China post cranks up logistics ops
China’s State Postal Bureau said it will spend 100 million yuan ($12 million) this year to improve its fledgling logistics network.
Li Xiong, manager of the logistics subsidiary of the postal agency, said it recently signed service contracts with seven domestic and multinational companies. They weren’t identified.
China’s postal monopoly has struggled with heavy debt since the government split it and the profit-making telecommunications sectors into two independent units in 1999.
Since then, the agency began to explore non-postal businesses, and set up China Postal Logistics Co. Ltd. at the beginning of this year to compete against parcel delivery companies such as FedEx Corp. and United Parcel Service, who are making significant inroads in the Chinese market.
The competitive pressure is likely to intensify as China makes good on promises to open its service sector, including the delivery business, to foreign companies within three years of its entry into the World Trade Organization in late 2001. The government has promised to allow foreign courier companies to establish wholly-owned operations in China, but hasn’t said when. WTO commitments say that must happen before the end of 2005.
The postal agency has so far relied on a monopoly clause in its charter that forbids foreign express operators to handle shipments of less than 50 grams (1.1 pounds).
China’s postal law stipulates that delivery of letters and other goods “that have functions of letters” should be exclusively operated by China Post. The state agency contends that express delivery companies try to blur the distinction between postal services and goods delivery.
