Air Express carriers urge China to further liberalise postal services

The Asian chief executives of the world’s top four air express carriers are to meet in Beijing to show their commitment to the Chinese market and to call for further liberalisation of the country’s express mail services.

During their first ever joint visit to China, the Asian division leaders of DHL, FedEx Corp, United Parcel Service Inc and TNT Express will talk to top Chinese officials, including the Vice-Minister of Commerce Liao Xiaoqi, the executive director of the Conference of Asia Pacific Express Carriers (CAPEC), Ira Wolf, said.

All four are members of CAPEC.

During the meeting, they will reaffirm the role that the air express industry plays in China’s economic growth, and urge the government to further modernize procedures, liberalize regulations and encourage free trade, CAPEC said in a statement.

‘We hope to see no additional restrictions in China’s amended draft Post Law and that the size of the monopolized sector be as small as possible,’ Wolf said.

CAPEC also hopes to see the establishment of an independent industry regulator, as China’s State Post Bureau is currently both the regulator and dominant player in the country’s mail delivery market.

To protect the local industry, the Chinese government has banned foreign air express carriers from the domestic express mail delivery sector and only allows them to offer international courier service through joint ventures with local partners.

Foreign air express carriers can hold up to 75 pct stake in such ventures.

However, restrictions did not stop foreign firms from expanding in the country.

DHL, FedEx, UPS and TNT have grabbed a 62 pct combined market share in the international forwarding service sector over the past 20 years, while China Post, shielded by the country’s Post Law, only managed to hold onto its dominance in the domestic express mail sector.

Industry analysts expect China Post’s share in the international air express sector to decline further, as global companies continue their expansion.

CAPEC member firms will also express concerns on a proposal to impose an additional tax burden on them to support a planned national postal fund, Wolf said. The specific tax rate was not available.

He argued that these firms already pay business taxes in China accordingly and that extra levies to help finance China’s postal service are not appropriate, given that they are not post offices but air express carriers.

‘We have no problems if they raise taxes for all,’ Wolf said.

‘Our concern is we may be singled out as a sector to help finance a universal postal fund.’

China’s obligations under the World Trade Organization require the country to open its logistics sector further to foreign firms, allowing them to operate wholly-owned subsidiaries in the country by the end of 2005.

However, all four CAPEC members were satisfied with their local partners and said that they are committed to the partnerships even after 2005.

‘We believe that the structure of our relationship with our local partner is very beneficial for both sides, and strengthens us in China,’ Uwe Doerken, CEO of DHL Express, told reporters during a trip to Shanghai in October.