Long-awaited reform of China's postal system has begun with the establishment of the new State Postal Bureau and China Post Group Corp yesterday.

Market-oriented policies modelled on reforms in the telecommunications sector will separate administrative functions and business practices from the original State Postal Bureau.

"China's postal service system enters a new development stage, with the government responsible for market supervision and China Post Group independent in its management," Zhang Xiaoqiang, Vice Minister of the National Development and Reform Commission, said at a ceremony yesterday marking the new entities.

However, a lot of work still remains to complete reform in the company as well as the administrative body, Zhang said.

For the State Postal Bureau, the improvement of sector regulations is essential to build a fair and orderly market environment, said Ma Junsheng, director of the State Postal Bureau.

More internal reforms should be undertaken at China Post to improve its efficiency, Zhang stated.

He added that the company should focus on improving its core business, speeding up the establishment of provincial postal companies and reforming the postal savings business, as well as develop new businesses.

The company is aiming to collect 67.05 billion yuan in revenue for 2007, up 5.5 percent over the previous year, Liu Andong, general manager of China Post Group Corp, said earlier.

However, concerns about the company's weak competitiveness in the profitable express delivery business linger.

In recent years, the meteoric rise of private express mail delivery companies and the growth of international delivery giants have been forcing the State-owned postal system to play on a narrowing field.

According to Yuan Guoli, director of China Post's delivery bureau, efforts will be made to improve management, lower operating costs and undertake innovation in products, operations and management to improve their services and upgrade their competitiveness.

"It is true that we have an obvious advantage a network in over 2,000 cities that may take a long time and great effort for private or global firms to build," Yuan told China Daily.

(China Daily January 30, 2007)