Traditional postal services face an uncertain future.
While the post office will still sell you stamps and happily deliver your packages, a changing world is forcing it to diversify. With the advent of overnight delivery services and the explosion of the Internet, fewer people use the post office for its traditional services, forcing it to consider an uncertain future.
Perhaps the most surprising development of the post office's efforts is how successful it has been at selling cosmetics. "Our hottest sales items are beauty and health care products," says Kuo Suh-er, marketing section chief under the Department of Savings and Remittances of Chunghwa Post Co. Ltd. "Take facial masks for example. Sales volume stood at around NT$300,000 (US$8,824) in February of 2004 when we began to market them, but sales have rapidly soared to an average NT$20 million (US$588,235) a month. The reason is good quality and reasonable prices--two major requirements the manufacturers have to meet when we take on consignments."
To distinguish such products from similar offerings at convenience stores and supermarkets, Kuo says the products sold at the post office should be unique and only available at the local branch.
Yet the post office is not hedging its bets with just a few cosmetics. In addition to stamps and other merchandise associated with the post, a customer can now buy books, CDs, commemorative gold and silver coins, hotel accommodation vouchers, freeway toll coupons, ornaments, rice, prepaid telephone cards, T-shirts, train tickets, and wine.
And for Chunghwa Post, commissions deriving from its consignment services have become an increasingly important contributor to its overall revenues. These services will bring in an estimated NT$180 million (US$5.3 million) in 2004, compared with NT$60 million (US$1.8 million) in 2003.
Kuo says the passage of Article 5 of the Postal Act in July 2001 allowed Chunghwa Post to accept consignments from government units and public and private groups. But it was not until last March when the post office made use of this potential cash cow. The post office set up sales centers in the lobbies of several branches to display and promote their products. Kuo says around 50 to 60 such sales centers will be established nationwide over the next two years. The success of the program has prompted postal officials to search for more new ideas. For example, Kuo has also suggested establishing a coffee corner in every post office lobby.
"In a low-profit environment, we've sought to forge strategic alliances with other industries to develop new business opportunities and create services to meet customers' demands," Samuel Hsu, chairperson of Chunghwa Post, says. "Our vast, nationwide channels are our greatest advantage when promoting new businesses and services."
Hsu says the rise of electronic communications, the downturn of interest rates, and rising competition from private couriers and convenience stores have forced the postal system to branch out.
Traditional correspondence is on the wane as people the world over make use of faxes, mobile phones, and the Internet. Adding to the Post's woes are door-to-door delivery services introduced by convenience stores, which have grabbed a sizable share of the parcel market. Not surprisingly, Hsu says, the Post was losing revenue.
To cope with these challenges and still operate within government regulations, the Chinese Postal Service, which had been in existence since 1896, was transformed into a corporation in January 2003, Hsu says. Renamed Chunghwa Post, the state-run company now offers a wide range of services including mail and parcel delivery, banking, postal remittances, and life insurance policies.
"Our mission and responsibility focus on how to enhance management effectiveness and service quality, as well as being profitable," Hsu says.
After the transformation, the Directorate General of Posts and the Directorate General of Postal Remittances and Savings Banks were merged into one institution and their subordinate departments decreased from 27 to 14 altogether.
By transforming the government agency into a company, Hsu says Chunghwa Post is now able to make appointments and recruit new employees with far greater flexibility than before. Such flexibility enables the company to compete with the private sector on a level playing field.
Currently, Chunghwa Post handles 10 million pieces of mail daily. In addition, the post office banking sector services 19 million accounts, which boast of a combined savings of approximately NT$3.2 trillion (US$94 billion), a result of the post office's long tenure as one of the country's top financial institutions.
Its life insurance business is not too shabby either, as insurance premiums have topped the NT$700 billion (US$21 billion) mark, which places the post office as one of the nation's top five insurers.
Indeed, the post office has long played an indispensable role in Taiwan. Most Taiwanese open their first banking account and buy their first life insurance policy from the post office, which is in part due to the presence of a post office on every corner.
Among Taiwan's 309 townships, one third do not have legitimate financial institutions, except for the local post office. There are 1,322 post offices in Taiwan, covering its offshore islands as well as remote mountain areas.
"In line with the government policy to take care of everybody no matter where they live, we have had to set up service bases throughout Taiwan, even though in some places we operate in the red," Hsu says. "And when we know that farmers are accustomed to having their chores done between 7:30am and 8:30am, we should open our doors at 7:30am."
He says the post office's everyday role in the life of Taiwan's citizens is better than branding, as its image will help the post office weather the changes without losing ground to the competition.
