Air express firms oppose possible China tax
Beijing proposes move to help fund rural postal service
CHINA may slap a new tax on express delivery companies to help fund a rural postal service, an industry group said yesterday in the latest hurdle to foreign players in the fast-growing industry.
Firms such as FedEx Corp and United Parcel Service strongly opposed such a tax, proposed in draft legislation being reviewed by Chinese authorities, said Ira Wolf, the director of the Conference of Asia Pacific Express Carriers (Capec).
'Our concern is that we may be singled out as a sector to help finance a universal postal fund,' Mr Wolf said at a briefing attended by the Asia chiefs of four major express companies.
A tax would be a fresh blow to foreign companies struggling to get a bigger slice of a market fiercely guarded by government-run China Post, the industry monopoly that is also its regulator. After months of wrangling, Beijing decided in September to let foreign express firms deliver abroad some documents from China, but barred them from personal letters and government mail.
The decision largely protected China Post's lock on letter delivery and analysts have said the most lucrative parts of the business will be off-limits to foreign operators for some time.
Surging trade has driven Chinese freight service demand, and a recent report by investment bank Bear, Stearns and Co said the air express market was worth about US$1.5 billion a year.
Mr Wolf said express firms provided different services and had different customers from the post office.
'We are not a postal industry. Our business is fundamentally different than the postal business so there is no logic for us to be the sector that would be funding this new fund,' Mr Wolf said.
Mr Wolf said that he did not know how much the tax would be or when a final version of the legislation was expected to be passed. 'There have been some provisions (for a tax) in recent drafts,' he said. 'It appears to be intended to finance postal infrastructure in remote areas.'
Capec members, which also include DHL, a unit of Germany's Deutsche Post AG, and TNT Express Worldwide, a unit of Dutch mail and logistics group TPG would meet Vice-Minister of Commerce Liao Xiaoqi to voice their concerns.
'There are forces for reform and liberalisation who are looking for methods and means to grow the economy, and there are others who are quite pleased with the status quo,' Mr Wolf said. The group had no plans to meet with China Post, he said. - Reuters
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