An alliance comprising of FedEx [FDX], UPS [UPS], DHL and TNT [TP] has met in Beijing to fight a proposed tax on foreign express carriers. The alliance claims that revenue raised from the tax would be used to support China Post, a potential competitor. China is a key market for these global express operators, which stand to gain much from the country's participation in the WTO.
Although FedEx and UPS remain locked in an acrimonious dispute with DHL in the US, the three express giants have joined forces - together with TNT - to lobby against a proposed tax that would hinder their growth plans in China and, they argue, force them to subsidize state-run China Post.
The alliance, called the Conference of Asia Pacific Express Carriers (Capec), says that the proposed tax is unfair. The Asia chiefs of the four carriers met with China's vice-minister of commerce, Liao Xiaoqi, to make their case. FedEx's Asia Pacific president David Cunningham said: "It's the first time we've gotten together and we wanted to make sure the issues are aired."
These issues center around the proposed tax, but also include the implications of designating Capec's members as postal - rather than express - operators. "Our concern is we may be singled out as a sector to help finance a universal postal fund," said Capec executive director Ira Wolf, pointing out that the carriers already pay business taxes in China.
In addition to this, Capec is concerned that China Post is the industry's regulator, a role that will allow it to erect obstacles in the way of competitors and protect its monopoly position.
The carriers represented by Capec clearly regard the proposals as a retrograde step for the $1.5 billion Chinese air express market, which under China's WTO pledges is committed to greater liberalization and fewer barriers to foreign operators. The express sector plays a key role in facilitating China's rapid economic growth, and its liberalization will enable foreign companies to fully unlock China's potential. Capec's members will hope that what Mr Wolf calls the "forces for reform" prevail over those "who are quite pleased with the status quo".