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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5 Responses to “China’s New Postal Law Is Complete, and the News Isn’t Good”

  1. Chinamatt says:

    April 27th, 2009 at 10:30 am

    Does this mean China Post will improve its service and stop “losing” international packages? (don’t laugh too hard while you think about it)

  2. Rich says:

    April 27th, 2009 at 10:56 am

    I wish… I currently have one lost.

    I mean, they “say” they attempted to deliver (no note on the door and my guards downstairs would have signed for it anyway).

    Just hoping it is returned in 30 years and makes the news

    R

  3. Zhou Ji-Ming says:

    April 28th, 2009 at 7:12 pm

    This situation seems similar to the situation faced by Jim McGregor in his book One Billion Customers. While head of Dow Jones in China in the early 90’s, he and other financial information service providers faced the impossible situation of having Xinhua become both competitor and regulator of them and other foreign competitors.

    McGregor’s negotiating strategy – where the foreign competitors essentially banded together in an attempt to gain a more level playing field – should be required reading for the leaders of the 3P companies you mention. – zhou

  4. David says:

    April 29th, 2009 at 8:52 am

    From Reuters:
    EU probes new China postal law over trade concerns
    Wed Apr 29, 2009 5:34am EDT
    * EU analysing if new China postal law breaches trade rules

    * Law favours monopoly China Post, excludes foreign firms

    * EU business lobby, postal industry criticise law (Adds background, details)

    By Darren Ennis

    BRUSSELS, April 29 (Reuters) – The European Commission said on Wednesday it was investigating whether China broke world trade rules with a new postal law that allows only a state monopoly to deliver domestic letters and documents.

    The probe by the European Union executive, which oversees trade policy for the 27-nation bloc, could further damage brittle trade relations between Brussels and Beijing ahead of high-level talks between the trading partners next month.

    “We have received details of the new law and are currently analysing it to see if it contravenes the rules of the World Trade Organisation,” Lutz Guellner, spokesman for EU Trade Commissioner Catherine Ashton, told Reuters.

    The law approved on Friday allows only China Post — also the industry regulator and pricing authority — to deliver letters and documents posted within China, cutting out foreign firms such as FedEx Corp (FDX.N: Quote, Profile, Research, Stock Buzz), TNT (TNT.AS: Quote, Profile, Research, Stock Buzz) and United Parcel Service Inc (UPS.N: Quote, Profile, Research, Stock Buzz).

    The EU chamber of commerce in Beijing and the Conference of Asia Pacific Express Carriers (CAPEC), an industry group representing the interests of FedEx, TNT Deutsche Post DHL (DPWGn.DE: Quote, Profile, Research, Stock Buzz) and UPS, have described the law as protectionist.

    The law, which will become effective on Oct. 1, defines letters and documents as those also including almost all printed material and information stored on CDs or DVDs.

    Foreign firms would be allowed only to deliver “packages” and international letters and documents in China, barring them from entering the highly lucrative and fast growing domestic express delivery market. (Reporting by Darren Ennis)

  5. robert says:

    May 17th, 2009 at 7:16 pm

    Rich, do you have a link to the Chinese-language version of the law, or the title of the law in Chinese?