For discussion on 14 April 1997

Legislative Council Panel on Economic Services

ARRANGEMENTS FOR PHILATELIC SALES AT POST OFFICES

Background

Philately is an important source of income for the Post Office. Philatelic revenue in the past 10 years is tabulated at Annex. This shows a steady increase in revenue up to 1991/92. From 1992/93 onwards, there was a larger increase, partly due to increasing demand for Hong Kong stamps, and partly due to the successful Stamp Exhibition held in 1994. Demand increased dramatically in 1996-97, more so since the end of 1996. It is believed that this increase is connected with the transition of sovereignty in 1997 as more and more collectors in Hong Kong and in China have started collecting Hong Kong stamps. This has led to considerable activity in the stamp market, in Hong Kong and China, and many reports in the media have described speculation and the rapid increase in value of Hong Kong stamps. People in Hong Kong are now generally well aware of these developments.

Sales Arrangements

2. The Post Office policy on special stamp issues is to meet known and foreseeable philatelic demand and short term operational requirements.

3. Customers can purchase special stamps across the counter at all post offices on the first day of issue and subsequent days provided stock is still available. The Post Office also has in place a number of arrangements for placing advance orders for special stamps and these are being promoted. These advance order arrangements are -

  1. Local Standing Order Scheme (LSOS) - This was introduced in November 1996. Customers can order in advance without limit mint stamps, definitive stamp sheetlets, souvenir sheets and serviced covers for the whole year of 1997;

  2. Local Advance Order Scheme (LAOS) - Under this scheme customers can order in advance, by issue, serviced first day covers for stamps and sheetlets;

  3. to promote philately, there is a School Advance Order Service for school stamp clubs and the Stamp Dealers Standing Order Service for recognised stamp dealers;

  4. for staff and customer relations purposes, there are special arrangements for the sale of special stamps, souvenir sheets and stamp sheetlets. The quota for the staff is generally below that for the public; and

  5. Overseas Mail Order Service is similar to LSOS but for customers overseas. Such customers can also buy Hong Kong stamps from the overseas agents of the Post Office.

Determination of Printing Quantities

4. Stamp printing quantities are decided prior to tendering. In submitting tenders, printers should have the necessary capacity, and be able to obtain the necessary paper. Stamp paper with gum which meets our specification is not readily available, as there are only a few manufacturers around the world, and it takes time for production. This means that printing quantities cannot normally be increased significantly at short notice.

5. In keeping with good philatelic practice the Post Office sells mint stamps at face value. We do not reprint special and commemorative stamps after they are sold out. This ensures the long term interests of the philatelic market. The maximum sales period, subject to stock availability, for special and commemorative stamps is 15 months from the date of issue.

6. In assessing the printing quantity of special stamps, the following demands are invariably taken into consideration -

  1. orders placed under the various advance order schemes;

  2. standing orders of local stamp dealers and the Post Office's overseas agents; and

  3. sales over post office counters on first day of issue.

Most of the quantities under (a) and (b) are standing orders. Hence they can be assessed fairly accurately. However, sales over post office counters on the first day of issue are difficult to determine as they can be subject to speculation and vary according to the popularity of the theme. Our general practice is to allow for a "buffer" of at least 50% more than past counter sale quantity. This buffer has been greatly increased in 1997.

7. The most unpredictable component of first day sales is demand from China which is an enormous market and as we understand it, is largely speculative. This probably accounts for much of the increase in demand in recent months, especially for souvenir sheets and stamp sheetlets. Although we provide for sales to customers in China under our overseas mail order service and through our agents, it is clear that additional demand has also been met recently through counter purchases from post offices in Hong Kong.

8. Our concern has always been to maintain a long term philatelic market. Experience elsewhere has shown that philatelic interest is liable to decrease substantially if the quantity available is too large, to the extent that stamp sales can be transacted in the secondary market at below face value. We have nevertheless relaxed our printing quantity criteria substantially because of the very special circumstances of the current situation.

First Day Sales Arrangements

9. Strict control is exercised over the movement of stamp stock by Post Office staff. Requisitions and issue of stock between Headquarters and branch post offices, and between postmasters and counter staff are properly documented. All counter staff are reminded regularly that special stamps and other stamp products which are in their stock for sale on the first day of sale must not be withheld from sale to the general public, and irregularities could lead to serious consequences for the staff concerned. Also, audit checks are carried out at randomly selected post offices on the first day of issue to reconcile the customer count with the sales of philatelic items.

