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Controversial postal law gets green light

By Zhu Zhe (China Daily)
Updated: 2009-04-25 08:23

Top Chinese legislators gave their final nod to the revised Postal Law on Friday, amid concerns that it may hamper foreign firms' and private couriers' access to the lucrative market.

A worker handles parcels, to be delivered by private courier ZJS Express to clients, at the airport of logistics park of the Beijing Capital International Airport. [File photo]

The law, due to take effect on Oct 1, bans foreign companies from delivering express letters in China, which means they can only deliver express packages domestically and send express letters internationally.

The adoption of the law means years of lobbying by major global express-delivery companies in China to lift such a restriction has amounted to nothing.

The Conference of Asia Pacific Express Carriers (CAPEC), which represents four global express-delivery giants, DHL, FedEx, TNT and UPS, expressed regret over the new law, although legislators insisted the rule is in line with China's commitments to the World Trade Organization (WTO) and creates no barriers.

"CAPEC regrets that the newly enacted China Postal Law excludes foreign business from entering a segment of the domestic market," it said in a statement made to China Daily on Friday.

It said the exclusion provision will "erode the competitiveness of foreign invested firms against their domestic counterparts in the wider express market", and wished for an "open and level playing field" in the near future.

Express delivery is big business in China, accounting for about 43 percent of the postal system's revenue of 96 billion yuan ($14 billion) last year, according to figures from the State Post Bureau.

But He Yongjian, from the legislative affairs commission of the National People's Congress Standing Committee, the top legislature, said on Friday the amendment doesn't affect the development of foreign business operations in China, nor does it breach the nation's WTO commitments.

He explained that on entering the WTO in 2001, China made commitments to open express mail services with the exception of "services monopolized by China's postal department according to the law".

The existing law, which was passed in 1986, stipulates that the delivery of letters in China is a monopoly of the country's postal department.

Apart from the restrictions on foreign business, the new law also requires China's privately-owned express-delivery companies to acquire a permit from the government.

Legislators said the market access system aims to regulate the rapidly growing sector, but insiders said it helps to maintain the State-owned postal service's market monopoly.

"Express delivery is an open and competitive industry globally. But such a new rule creates a barrier for private operators in China," said Liu Heping, general manager of Shanghai Huanzhi Transport Cooperation. He is also former vice-general-manager of Shanghai East Union Express, the first private express delivery company in the economic hub.

He said that as a direct result of the new law, many private delivery companies would have to turn to other business, or play "hide-and-seek" with local law enforcement officers, resulting in delayed deliveries.

"Therefore, the interests of customers will be affected," Liu said, adding that for now State-owned delivery service don't have the capacity to fully meet customers' needs.