The Japan Post group was reorganized on Oct. 1 under the revised postal privatization law that was enacted in the last Diet session. The main aim of the revision is to boost business by increasing convenience for customers. In a difficult business environment, the Japan Post group must strive to improve its profitability so it can provide better services.

As a result of the Japan Post privatization plan pushed by the Koizumi administration, the Japan Post group was organized into five companies, with Japan Post Holding having under its wing the Japan Post Service (mail delivery), Japan Post Network (counter services at post offices), Japan Post Insurance and Japan Post Bank.

Although the counter-services company was entrusted by the insurance company and the bank with selling financial instruments and handling banking services, mail carriers were prohibited from conducting insurance and banking services because they were not employees of the counter-services company.

Because people in remote or depopulated areas began complaining that nearby post offices were abolished or that mail carriers would not carry out insurance and bank-related services, the Democratic Party of Japan, the Liberal Democratic Party and Komeito submitted a revision bill to the Diet in April. Under the revised law, the mail delivery and postal counter services companies were merged into Japan Post Co.

The law obligates Japan Post Co. to provide universal postal and financial services across the country. Workers at 52 post offices are now allowed to withdraw money on customers’ behalf and deliver it to them, a service many people requested to be resumed. Japan Post Co., which has some 24,000 post offices throughout the country, plans to offer the service at more post offices. At some post offices, it has become possible for customers to receive mail and buy stamps at the same counter.

It will be imperative for Japan Post Co., which now has more than 200,000 employees, to streamline operations and increase efficiency while maintaining services for customers, especially those in the countryside. Wide use of e-mail and competition from home delivery firms are making the business environment for Japan Post Co. difficult. In the business year to March 2012, the mail delivery company suffered a net loss of ¥4.5 billion. Although the postal counter services company made a profit of ¥18.8 billion, it was about 40 percent less than in the previous business year.

Japan Post Co.’s main source of revenue is expected to be sales commissions for financial instruments of the insurance company and the bank. The Japan Post group will need to find ways to reduce friction with other private financial institutions opposed to the expansion of financial services at the post office while making efforts to operate in the black.

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