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A Profitable China Post Achieves Its Goal

The State Postal Bureau (China Post) finished its three-year campaign to go back to profit in 2001 following separation from the telecom sector in 1999.

Liu Liqing, director-general of China Post, announced that the huge organization moved back into the black last year with a profit of 60 million yuan (US$7.2 million).

China Post inherited a heavy debt of 18 billion yuan (US$2.2 billion) when it split from the telecom sector.

To ensure it quickly became an independent organization, the government said no more financial subsidies would be given after a three-year loyalty period.

China Post would then have to pay off any debt and support itself.

As a result China Post started to reconstruct itself into a modern post provider.

With 67,000 post outlets and a delivery network composed of aeroplanes, trains and vans, China Post said it would soon become the country's top logistics company.

Liu Liqing estimated China's logistics market could make an annual revenue of 1.78 trillion yuan (US$214.4 billion).

As the market is not yet fully tapped, Liu said China Post would enjoy the highest growth as the strongest player in the field.

China Post raised delivery speeds three times in the year and set up its own airmail network supported by 10 planes.

The range it delivers has widened from letters and packages to almost everything that is legal.

And EMS (express mail service) postal workers do not sit in the post office and wait for customers any more. Now they provide door-to-door delivery if you make a telephone call.

Big companies like Hewlett- Packard, Dell, Haier and Southern Airlines all use China Post's network for goods delivery.

"Nobody could compete with China Post with its far-reaching network and experienced labour force," Liu said.

But China Post is facing growing threats from both domestic private firms and overseas delivery providers.

Foreign delivering giants Fedex, UPS and DHL and many small domestic companies have started their package delivery business in major cities.

Their businesses, especially those from abroad, have restrictions due to government protection of China Post.

But that will not last forever as the country has promised to open the service industry, including delivery business, to overseas players according to rules of the World Trade Organization.

To upgrade efficiency, China Post has spent millions of yuan on a nationwide computer network which covers 236 major cities and has made most of China Post's business available online.

In reconstructing itself into an independent commercial organization, postmen and postwomen have changed their status from government officials into company employees.

They started to take into account the feelings of customers, provide services they needed and think from the point of view of customers.

Liu said the bureau had set its new year revenue target at 51 billion yuan (US$6.1 billion), which is an 8.5 per cent increase compared with the previous year.

China Post plans to make a profit of 100 million yuan (US$12 million) this year, he said.

But a lot of work still needs to be done to make China Post a real modern post organization, industry insiders said.

"The bureau needs to further reform both the management and operation systems to become a commercial organization according to market rules," said Tian Xuejun, executive deputy director of the Logistics Institute at Beijing University of Science and Technology.

He suggested that China Post could go public to access development capital after it finished structural reform.

(China Daily January 30, 2002)

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