Rules mystify couriers and forwarders

PUBLISHED : Wednesday, 25 September, 2002, 12:00am
UPDATED : Wednesday, 25 September, 2002, 12:00am

Mainland authorities have thrown new fuel on to the China Post dispute by placing control of the country's US$2 billion express industry firmly in the hands of the State Post Bureau.

The move dumbfounded domestic and foreign forwarders and air couriers, which have been struggling to level the express market playing field in the post-World Trade Organisation era.

United Parcel Service chief operating officer Thomas Weidemeyer said: 'We don't care who our competitor is as long the regulations are fair. We have been doing business in China since 1988 and for them to just overnight change the rules . . . for one, my belief is that it is against the dictates of acceptance to the WTO.'

In a joint notice earlier this month, the Ministry of Information Industry (MII), the Ministry for Foreign Trade and Economic Co-operation (Moftec) and the State Post Bureau gave forwarders and express operators until November 4 to apply for 'entrustment' from the bureau.

Companies failing to comply would 'cease to conduct the postal and delivery services for letters and materials of [a similar] nature', it said.

Operators complained the notice was so vaguely worded they still had no idea what the post-entrustment regulations would or would not allow.

After entrustment, the compliant firm 'may conduct postal and delivery services for cross-border letters and materials of [a similar] nature, excluding private letters and official documents of the CPC, governmental and military organisations above county level [inclusive]', it said.

The notice appears to indicate Moftec and the MII have settled their jurisdictional dispute: Moftec governs mainland forwarders and had questioned MII's right to dictate industry rules.

MII, which governs China Post, in January tried to carve out the valuable express market exclusively for its underling by preventing forwarders and foreign operators from handling parcels weighing more than 500 grams.

The move did not sit well with Moftec.

The notice this month rescinded that move but in its place were potentially more easily manipulated regulations, one executive said.

'In this light, lifting the weight restriction is actually a step backwards. At least there we had some firm description of the limitations,' he said. 'I mean, what's a private letter?'

The Council of Asia-Pacific Express Companies (Capec), which represents the foreign express operators in the dispute, clearly saw the notice as a setback.

'We are disappointed that this new notice does not address the issues Capec has raised and we are concerned that it will affect China's competitiveness and the development of its economy,' Capec said.

It was the latest in a series of 'entrustment' deadlines and the executive said this edition, like its predecessors, would probably also fail to stick.

'Capec and the industry are not going to stay quiet on this. There will have to be more changes to the regulations because this simply isn't workable,' he said.

Operators claim the move allows the State Post Bureau to regulate its competitors.

The potential of the international express industry in China, which includes small packages, is said to be enormous.

EMS, China Post's express service, has seen its sales hit US$600 million, and the market is growing annually by as much as a third.

The export market alone was expected to grow 9 per cent a year to almost 12 million units by 2005, according to United States-based consulting firm MergeGlobal.