BEIJING, Jan. 30 - Long-awaited reform of China's postal system has begun with the establishment of the new State Postal Bureau and China Post Group Corp Monday.

 

Market-oriented policies modelled on reforms in the telecommunications sector will separate administrative functions and business practices from the original State Postal Bureau.

 

"China's postal service system enters a new development stage, with the government responsible for market supervision and China Post Group independent in its management," Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission, said at a ceremony yesterday marking the new entities.

 

But there is much work to do to deepen the reform in the company as well as the administrative body, Zhang said.

 

For the State Postal Bureau, it is important to improve regulations in the sector and build a fair and orderly market environment, said Ma Junsheng, director of the State Postal Bureau.

 

More internal reforms should be undertaken at China Post to make the company more efficient, Zhang said.

 

He added that the company should further improve its core business, speed up the establishment of postal companies at the provincial level and reform of the postal savings business, as well as develop new businesses.

 

The company has set a revenue target of 67.05 billion yuan for 2007, an increase of 5.5 percent over the previous year, Liu Andong, general manager of China Post Group Corp, said earlier.

 

But there are concerns about the company's weak competitiveness in the profitable express delivery business.

 

In recent years, the rise of private express mail delivery companies and the growth of international delivery giants have placed increasing pressure on the State-owned postal system.

 

According to Yuan Guoli, director of the delivery bureau of China Post, they will make efforts to improve management, lower operating costs and undertake innovation in products, operations and management to improve their services and upgrade their competitiveness.

 

"It is true that we have an obvious advantage a network in over 2,000 cities that may take a long time and great effort for private or global firms to build," Yuan said.