Page 170 - 2016_WhitePaper_web
P. 170
6 White Paper on the Business Environment in China
no-French fund it manages invested $19.6 million in Shanghai tics companies, and the postal system is clearly affecting the law
Zhengming Modern Logistics Co., which operates refrigerat- revision process,” and that “Under the current legislation mech-
ed trucks in China that transport food for businesses includ- anism, departmental interests are hard, if not impossible, to re-
ing McDonald’s Corp., China Mengniu Dairy Co and Haa- move from legislation.”38
gen-Dazs.”36
It has also been commented by industry players that both
“Successful Chinese logistics firms have strong supply-chain domestic and international companies in the sector essentially
management… so it makes sense for private-equity firms to back have to “compete with [their] regulator.”39
the local players,” said one private equity managing director.36
In April 2009 Chinese legislators released the final version
In August 2015, a newsworthy development in China’s of the new Postal Law, which became effective on October
logistics industry occurred when the National Development 1, 2009. Under the new regime, intra-city delivery of items
and Reform Commission pledged to “guide private capital” to weighing less than 50 grams, and the inter-city delivery of items
the logistics industry, which is “holding back economic growth”. weighing less than 100 grams will be handled exclusively by the
In a statement to Xinhua, the NDRC said that “China’s overall state-owned monopoly, China Post.40 Foreign participants in
logistics sector remains underdeveloped and the government the industry are furthermore prohibited from delivering letters
will speed up construction on major projects as part of wider in the mainland at all, although they are still permitted to
efforts to stabilize economic growth and push industrial deliver parcels domestically and both parcels and express letters
restructuring”. By 2020, President Xi Jinping’s administration internationally41.
aims to build a “modern logistics service system with annual
growth of value added output of around 8 percent, accounting This overt protection of the state monopoly is unsurprising
for around 7.5 percent of the country’s GDP”, states the NDRC (if disappointing) given that domestic express delivery is a major
document. 43 source of revenue for the State Post Bureau, which operates the
China Post monopoly—reportedly accounting for 96 billion
Data from China Federation of Logistics and Purchasing yuan, or 43 percent of its total revenue in 200841.
showed goods worth 104.7 trillion yuan (16.3 trillion U.S.
dollars) were transported in the first half of the year. Between
January and June, the gross revenue of the logistics industry hit
3.6 trillion yuan, up 5.4 percent over the same period last year.43
Notable Policy Activity*
Postal Law Reform
Reform of the Postal Law began in 1998, and finally con-
cluded 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 fa-
voritism 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 Jan-
uary of 2007 as part of the effort to divorce the business func-
tions from the regulatory functions of the entity, sentiment
reflects 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, “The conflict of interest between
non-postal service providers, such as express delivery and logis-
* Although it is no longer current, this section has been left intact to provide
historical context to the discussion above.
170
no-French fund it manages invested $19.6 million in Shanghai tics companies, and the postal system is clearly affecting the law
Zhengming Modern Logistics Co., which operates refrigerat- revision process,” and that “Under the current legislation mech-
ed trucks in China that transport food for businesses includ- anism, departmental interests are hard, if not impossible, to re-
ing McDonald’s Corp., China Mengniu Dairy Co and Haa- move from legislation.”38
gen-Dazs.”36
It has also been commented by industry players that both
“Successful Chinese logistics firms have strong supply-chain domestic and international companies in the sector essentially
management… so it makes sense for private-equity firms to back have to “compete with [their] regulator.”39
the local players,” said one private equity managing director.36
In April 2009 Chinese legislators released the final version
In August 2015, a newsworthy development in China’s of the new Postal Law, which became effective on October
logistics industry occurred when the National Development 1, 2009. Under the new regime, intra-city delivery of items
and Reform Commission pledged to “guide private capital” to weighing less than 50 grams, and the inter-city delivery of items
the logistics industry, which is “holding back economic growth”. weighing less than 100 grams will be handled exclusively by the
In a statement to Xinhua, the NDRC said that “China’s overall state-owned monopoly, China Post.40 Foreign participants in
logistics sector remains underdeveloped and the government the industry are furthermore prohibited from delivering letters
will speed up construction on major projects as part of wider in the mainland at all, although they are still permitted to
efforts to stabilize economic growth and push industrial deliver parcels domestically and both parcels and express letters
restructuring”. By 2020, President Xi Jinping’s administration internationally41.
aims to build a “modern logistics service system with annual
growth of value added output of around 8 percent, accounting This overt protection of the state monopoly is unsurprising
for around 7.5 percent of the country’s GDP”, states the NDRC (if disappointing) given that domestic express delivery is a major
document. 43 source of revenue for the State Post Bureau, which operates the
China Post monopoly—reportedly accounting for 96 billion
Data from China Federation of Logistics and Purchasing yuan, or 43 percent of its total revenue in 200841.
showed goods worth 104.7 trillion yuan (16.3 trillion U.S.
dollars) were transported in the first half of the year. Between
January and June, the gross revenue of the logistics industry hit
3.6 trillion yuan, up 5.4 percent over the same period last year.43
Notable Policy Activity*
Postal Law Reform
Reform of the Postal Law began in 1998, and finally con-
cluded 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 fa-
voritism 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 Jan-
uary of 2007 as part of the effort to divorce the business func-
tions from the regulatory functions of the entity, sentiment
reflects 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, “The conflict of interest between
non-postal service providers, such as express delivery and logis-
* Although it is no longer current, this section has been left intact to provide
historical context to the discussion above.
170
