Hongkong Post financial struggles come to light

Hongkong Post has been in the red for seven out of the past 10 fiscal years, racking up to HK$364 million in losses a year, according to the Audit Commission.

The government watchdog also slammed the postal department for failing to include national security clauses in agreements signed with stamp designers.

It found that Hongkong Post has falsely described postal services to the mainland as "international services" on its website, mobile application, annual reports and notice boards at the General Post Office.

It is mandatory for all departments to ensure that references to Hong Kong and other parts of China are "carefully and correctly worded in their day-to-day operations and correspondences," it said.

The audit report said the post office recorded losses of between HK$3 million and HK$364 million in the deficit years , including a loss of HK$305 million last year.

Additionally, the department also saw a negative return on fixed assets of 13 percent last year, well short of the target of 1.5 percent.

The report found that the department did not reach its target return on fixed assets for nine years in the past decade, and its local e-commerce service recorded negative profits from 2018 to last year, with a loss of about thrice the revenue per year.

"The actual revenue from local e-commerce services fell short of budget revenues by 69 percent, 64 percent and 71 percent in 2021, 2022 and 2023, respectively," the commission said.

Nonlocal e-commerce services had a modest profit margin of less than 5 percent from 2018 to 2022, as services for nearly 80 destinations out of 170 were suspended for over a year or more as of January, the report said.

Furthermore, the watchdog found that the department had stocked unsold special or commemorative stamps worth HK$137 million as of January 31 last year.

Among them, about HK$86.6 million of stock issued more than two years ago had not been disposed of in accordance with guidelines for the destruction of obsolete stamps and philatelic products.

"A large amount of obsolete stamp stocks pending destruction incurs high administrative cost in regular stocktaking exercises and security, as well as occupies valuable space for storage stamps," the commission said.

In response, Hongkong Post said it agrees with all the suggestions and will take follow-up actions accordingly.

"The department attaches great importance to national security and will incorporate the clauses concerning safeguarding national security into the service agreements with stamp designers," it said.

Traditional mailing services will continue to lose money in providing affordable services, the department said, adding that nonlocal e-commerce services, which are the most profitable, were also affected during the pandemic.

"With the resumption of normalcy and more favorable air conveyance rates after the pandemic, the overall profitability and traffic volume of nonlocal e-commerce services are expected to gradually rebound," it added.

The department said it has formed a five-year strategy in 2021 to boost business, including developing special lane services for the mainland and Belt and Road countries.

As for the stock and sale of special stamps, the department said it will consider organizing philatelic workshops.

A woman named Kwan suggested lowering postage fees and offering discounts to attract users, as other companies are providing cheaper and more convenient services.

ayra.wang@singtaonewscorp.com