China Post marches to logistic industry

China Post marches to logistic industry
(09/21/2001) (China Daily)

The State Postal Bureau (China Post) needs to restructure management systems and business operations in order to become a modern logistics provider, industry experts say.
China Post aims to become the country's biggest logistics provider, supported by its far-reaching network and decades of delivery experience.

"But the bureau is still far from a real logistics company,'' said Tian Xuejun, executive deputy director of the Logistics Institute at Beijing University of Science and Technology.

The restructuring plan made by Tian's institute was recently chosen out of seven other proposals, Tian told China Daily Thursday.

Under Tian's plan, a logistics branch should soon be set up to become China Post's major revenue source.

He said the plan had been approved by bureau leaders and would begin operating in the near future.

The logistics branch should become a commercial entity and operate under market laws instead of playing the role of a government department.

Under the rules of the World Trade Organization (WTO), which China will soon become a member, the country hopes to open its service and logistics market in three years.

China Post must grow into a competitive logistics provider within the three-year protection period, in order to be able to survive when foreign logistic giants arrive.

Major international logistics players, UPS, Fedex and TNT, have all been eyeing the huge Chinese market as Chinese companies are currently unable to compete with them.

Besides system restructuring, operation reforms also need to be put in place as soon as possible, Tian urged.

China Post needs to set up a money clearing system to enable customers to pay for items anywhere around the country. A service charge needs to be put in place in order to protect a healthy revenue distribution among local post offices to ensure that these offices make profit.

Without a central clearing system, local post offices give discounted prices to attract more customers. But delivery offices at the destination of the post lose money, according to Tian.

A clearing system would help distribute the revenue income among collectors and delivery offices.

Although China Post currently employs more than 1 million people nationwide, there is still an urgent demand for extensive knowledge of the logistic field.

The bureau's computer network also needs to be upgraded to satisfy customer demand for information. Although China Post has invested 100 million yuan (US$12 million) in its computer hardware upgrades, the software side is far behind what it needs to be. The logistics computer network should help customers track their goods while at present they can only check the route of their post within their province.

Business to business (B2B) delivery should be China Post's major aim while the bureau focuses on business to customer (B2C) services.

Multinational companies, emerging enterprises and chain stores would be the main customers of China Post, Tian said.

China's logistics market is estimated at around 1.78 trillion yuan (US$215 billion), according to Liu Liqing, director-general of China Post.

Supported by the 66,000 post outlets and 1 million experienced delivery employees, China Post is the most potential top logistics provider in the country. But it must move fast to fully utilize the final three-year protection period after China's entry into the World Trade Organization, said Tian.

(China Daily by Hou Mingjuan)