10. To alleviate the pressure of queuing and to minimise the inconvenience caused to other customers using normal postal service, the following arrangements have been developed recently on first days of issue :-

  1. Early opening of district post offices in order to shorten queuing time. Since the Archaeological Finds issue in June 1996, an additional 20 post offices (besides General Post Office, Tsim Sha Tsui and Yuen Long which normally open at 8:00 a.m.) open at 8:00 a.m., or one and a half hours earlier than usual, on the new issue day in order to clear the queue earlier;

  2. Issue the stamps on Sundays. We have done so on 26 January 1997, when we issued the new definitive stamps, and on 16 February 1997, when we issued a definitive stamp sheetlet for the HONG KONG ‘97 Stamp Exhibition. We also extended the opening hours of all post offices on 25 January 97 (Saturday) to that of normal business hours on weekdays, to cater for demand on the final day of normal sales of the old definitive stamps. It is also our plan to issue future stamp issues on Sundays as far as practicable to avoid causing inconvenience to other customers. These arrangements ensure that normal postal services are not affected;

  3. Designate more counters for normal postal service by mobilising staff from other sections to augment the strength at counters. In past issues, more than 80 post offices have designated counters for normal postal service. This has helped to maintain the normal postal services at a reasonable level;

  4. Deploy staff to the counter from other activities. On normal days, we have 465 staff working on the counter, but on new stamp issue days, the number of staff on the counters and datestamping is 768;

  5. Liaise with the police and employ security guards at all post offices to control the crowd. In October 1996, we started employing security guards in the busiest offices. The number of security guards employed for one special issue is now about 300;

  6. Provide order forms in advance for customers to order so as to shorten the queuing time. We tried this at the HONG KONG ‘97 Exhibition, and will consider it for future occasions as appropriate;

  7. Pre-package products, e.g. the Frama labels which were issued on 12 March 1997, souvenir sheets and stamp sheetlets, to speed up transactions;

  8. Promote the Local Advance Order Service for serviced first day covers so that customers need not queue;

  9. Extend the Local Advance Order Service for serviced first day covers for stamps, to serviced covers affixed with stamp sheetlet with effect from the "Serving the Community" stamp sheetlet issued on 4 December. This has attracted some 22500 advanced orders; and

  10. Sales quota per customer queuing is imposed to ensure fair distribution of stock. However, we also relax the sales quota when supply permits. This means that customers need not queue so often to meet their needs.

Improvements to The Local Standing Order Service

11. In overall terms, we believe that the LSOS has been a very successful scheme in meeting our customers’ needs, reducing the number of people who need to queue, and helping us estimate the demand in 1997. Without the scheme, we would probably have been in an impossible position to meet demand this year. The 56843 customers now registered under the service and the volume of orders they placed far exceeded our original expectations. Now that the scheme is reasonably settled, we are looking for ways to further improve the service for customers this year. These include :-

  1. Introduce Phase II in mid-1997 whereby customers can join the service at any time;

  2. Expand the scope of the scheme to include packaged products, e.g. stamp booklets, presentation packs; and

  3. Enhance the existing computer system so that a Call Centre can be set up to which customers can phone to check their account balance instantly through a voice interactive system, or request for general information via fax.

On the administrative front, we are considering the need for additional staff resources, improved accommodation and philatelic processing equipment.

Improvements to the Local Advance Order Service

12. We will expand the LAOS to include ordering of mint stamps, starting with the Hong Kong Migratory Birds stamp issue on Sunday, 27 April 1997. Under this service, customers can place the orders about two weeks before the issue date. Applications will be closed a week before closing date to allow time for the Post Office to consolidate the orders for processing. No handling fee will be levied, but a minimum quantity of 5 sets of stamps will be imposed. Orders will be available for collection by customers six weeks after release at the post office where the customer places his order. The reason to impose a minimum quantity is to reduce handling costs and expedite processing. Customers will be free to place an order consolidating the requirements of others, as no maximum limit on ordered quantity will be imposed. We will, if necessary, print additional quantities to meet demand. With the introduction of the expanded LAOS, the special sales arrangements for staff and customer relations purposes will not be necessary and will cease. The staff are content with this change.

13. The enhanced LAOS coupled with the already introduced LSOS, should provide adequate channels for customers to order our stamps in advance. The need to queue at the post offices on the first day of issue should be reduced significantly. There will still be some collectors who prefer to come to post offices on the first day of sale to prepare their first day covers themselves, or to send off the covers to their friends overseas, on that day or just to obtain the stamps at the first opportunity for self-collection or re-sale at a profit.

Other measures

14. We are also considering other additional measures we can take to improve the situation in the queues. These may include the opening of additional counters, reviewing quota arrangements, and employment of additional security guards and post office staff and balloting in special circumstances.

15. We remain concerned about the long term health of the philatelic market, and the interests of our customers. We will therefore encourage customers to consider their needs carefully before making any purchase under the extended local advanced order service. Philately is an enjoyable hobby but as a speculative activity it is subject to the same vagaries as other such activities - values may go down as well as up.

Economic Services Branch
8 April 1997

Last Updated on 14 August 1998