The long-awaited reform of China's postal service is gathering momentum with the launch of 10 new management bureaux this week.

The State Postal Bureau (SPB), or China Post, yesterday launched five provincial post management bureaux in Shanghai, Hebei, Fujian, Ningxia and Congqing, an SPB spokeswoman told China Daily.

That followed the inauguration of another five bureaux in Tianjin, Zhejiang, Shandong, Sichuan and Shaanxi on Monday.

The new bureaux are part of the government's ambitious market-oriented reform scheme under which the SPB's administrative functions and business practices will be separated.

The SPB plays a dual role in China; it is both the national postal operator and the country's postal regulator.

The SPB spokeswoman said provincial bureaux would be established across the country in the near future, without giving a specific timetable.

Provincial management bureaux will be under the direct administration of the SPB rather than the jurisdiction of local government.

Also planned is a national administration centre and the China Post Group Corp, which will deal with postal services. The two will operate independently.

The State Council, China's cabinet, last year endorsed the much-debated postal reform package. The scheme was proposed several years ago, but its complexity stalled the process.

And questions have been raised as to how the government should deal with combining so-called post-exclusive services and competitive postal services after the reform.

While competitive postal services such as express delivery have proved lucrative and enjoyed rapid growth, post-exclusive services such as sending letters, newspaper subscriptions, and stamp printing and circulation have suffered losses.

China Post deals with both services. The government currently subsidizes post-exclusive services. But determining how to foster this unprofitable industry post-reform could prove difficult.

A fully market-oriented postal operator may not be willing to offer post-exclusive services without government subsidies. For example, establishing a presence in poverty-stricken or mountainous regions is understood to be unprofitable for a postal operator.

Delivery giants DHL, FedEx, TNT, UPS and domestic private logistics firms have long lobbied legislators and regulators for industry deregulation and a specific definition of post-exclusive services.

Chinese legislators are amending the existing Postal Law to redefine the scope of post-exclusive services, but the SPB spokeswoman said a timetable for its passing had not yet been set.

A spokesman for the Conference of Asia-Pacific Express Carriers (CAPEC), an organization representing the interests of DHL, FedEx, TNT and UPS in Asia, said there are still problems to iron out in the postal reform.

He told China Daily yesterday that non-post-exclusive services should not be subsidized by the government, either directly or indirectly.

Companies dealing with those non-basic services "should (also) pay taxes and various fees," he said, indicating such firms are currently enjoying tax exemptions.

"The postal administration should only have jurisdiction over the basic services offered by operators dealing with post-exclusive services," he added. "Other express delivery services, whether domestic or international, should not be overseen by the postal administration. It's inappropriate for postal administration to regulate the whole express delivery industry."

(China Daily 09/06/2006 page10)