Stand and deliver

State postmen maintain their monopoly

Stand and deliver

Won't benefit from the new law

October 1 is turning out to be a red letter day for China’s postmen. Not only will they get the day off (and a national parade to boot) but they’ll also see a revised Postal Law go into effect, following its adoption by the National People’s Congress in April. The new legislation continues to block foreign companies from delivering domestic letters in China. A first class day all round, you might say.

With talk of import bans on auto parts and chicken meat still swirling around the international media, the news of the restrictions on such a huge segment of the postal market is prompting further grumbling about the limits of China’s free market instincts. The EU’s Chamber of Commerce in Beijing is one of those crying foul, claiming contravention of WTO commitments.

Not so, Qiao Xiaoyang of the NPC Law Committee told the Global Times earlier this year. When the postal market was first reformed in the mid-1980s, it was always made clear that the delivery of domestic letters would remain under the exclusive control of state-run China Post.

Foreign firms would only be allowed to deliver domestic “packages” (items heavier than letters), as well as international letters and documents coming into the country. But delivery of letters solely within China was always off-limits, Qiao argues. This was reiterated at WTO entry in 2001. Express mail was to be opened up with the exception of “services monopolised by China’s postal department according to the law.”

It is the customer who is losing out in all of this, wails the Conference of Asia-Pacific Express Carriers, which speaks on behalf of courier firms FedEx, DHL, UPS and TNT. Without reform, there are few market incentives to improve postal service quality.

An opinion piece in the China Youth Daily seems to agree that the current state-owned service is prone to poor service.

But the newspaper is not calling for the industry to be opened up completely. In fact, it regards China Post’s monopoly as a rational one, as it underpins a public service.

It doubts too that private delivery firms will offer services in places that they do not consider profitable. Besides, China Post’s main rivals (especially the foreign ones) are big enough to cope with a few restrictions, the newspaper says .

The implication, of course, is that China Post might not prove quite as robust in the free market sunlight. And it is true that the postal giant was one of the last large state-owned enterprises to be restructured.

The industry’s top bureaucrats have also long enjoyed a dual role as regulators and as business executives charged with delivering the mail. More recently, the State Post Bureau has been set up as a distinct regulatory authority, although critics complain that deep-rooted, preferential relationships within the sector will take much longer to disentangle.

But to see China Post as a super-sized relic, lashing out in enraged fashion at its commercial rivals, is to ignore an alternative view. Others see the company as positioning itself for future growth.

With thousands of post offices across the country, the company has an unmatchable reach across China. Hundreds of millions of depositors keep their savings in its bank. Rural migrants send an estimated $30 billion in remittances back to their relations through its network. Efforts are also being made to push into internet banking, small loans and life insurance.

This type of bundling of services should help in winning more business from farmers, low-income urban residents and migrant workers. It might eventually help in winning back some of the market share lost to rivals in the express package business too.

This particular dinosaur is still set on delivering, it seems.

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