Tags: china | liberalize | courier | market

China to 'Fully Liberalize' Domestic Courier Market

Thursday, 25 Sep 2014 07:06 AM

China said it would ease restrictions on foreign couriers seeking to deliver packages nationwide, potentially increasing competition in a fast-growing business already marked by bruising price wars.

The State Council, or cabinet, said in a statement late on Wednesday it had decided to "fully liberalize" the market for parcel delivery to promote fair competition between domestic and foreign firms.

It said the government would allow foreign firms that met certain criteria to take part, and would also encourage mergers in the sector.

The statement, however, did not give any details or specify what restrictions would be eased, or what the government's criteria were.

FedEx Corp, which along with United Parcel Service Inc operate express parcel delivery services in China, told Reuters on Thursday it welcomed the cabinet decision. It declined, however, to provide any details on the measure.

UPS did not immediately respond to requests for comment on the government announcement.

U.S. and European trade officials have in the past criticized as protectionist Chinese regulations on the postal sector. Both the American and European chambers of commerce welcomed government measures to liberalize the sector in separate statements.

Under a 2009 law, all courier firms must obtain city government permits before they can deliver packages anywhere in China. Local firms have found it much easier and quicker to do so than foreign couriers.

The law also bans non-Chinese couriers from delivering domestic mail, a lucrative market segment the foreign firms have lobbied hard to access. State-owned postal service China Post , which dominates that market, made 14.5 billion yuan ($2.36 billion) from delivering mail last year.

Express parcel delivery is booming in China, thanks to a surge in e-commerce. Revenues in the express parcel delivery market have more than doubled to $13 billion over the five years to 2011, and are expected to surpass the $70 billion a year generated in the United States, and become the biggest in the world by 2032.

The Chinese market, however, is highly fragmented and competition is stiff.

There are currently more than 35,000 express delivery companies operating in China. Some can ship packages for hundreds of miles for as little as 2 yuan (32 US cents), and as quickly as within the same day, a minuscule amount compared to the U.S. Postal Service, which on average charges at least $10 for a domestic delivery.

In 2011, DHL, a division of the German logistics company Deutsche Post AG, exited the Chinese domestic express delivery market to focus on international shipments, citing its inability to compete on such razor-thin margins. ($1 = 6.1357 Chinese yuan)

© 2017 Thomson/Reuters. All rights reserved.

 
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China said it would ease restrictions on foreign couriers seeking to deliver packages nationwide, potentially increasing competition in a fast-growing business already marked by bruising price wars. The State Council, or cabinet, said in a statement late on Wednesday it had...
china, liberalize, courier, market
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2014-06-25
Thursday, 25 Sep 2014 07:06 AM
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