China stalls express shipping rules
China wants to be a full member of the World Trade Organization, but it’s having trouble following the rules.
The deadline for resolving a months-long dispute pitting China’s postal monopoly against foreign express delivery giants has been extended to mid-August, FedEx says.
Memphis-based FedEx is the world’s biggest express carrier, and employs about 30,000 people at its world headquarters, world technology center in Collierville and hub at Memphis International Airport.
The spat revolves around proposed restrictions on express services that would hand the state monopoly a competitive edge during China’s first year in the WTO. China previously faced a June 15 deadline for the new rules to have taken effect.
“I understand from unofficial sources that the submission date has been extended to mid-August,” a Fedex spokeswoman told Reuters. “We remain confident that this issue will be resolved to the benefit of our customers in China.”
The stakes are high in a market state media has estimated at some $1.8 billion annually. Express firms have experienced 30% sales growth in recent years, the China Daily Business Weekly says.
State media quoted some foreign firms as threatening to pull out of the country, protesting that the new restrictions would affect more than half their business in China.
The dispute flared up over a February China Post directive that proposed to restrict foreign express delivery firms from handling shipments weighing 1.1 lbs. or less.
The directive also required all delivery firms to obtain operating certificates from the postal bureau or lose their licenses.
And it proposed to bar express firms from transporting documents carrying individuals’ names, and prohibit them from accepting documents from government or Communist Party bodies.
Industry executives said China Post faced an obvious conflict of interest by being both industry regulator and competitor.
In April, FedEx, United Parcel Service, DHL and TNT International Express drew up a letter for China’s trade ministry to protest against the plans, complaining they would only bolster the bureau’s monopoly.
FedEx said in May it was confident the spat would be settled by June 15, a second deadline extension for implementation of the new rules after the original May 6.
An industry group that represents both foreign and domestic express firms in the tussle says it would be settled in a manner acceptable to all parties.
“A settlement will come very soon. We won’t be waiting weeks,” says Li Limou, the secretary-general of the China International Freight Forwarder’s Association.
“As long as we are still in discussions nobody will do anything. It’s certainly been a really long time, but there will be a decision that both sides will accept,” he says.
The postal authority at present controls about one-third of the market, Li says.
“We hope that we can proceed with our original business and operate normally. But the postal bureau has other opinions,” he told Reuters from Beijing.
