China's parcel carriers mull price hike on levy fears

By Chen Boyuan: 0 Comment(s)Print E-mail China.org.cn, April 27, 2013

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Major international parcel companies, including TNT, FedEx, UPS and DHL and their Chinese counterparts such as ZJS Express and SF-Express gathered in Beijing Wednesday to attend a seminar as they consider a move to raise prices as the industry's regulatory body the Postal Universal Service Fund prepares to impose surcharges, the China Times reported.

China's parcel carriers mull price hike on levy fears.[File photo]

Any decision to increase prices would be made by both China's private and foreign-funded parcel carriers.

Chinese postal authorities are likely to collect a surcharge on all private and international postal service companies operating in China to subsidize China Post's unprofitable mail and postcards services.

The surcharge will reportedly take away between 25 and 40 percent of all private and international postal carriers' profits, provoking accusations of unfair competition from the self-styled "low-profit" couriers.

The seminar also marked a rare show of unity among China's already struggling private parcel service industry.

"Private parcel companies in China, big and small, are struggling to survive," said a senior management official from one of the parcel companies. "We never counted on any favorable policies but please at least let us live."

China Post and the country's Ministry of Finance conducted a joint feasibility study last year into the introduction of industry surcharges, fueling concern among private parcel companies. Industry insiders expressed surprise that the draft regulation has been completed so quickly.

The regulation imposes a 0.1 yuan surcharge on each city express package, and 0.2 yuan on nationwide express parcels. The regulation also levies a 1 yuan (US$0.16) fee on packages sent to and from Hong Kong, Macao and Taiwan, and 2 yuan on each international delivery.

China postal authorities are allegedly collecting the money on basis of Postal Law, which, as legal experts have pointed out, "does not specify the standard or objects of the taxation, or the issues regarding fund use and management."

Parcel service companies have maintained that they support China Post's public services, such as sending letters to remote areas, but argue that the country should not make one company subsidize another. Instead, they say the government is responsible for public services and such services should be funded by state revenue.

Despite being unified in protesting against the proposed surcharges, China's private parcel service sector appears resigned to the fact that the levies are a foregone conclusion.

"The seminar is just a format," said the boss of one private parcel service, adding that the sector would have to raise prices to absorb the extra cost burden.

He continued: "We won't just soak up the extra cost. We are companies, not charities."