Hongkong Post must deliver on innovation to survive
As the city’s postal service seeks an injection of funds, it is clear that operations need a serious revamp
The bailout being sought after eight consecutive years of deficit totalling HK$2.9 billion – a peak profit of HK$1.23 billion was recorded in 1997-98 – has raised questions over the financial viability of the department which has functioned on a self-financing basis as a trading fund since 1995. The mail volume handled by the post office decreased by an average rate of about 7 per cent per year from 2019-20 to 2024-25, culminating in a 44 per cent drop. The trend is expected to continue or worsen in the coming years, officials say.
The replacement of letters by electronic communication is not something new, nor is the intensifying competition with commercial delivery services. While the post office has rightly sought to diversify its operations to help raise revenue over the years, the accumulated financial woes showed its pace of reforms is lagging behind. In 2020-21, e-commerce generated nearly half of Hongkong Post’s annual revenue but the proportion fell to around 25 per cent in 2024-25, equivalent to HK$700 million, due to geopolitical changes and competition from private operators.
Hongkong Post may borrow a leaf from overseas. While postal services in some countries have been scaled back, there are also good examples of how radical reforms involving diversification and digitalisation have resulted in profitable operation. For instance, Singapore Post is regarded as a successful case of transformation into a global e-commerce logistical enterprise through modernisation and international market expansion.
Officials concede that the injection of funds is meant to “buy time” for reforms and pledged to make a decision within three years. The options include privatisation, turning into a government-owned corporation or reverting back to a fully funded department. The digital age does not necessarily spell the death of postal services but calls for a serious revamp. Be it self-financing or fully funded, Hongkong Post must continue to reinvent itself for the times.