Couriers urge China Post to withdraw rules

PUBLISHED : Wednesday, 30 October, 2002, 12:00am
UPDATED : Wednesday, 30 October, 2002, 12:00am

International express operators yesterday appealed to China Post to pull back from an embarrassing conflict by withdrawing new regulations the couriers say will damage the development of an efficient logistics industry.

The operators, represented by the Conference of Asia-Pacific Express Carriers (Capec), said they were unlikely to file for 'entrustment' by next Tuesday's deadline.

A spokesman for Capec said entrustment - essentially making China Post the regulator of companies with which it competes - flies in the face of the 'economic liberalisation and fair competition' enshrined in World Trade Organisation principles.

Failure to file, China Post insists, will result in the foreign express operators being banned.

'We are against China Post regulating the industry and we are against the principle of entrustment,' the spokesman said.

'It will hurt China's image in the international community so soon after its entry into the WTO,' the spokesman added.

Deadlines have come and gone in the long-running dispute which first emerged in December, but China Post last month reminded all operators they must file this time.

A Capec spokesman said: 'We feel it is likely they will enforce the deadline.'

In February, China Post informed foreign express operators they would be restricted from carrying packages over 500 grams unless they charged more than China Post.

But that restriction was not mentioned in the last directive (directive 472) and deadline issued on September 5.

Capec members, which include the world's top four express operators, say they are in the dark with the deadline nearing.

'[The] 472 said it supercedes all directives issued before it if there's a conflict.

'But what if there's no conflict? Does that mean previous regulations still apply?' asked an express operator.

'[The] 472 did not mention any weight restriction. Does that mean the weight restriction has been lifted? What are we being asked to sign and how do we comply?' asked another.

The Capec spokesman called for the deadline to be dropped 'so the parties can address these matters without pressure'.

It had twice in the past three months asked China Post for clarification on the issue but had received no response, the spokesman said.

At stake is a piece of China's burgeoning international express parcel and document industry, which Capec estimates has grown at 25 to 35 per cent per annum in the past five years.

While market data is sketchy, China Post subsidiary Express Mail Service (EMS) registered sales of 1.04 billion yuan (about HK$974.8 million) in 2000, a sum thought to represent roughly 40 per cent of the market.

The entrustment process is seen by outsiders as China Post's bid to hive off the lucrative international express market for EMS, one of its few profit centres.

According to the China International Freight Forwarding Association, EMS has been losing 4 per cent of the market a year to foreign companies since 1995.

It now controls just 33 per cent of the market compared with 97 per cent a few years ago.

China Post, which will see government subsidies removed within a year, is also under pressure to correct its loss-making ways before hiving off its six most profitable regions for a Hong Kong listing.

Capec, whose members traditionally have been regulated by the Ministry of Foreign Trade and Economic Co-operation (Moftec), favours a return to that system.

'We have been regulated by Moftec for a long time, they do a good job and we are comfortable with them,' said the spokesman. 'Why change now?'