Express-delivery JVs Continue to Clash with Postal Bureau Over Delivery Rights
May 01, 2001
(30 April 2001) The ongoing campaign to regulate China's postal communications market has stirred up agitation among some Sino-foreign joint venture express-delivery companies who claim their legal business operations are being interrupted.
The heads of many international freight-forwarding companies poured out their complaints to the media at a China International Freight Forwarder's Association (CIFA) news conference in Beijing . The companies represented at the April 27 conference included DHL-Sinotrans Ltd., Datian W. Air Service Corp. and EAS International Transportation Ltd., a Beijing freight-forwarding company.
DHL-Sinotrans and Datian officials claimed that local postal officials forced their way into many of their branch offices and conducted illegal searches, the April 27 Zhongguo Xinwen She ( China News Service ) reported.
Some of the branches reporting this activity were DHL-Sinotrans' branches in Xi'an , Jiangxi and Sichuan and in the cities of Zibo and Weifang in Shandong province. FedEx Corp.-DTW Co., Datian's joint venture, reported similar activity at its office in Dongguang, Guangdong province.
Search and seizures–legal or not?
Additionally, these companies complained that deliveries by the local branches were being intercepted at roadblocks. They said that inspections were being conducted and their cargo documents and delivery goods had been confiscated. Sometimes the branches had to pay stiff fines. However, the company officials claimed that all these incidents occurred when the branches were conducting legal business operations, the article said.
The State Postal Bureau (SPB) announced at a news conference in mid-April that it had joined forces with the local police and government departments for industry and commerce to investigate express-delivery companies in Beijing, Tianjin , Hebei and Shandong. This move was substantiated by the implementation of provisions of the Postal Law and local regulations, which state that foreign companies are banned from letter-delivery operations, a SPB official said.
However, the international freight-forwarding companies attending the April 27 CIFA news conference cited another provision from the Postal Law to support their legal international express-delivery services. They said that although the law stipulates that letter delivery should be a monopoly run by the state postal offices, it adds the clause "unless otherwise determined by the State Council ."
According to China's International Freight-Forwarding Service Management Regulation unveiled with the State Council's approval in 1995, international freight-forwarding companies are allowed to offer international express-delivery services, excluding personal letters.
The Ministry of Foreign Trade and Economic Cooperation ( MOFTEC ) and the General Administration of Customs ( GAC ) also released relevant regulations concerning international express-delivery services.
Growing international JV presence
Since China opened its international express-delivery sector to foreign investors in the 1980s, a stream of world-famous express couriers have gained footholds in the Chinese market. They include the United Parcel Service (UPS) of America Inc., FedEx Corp., DHL Worldwide Express Corp., the TNT Post Group and the Overseas Courier Service (OCS). These foreign express couriers have formed joint ventures with Chinese companies to provide express delivery of business mail.
The UPS and FedEx joint ventures are currently in a race to open cargo-flight routes to China, the article said.
In recent years, the business volume of various types of express couriers has been growing at an average annual rate of between 20 percent and 30 percent, speeding its market share to 60 percent. The fierce competition has reduced the market share of the SPB's Express Mail Services (EMS) to 40 percent.
Chaos over words
An industry insider attributed the constant conflicts between the state postal services and the express-delivery companies to their different understanding and interpretations of the wording of "the exclusive letter-delivery operations" in the Postal Law.
The state postal departments blamed some express-delivery companies for operating in violation of regulations and causing chaos in the market. The accused express-delivery companies shot back with allegations that the state postal departments were trying to cover up their poor efficiency and failure to separate administrative control from business operations, according to the story.
The insider said that there are still disputes over whether the SPB or MOFTEC has the authority to approve and manage the international express-delivery operations. The state postal departments want to hold onto their monopoly by waging a campaign against illegal competition, a practice that ran counter to China's opening-up policies for the entry into the World Trade Organization.
MOFTEC held two meetings with the postal services and the express-delivery companies and listened to arguments from both sides. In an effort to resolve the conflict, MOFTEC sent a letter to the SPB acknowledging the domestic express-delivery sector's great achievements in recent years and suggested that the status quo be maintained before the revision of the Postal Law, the article said.