Despite its push to expand, Hsu says his company's major objective is to transform its three core businesses, namely postal services, banking, and simple life insurance into competitive services.
Accordingly, every employee must cross-train in these three fields. The Postal Training Institute offers a wide range of training programs, which includes courses on computers, service, marketing, and technical skills. The company also offers incentives and performance evaluations to improve employee morale and performance.
Hsu says his company will continue to strive for approval from its supervisory authorities to offer loans and financial management services, as well as more insurance products to better manage its capital in the financial market.
Huang Shui-cheng, president of Chunghwa Post, says the post has expanded its traditional services. The company now provides door-to-door pickup services for parcels and speed-post items, and express deliveries for farms and frozen goods. Moreover, to put its customers' minds at ease, the post office has built a tracking system for parcels and registered mail via the Internet and offers discount rates from time to time for special events and holidays.
Furthermore, the company has special branches that offer extended service hours well into the evening during weekdays, and daytime hours on the weekends. In addition, customer service centers are available 24 hours, year-round.
Like many companies facing the harsh realities of globalization and increased competition, the post office has had to explore ways to reduce labor costs and upgrade efficiency. As a result, Chunghwa Post has adopted an automated mail sorting system. In 2003, for instance, an additional 333 computerized counters were added to streamline its mail processing operations.
Huang says that on top of improving its operations, Chunghwa Post has proved its Internet savvy by creating the e-post system. The system allows customers to send electronic documents through an Internet server. Customers then have the option of sending email or converting email into regular post by using digital signatures and encryption. It is a fast and reliable way to produce and deliver one's invoices, statements, and time-sensitive memos. In 2003, the company's electronic mail volume registered a 20-percent annual growth rate, contributing an additional NT$621 million (US$18 million) to the company's coffers.
Chunghwa Post has also teamed up with Chunghwa Telecom to introduce the "emome financial card" service, enabling customers to conduct savings account transfers, report the loss of bank balance books, and make banking inquiries via mobile phones.
Of course, no postal service would be worthwhile if it ignored the world's stamp collectors. Apart from postal services, selling stamps and the accompanying paraphernalia is still one of Chunghwa Post's major businesses. Revenue from this area, however, saw a steady decline and in 2003, the company only brought in NT$528 million (US$16 million), its lowest figure in well over a decade. It is no surprise that the number of stamp collectors has declined. As the younger generation trades paper for PCs, Chunghwa Post finds its consumer base shrinking.
The company, however, is trying to find new ways to lure young people to a generational pastime. Su Da-hsiung, director of Chunghwa Post's Philately Department, says his unit is always looking for new stamp designs.
Stamp sets now depict a range of interests from pop culture to old favorites like local plants. Chunghwa Post has issued stamp sets with cartoon characters like Harry Potter and Hello Kitty, as well as stamps featuring Taiwan's aborigines, agriculture, artifacts, flora and fauna, folk culture, historic relics, landscapes, and musical instruments, among others.
Su says that officials from his department, along with government authorities, philatelists, and philately groups, refer to survey results to pinpoint the themes that are most likely to be attractive to the public.
In addition, several series have been issued to commemorate national and local events, as well as celebrated personalities such as Madame Chiang Kai-shek and singer Teresa Teng. In 2004 alone, the state-run company released a total of 26 stamp sets, compared with the 18 issued the year before.
Su says the post office has made sweeping changes when it comes to planning and issuing a stamp. The steps involved in making a postage stamp--thematic selection, design, open bidding, printing, and distribution--used to take up the better part of a year, whereas now, the post office can get a new issue out within 40 days.
Moreover, the volume of stamp sets issued has been reduced from 2 million in years past to 700,000 to 800,000, which of course will raise the value of the collections.
The company's Postal Museum is used as an exhibition hall, where interested visitors can find a wealth of information about the history and evolution of postal services in Taiwan. The museum also has a fleet of trucks that tour the island year round visiting schools to educate children on how stamps are made.
Chunghwa Post has been actively participating in the international stamp exhibitions, not only to learn about the experiences of foreign counterparts, but also introduce Taiwan's contributions to international philatelic circles. More significantly, the post office has won the right to host the 2005 Asian International Stamp Exhibition. The exhibition is scheduled to take place from August 19 to 24 at the Taipei World Trade Center, and 28 countries are invited to attend.
In his 35 years with the post office, Su has watched the postal system change over time, and knows how postal workers must adapt to changing conditions. "We are now operating like a business organization in that we have to take responsibility for our own sales performance, be it surplus or deficit," he says. "We either have to do our utmost to offer various products and services, and increase sales, or face elimination."