increase EMS delivery speed.

Over 70 per cent of Chinese cities will then receive EMS parcels within 24 hours, according to China Post.

By renting more planes and using more air routes, China Post will provide 24-hour delivery to most of the country by the end of the year, said Liu Liqing, director general of China Post.

The bureau recently signed a deal with China Southern Airlines, the country's biggest air service company. Under the agreement, China Post will become the goods delivery agent of the airline and China Southern Airline will help deliver parcels for China Post.

Customers will also be able to buy air tickets from China Post's outlets all over the country.

Analysts say China Post can no longer rely ordinary mail to be its major source of revenue. Supported by over 60,000 post outlets around the country, the bureau has aims to become the biggest express mail provider.

Retail services are also within China Post's business range.

China Post began providing one-day cash remittance services on July 1, offering a challenge to the banking sector.

With the service, cash can be received within 24 hours without the need for a savings account.

"The 24-hour cash remittance service is more convenient than the same business provided by banks. Its low service charge and convenience will surely attract many customers and challenge the banks," said Tao Liming, a financial expert with China Post.

The bureau may also lend remittance money to other financial institutions, he said.

With these reforms, China Post is gradually becoming a more market-oriented commercial organization.

Catering for customers' need and providing new services will allow the bureau achieve its financial ambitions.

But business insiders also warn that China Post must avoid depending on monopolies to survive.

China Post recently accused many private express delivery companies of breaking the law by delivering letters. According to regulations, China Post is the only legal carrier of letters.

But the private companies claimed that the definition of letter was not clear enough and China Post's statements had harmed their reputation.

The dispute between China Post and private delivery firms has not yet been settled. Both sides agree the law should be clarified to overcome the problem.

| home |bdu | itchina | metrolife | newsphoto | language tips | worldreport | studyinchina | contact us |
copyright 2001 by chinadaily.com.cn. all rights reserved.