China Post, Express Companies Negotiate

International express delivery companies are close to resolving a festering dispute with China’s postal monopoly that is threatening their business in the country, an industry association said Tuesday. Both foreign and domestic express delivery companies have been negotiating with China Post over new regulations that require them to stop handling letters and packages weighing under 500 grams, and register with the government body to continue their other businesses. Those rules are widely seen as an attempt to shield China Post’s own express delivery business, EMS, from competition by the likes of FedEx Corp. (FDX), United Parcel Service Inc. (UPS), DHL Corp. (X.DHL) and TPG N.V. (TP), which now operate in China through local partners. ‘We will reach an agreement fairly shortly,’ said Li Limo, president of the China International Freight Forwarders Association, a local industry group that is representing the express delivery companies in the talks. ‘Both sides will make some compromises,’ Li told Dow Jones Newswires, though he wouldn’t comment on how China Post might modify the 500-gram restriction. His association has previously said packages under 500 grams account for 60% of its member companies’ traffic in China. Li said the express delivery companies would likely compromise by agreeing to sign documents in which China Post authorizes them to continue their letter delivery business – thus implicitly accepting it as a regulator. Express delivery companies have previously been operating under licenses granted by the Ministry of Foreign Trade and Economic Cooperation and have contested China Post’s authority to regulate their activities. Li said his association and China Post will ‘definitely’ reach a final agreement before June 15, the deadline that China Post has set for express delivery companies to comply with its new regulations.