In an announcement earlier this month, China Post said that all express delivery operators would only be allowed to deliver goods that weigh more than 500 grams and cost more than China Post's Express Mail Service (EMS).

The bureau said related companies should discontinue express delivery services immediately in order to "protect the China Post's exclusive right" to operate in this business.

Hundreds of express delivery companies, including local joint ventures of the top five global delivery businesses, DHL, Fedex, UPS, TNT and OLS, responded sharply, claiming China Post is "killing the express delivery industry."

Both parties said the other side is violating State law and regulations.

According to the Post Law, "The delivery of letters and other goods that have functions of letters should be exclusively operated by China Post."

Even the rules of the World Trade Organization (WTO) do not promise the opening of the letter delivery business to overseas operators, said a China Post spokesman.

For many years, he said, the express delivery companies have sought to confuse the distinction between post services and goods delivery services. They repeatedly violated the Post Law and had been warned by the China Post.

Although these delivery companies would be allowed to deliver goods that weigh more than 500 grams or individual letters that cost more than the EMS standard, express delivery companies said the China Post is "protecting monopoly and hurting the interests of all the trade companies."

Li Limou, vice-president of the China International Freight Forwarders Association (CIFA) and its 539 member companies, said China Post would eliminate all express delivery operations by companies other than itself.

Li said over 60 per cent of the shipments of the non-China Post deliverers are documents weighing less than 500 grams, and if China Post's new rules are carried out, the delivery industry would be severely hurt.

He said members of his association have all received government approval to operate express delivery businesses. "We are doing legal business. Why should the China Post use its role as a government bureau to protect its own interests?" said Li, who is a 30-year veteran of the delivery industry.

Express delivery and postal services are two different concepts and each has its own customers, according to Li.

China Post's EMS business, which has an advantage in domestic delivery, is suffering from shrinking market shares in the delivery of export and import goods.

Many multinational companies have begun to use the top five deliverers rather than EMS.

"China Post should solve its internal problem, like upgrading efficiency and installing better management software, but should not go back to being a monopoly," Li said.

The express delivery companies, which are under the supervision of the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), have organized and applied for government assistance.

A spokesman from MOFTEC said the organization is contacting China Post and its manager, the Ministry of Information Industry (MII), to jointly solve the problem. But the answers have not yet been given and industry insiders are still wondering about the direction of the country's delivery services industry.

(China Daily March 26, 2002)