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The eighth amendment to the Postal Law, which is soon to be submitted to the Executive Meeting of the State Council, has caused a stir among domestic private express and logistics companies. They are facing the threat of being phased out of the market by the expansion of government postal services.

A letter, sent by express delivery no less, was received recently by the All-China Federation of Industry and Commerce. The letter, signed by about 50 private express and logistics companies in Shanghai, called for more openness in the drafting of legislation, and engaging industry representatives in consultation and negotiation. 

"Those who drafted the amendment did not ask for our opinions. Regulating access to the market is ridiculous," said Liu Heping, vice manager of EUE Ltd. Co, a private express delivery company based in Shanghai, in a telephone interview with China Business Times.

"Seven years ago, I gave up a comfortable life as an executive to establish Ponyex. It is like my own child. But if the amendment is approved, this seven-year-old child will die!" said Feng Yuhui, general manager of Ponyex, an express delivery and logistics company based in Beijing.

Expansion of government postal services

Compared with the current version of the law, this new amendment redefines the scope of government postal services to include any small mail item with a unit weight of up to 150 grams. "This adjustment is ridiculous because most of the letters we deliver weigh less than 50 grams!" according to Xiong Xingming, vice president of Zhaiji Express.

For bigger parcels or packages, government postal services have been expanded in two categories; one for deliveries weighing less than five kilograms, and the other for packages weighing less than 10 kilograms.

"The weight of 99 percent of the letters delivered by Ponyex in the North China region is less than 150 grams. Soaring oil prices have resulted in a shrinking market for large goods transportation. If this amendment goes through, the small and medium sized players will have no choice but to close down," Feng said.

Private sector feeling the pinch

In Shanghai, more than 95 percent of in-city, 80 percent of domestic and 95 percent of international express services have been undertaken by the private sector. Nationwide, the figures are 80 percent for international and 90 percent for in-city services, according to Liu Jianxin, secretary-general of China International Freight Forwarders Association (CIFFA). The express industry employs 3 million people across the country.

And now, the amendment to the Postal Law threatens their very existence.

According to Liu Heping, if the amendment is approved, the private sector will lose 90 percent of market share for in-city and 50 percent for domestic services. Bankruptcy applications are bound to increase, and logistics, express and freight delivery enterprises across the country will lose more than 50 percent of their operations, and stand to lose an estimated 10 billion yuan a year.

Is anyone listening?

Industry players claim that they began to feel disappointed as early as 2003, when the fifth amendment was drafted. They add that not once were they consulted before amendments were made. They only heard about the eighth amendment through the grapevine; they have neither seen any public documents on the issue nor received notice to offer opinions.

In early September, Liu Heping formed an alliance with other private express companies to lobby CIFFA for help with their calls for consultation with the government. They chose CIFFA because CIFFA's mission is, after all, to represent the interests of international freight forwarders and modern logistics enterprises.

A disgruntled Feng Yuhui said: "Instead of a professional industrial association, we are under the supervision of the State Postal Bureau and State Administration for Industry and Commerce."

(China Business Times translated by Li Shen for China.org.cn, September 29, 2006)