Neopost eyes low usage of franking machines

France-based Neopost, the world’s No 2 manufacturer of postage machines, wants to take advantage of the opening of China’s postal service market.
The company is lobbying China’s postal industry regulators to allow franking machines to be installed in large companies, said Neopost Chair and Chief Executive Officer Jean-Paul Villot.

China’s low usage of franking machines, meant to facilitate processing of outgoing mail, provides huge business opportunities for manufacturers, he said.

“China has more than 10 per cent of world’s postmen, and more than 10 per cent of the world’s post offices,” Villot said. “However, it has just 0.3 per cent of the installation base of franking machines.”

Some 5,755 franking machines had been installed in China by the end of last year, indicate China Post statistics. However, there are about 300,000 franking machines in some European countries – including France and Germany.

China’s postal service now has the world’s largest goods delivery network, with more than 200 distribution centres and 150,000 postal workers.

“Until now, China has been one of the few countries where franking machines could be installed in post offices, but could not be in businesses and administrations,” Villot said.

To ensure the postal-service process was secure, China has prohibited businesses, except provincial post offices, from installing franking machines.

In 1999, China Post assumed responsibility for provincial post offices’ purchasing, and then called tenders for nearly 2,800 franking machines.

Neopost won the largest number of contracts, and installed 1,373 units in 22 provinces.

China Post called tenders this year for a nationwide programme; Neopost won 47-per-cent of the contracts.

Neopost has become the No 1 supplier of franking machines in China.

Neopost expects to have installed 4,065 franking machines in 28 of China’s 31 provinces by year’s end.

Neopost posted 196.3 million euros (US$196.5 million) in sales during the year’s second quarter.

Villot declined to reveal Neopost’s sales figures in China. Analysts believe they are small given the previously restricted access to the market.

China’s postal regulator “will and should allow the use of franking machines in the commercial sector” to be consistent with international practices, Villot said.

Businesses will find it easier to manage their increased mail and document flow and cut their trips to post offices if they have franking machines, Villot added. China’s postal regulator has shown increasing interest in technologies that can transform the traditional service sector.

Regulators have vowed to broaden the use of information technology and to increase the proportion of e-service income in gross postal income to more than 10 per cent by 2005.

US-based Pitney Bowes, Neopost’s major competitor, formed a partnership with China Post in August to implement its first Chinese Web-based postage management system, Postagebyphone.com.

Pitney Bowes also signed contracts with more than 15 provincial postal bureaux, which are worth several millions of US dollars, to provide and install postage machines.