China’s New Postal Law Is Complete, and the News Isn’t Good

Monday, April 27, 2009 2:11
Posted in category China Logistics

For the last 20 years, China Post has held the sole right to deliever China’s mail, domestic China express packages, and express letters.

It is a situation a regulation that has been frustrating for many of the global express carriers (UPS, FedEx, TNT, and DHL) becasue Logistics is in its simplest form about control of goods.

Making sure things arrive. In one piece. Unadulterated

So, with global clients expecting this service when signing over their package, it is understandable that many of these firms would now be concerned with the recent passing of China’s Postal Law.

Foreign companies will be limited to delivering express packages domestically, and can only send express letters internationally, Wang Yuci, vice director of the State Post Bureau, told Dow Jones Newswires Friday on the sidelines of a press briefing.

Chinese companies, both state-owned China Post and privately operated ones, will carry out the business of domestic express delivery of letters, according to the revised postal law.

For many firms, firms like TNT and FedEx, who were betting and positioning in China’s domestic delivery space, this is likely to come as really bad news as each had put a lot of money into developing domestic networks that would move documents around the country, and depending on the definition of the term “packages”, they could also find themselves having to outsource their domestic delivery of letter pouches to local partners as well.

Outside of the organic growth markets in China being blocked for foreign firms, firms who were gearing up to enter the local market through investments were also impacted – as confirmed by a quote in Xinhua:

the amendment article on not opening domestic delivery to foreign investment conforms to China’s WTO commitment

So what does this really mean for foreign firms sending their packages, it is still a largely unanswered question. With so many firms relying on UPS to send contracts and sensitive documents through a trackable system, it is clear that firms will need to watch and assess the situation.

The new law also put in place a new article article forbidding “all organizations or individuals from opening, hiding, damaging or discarding others’ letters, instead of just preventing postal workers from doing so.”, but I would remain skeptical on the value of this clause and find little value in it.

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