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5 White Paper on the Business Environment in China
as well as warehouse developer and operator Shanghai Yupei items weighing less than 100 grams will be handled exclu-
Group, to invest a total of $400 million in 17 warehouses in sively by the state-owned monopoly, China Post.40 Foreign
China that will be leased to rms including retailers and e- participants in the industry are furthermore prohibited from
commerce companies.”36 delivering letters in the mainland at all, although they are still
permitted to deliver parcels domestically and both parcels and
In August [2013] Cathay Capital Private Equity and express letters internationally.41
the Sino-French fund it manages invested $19.6 million in
Shanghai Zhengming Modern Logistics Co., which operates is overt protection of the state monopoly is unsurpris-
refrigerated trucks in China that transport food for businesses ing (if disappointing) given that domestic express delivery is a
including McDonald’s Corp., China Mengniu Dairy Co and major source of revenue for the State Post Bureau, which op-
Haagen-Dazs.”36 erates the China Post monopoly—reportedly accounting for
96 billion yuan, or 43 percent of its total revenue in 2008.41
“Successful Chinese logistics rms have strong supply-
chain management… so it makes sense for private-equity
rms to back the local players,” said one private equity man-
aging director.36
Notable Policy Activity*
Postal Law Reform
Reform of the Postal Law began in 1998, and nally
concluded 11 years later, in 2009.
In 2005, China Daily noted that, “Although in its sixth
draft, the postal law amendment is still moving slowly, with
many non-postal service providers accusing the authority
of favoritism towards the postal system,”37 referring to the
fact that the body tasked with developing the revisions was,
essentially, China Post itself.
While the China Post Group Corp was established in
January of 2007 as part of the e ort to divorce the business
functions from the regulatory functions of the entity,
sentiment re ects uncertainty about the lack of bias in the
process. China Daily’s coverage of the launch went on to discuss
the ongoing reform of the law, stating that, “ e con ict of
interest between non-postal service providers, such as express
delivery and logistics companies, and the postal system is
clearly a ecting the law revision process,” and that “Under
the current legislation mechanism, departmental interests are
hard, if not impossible, to remove from legislation.”38
It has also been commented by industry players that both
domestic and international companies in the sector essentially
have to “compete with [their] regulator.”39
In April 2009 Chinese legislators released the nal version
of the new Postal Law, which became e ective on October
1, 2009. Under the new regime, intra-city delivery of items
weighing less than 50 grams, and the inter-city delivery of
* Although it is no longer current, this section has been left intact to provide
historical context to the discussion above.
154
as well as warehouse developer and operator Shanghai Yupei items weighing less than 100 grams will be handled exclu-
Group, to invest a total of $400 million in 17 warehouses in sively by the state-owned monopoly, China Post.40 Foreign
China that will be leased to rms including retailers and e- participants in the industry are furthermore prohibited from
commerce companies.”36 delivering letters in the mainland at all, although they are still
permitted to deliver parcels domestically and both parcels and
In August [2013] Cathay Capital Private Equity and express letters internationally.41
the Sino-French fund it manages invested $19.6 million in
Shanghai Zhengming Modern Logistics Co., which operates is overt protection of the state monopoly is unsurpris-
refrigerated trucks in China that transport food for businesses ing (if disappointing) given that domestic express delivery is a
including McDonald’s Corp., China Mengniu Dairy Co and major source of revenue for the State Post Bureau, which op-
Haagen-Dazs.”36 erates the China Post monopoly—reportedly accounting for
96 billion yuan, or 43 percent of its total revenue in 2008.41
“Successful Chinese logistics rms have strong supply-
chain management… so it makes sense for private-equity
rms to back the local players,” said one private equity man-
aging director.36
Notable Policy Activity*
Postal Law Reform
Reform of the Postal Law began in 1998, and nally
concluded 11 years later, in 2009.
In 2005, China Daily noted that, “Although in its sixth
draft, the postal law amendment is still moving slowly, with
many non-postal service providers accusing the authority
of favoritism towards the postal system,”37 referring to the
fact that the body tasked with developing the revisions was,
essentially, China Post itself.
While the China Post Group Corp was established in
January of 2007 as part of the e ort to divorce the business
functions from the regulatory functions of the entity,
sentiment re ects uncertainty about the lack of bias in the
process. China Daily’s coverage of the launch went on to discuss
the ongoing reform of the law, stating that, “ e con ict of
interest between non-postal service providers, such as express
delivery and logistics companies, and the postal system is
clearly a ecting the law revision process,” and that “Under
the current legislation mechanism, departmental interests are
hard, if not impossible, to remove from legislation.”38
It has also been commented by industry players that both
domestic and international companies in the sector essentially
have to “compete with [their] regulator.”39
In April 2009 Chinese legislators released the nal version
of the new Postal Law, which became e ective on October
1, 2009. Under the new regime, intra-city delivery of items
weighing less than 50 grams, and the inter-city delivery of
* Although it is no longer current, this section has been left intact to provide
historical context to the discussion above.
154
