How Korea Post has survived in the IT era

In Korea, the birth of the postal service began with a bloody revolution. In 1884, the Enlightenment Party carried out the Gapsin coup, destroying the Min House regime to establish a nation based on the principle of sovereignty. Hong Yeong-sik, the first head of Korea Post, invited political figures in the organization`s opening ceremony, captured them and killed extreme conservatives. King Gojong and the queen were also detained. The next day, Enlightenment Party members formed a cabinet and announced a 14-point code of conduct as the party platform, but failed to establish a modern nation due to armed intervention by China`s Qing Dynasty.

The post office is one of the most familiar government agencies, but its definition is unfamiliar. In Chinese, the word is a combination of "a place to transfer a post horse" and "go on guard in shifts." The term is derived from "relay-style communication system via post horse." In Seoul, the presidential transition committee in its second-round announcement of government reorganization said, "We will transfer Korea Post to the Future, Science and Technology Ministry (which will be in charge of information and communications) considering the link between postal and communication services." Early in the term of the outgoing Lee Myung-bak administration, the responsibility for postal services was transferred to the Knowledge Economy Ministry, whose staff jumped for joy. The ministry was then empowered to control 3,700 post offices and 45,000 employees across the country.

Communications, however, take up a small portion of Korea Post`s duties. The Internet is widespread, and smartphones account for 30 million of Korea`s 52 million mobile phones. Email and text messages through mobile phones have replaced written letters. The practical role of letters and telegrams has diminished. In most countries, home delivery service accounts for a major part of postal services. National post offices have to compete against private rivals like FedEx and DHL. In 2008, the governments of Denmark, Belgium and Sweden sold their postal businesses to a British private equity fund, and the privatized post offices were later merged.

Korea Post`s key business is financial services. Deposits, pension and insurance affairs have raised the asset amount to more than 100 trillion won (93.8 billion U.S. dollars), a figure equal to the value of Korea Exchange Bank when it was taken over by Hana Financial Group. While the deposit guarantee limit is 50 million won (46,904 dollars) in financial institutions, Korea Post has no such ceiling. Employees and financial institutions deposit their money in Korea Post accounts due to relatively high interest rates and the low risk of bankruptcy. Private financial institutions claim that Korea Post has an unfair advantage in financial services and should withdraw from the industry. But removing this function is not easy since private postal service providers shun doing delivery to isolated farm areas due to low profitability.

Editorial Writer Heo Seung-ho (tigera@donga.com)