China postal service to partially privatize [EDIT: variation on the DotCom deal heat]
biz.scmp.com
Saturday, October 26, 2002
Economists wary of China Post listing plans
MARK O'NEILL in Beijing
China Post, which loses its government subsidy next year, wants to split off its six most profitable regions for a Hong Kong listing but economists doubt whether the plan is feasible.
The company began planning in February for a new firm incorporating the postal services of Beijing, Shanghai, Jiangsu, Zhejiang, Fujian and Guangdong, according to yesterday's China Economic Times, which is published by a leading government think-tank.
It sees the listing as the quickest way to raise capital from next year after the loss of its subsidy.
A China Post spokesman declined to comment.
The company was formerly part of the Ministry of Posts and Telecommunications and survived by having its losses subsidised by the ministry's profitable telecommunications arm. However, in 1999 the two were split off.
The government agreed to subsidise China Post to ease its transition, with eight billion yuan (about HK$7.49 billion) in 1999, falling to five billion, three billion and one billion yuan in the following years.
Last October, the post office announced a 160 million yuan profit but did not provide detailed figures, leaving it unclear as to whether this included the three billion subsidy.
Economists doubt whether the new company can meet the listing conditions, including three successive years of profits.
"While the six regions are the fastest-growing in China, it is hard to be sure if they have been profitable for the past three years," said Beijing consultant Wang Guojun.
China Post is one of the last behemoths of the state sector. At the end of 2000, it employed 524,000 people in 66,740 offices, with a network covering 3.09 million km and fixed assets of 75.7 billion yuan.
The new company would face the difficult task of deciding which employees were included, its ownership structure and its relationship to the rest of the network.
China Post is under threat in a number of areas.
Its postal savings bank in 1997 handled remittances of 360 billion yuan but this fell to 280 billion last year as customers switched to banks that provided quicker and cheaper services.
Its Express Mail Service used to have 97 per cent of the market for international express deliveries but this has dropped to about 40 per cent as a result of competition from rival foreign and domestic service providers. |
