Chinese procurement rules shut out European firms

20 April 2011

20 April 2011 | Angeline Albert

China’s “inconsistent” public procurement system causes European companies to miss contract opportunities worth $1 trillion (£611.4 billion).

European businesses are barred from much of this market through poorly implemented legislation that has led to regulations that overlap, according to the European UnionChamber of Commerce in China (EUCCC).

The EUCCC, which today published a reportexamining the Chinese public procurement market, is calling for reform after finding the regulatory framework governing purchasing “is inconsistent and unevenly implemented”.

Common challenges encountered by European business competing for public contracts included;

The difficulty of obtaining timely, accurate information about upcoming projects.
A lack of communication of projects’ evaluation criteria.
The trend towards decentralisation of tender information - leading to higher costs and less transparency.
The unfair implementation of public procurement awards.
An unsatisfactory appeals procedures.

Gilbert Van Kerckhove, chairman of the EUCCC’s public procurement working group, said: “The chamber has been working with the Chinese authorities to continue improving the procurement framework in China since 2004. This means fixing the little things, often at the local level, which get in the way of healthy competition.”

The EUCCC, which represents 1,600 companies, proposed improving the enforcement of existing public procurement regulations and ensuring this is done consistently nation­wide. It also recommended all details of the evaluation criteria be disclosed at the time of the bid announcement, that the evaluation report be distributed to all bidders - both successful and unsuccessful - promptly when the bid award is announced.

The report added contracting authorities should ensure price expectations were in line with market averages in their tenders. These should also include some calculations and explanation of how this estimate was set.

Additionally it suggested a standstill period of seven days be implemented after the tender award (and before signature of the contract) to allow unsuccessful bidders time to raise complaints and suggests the creation of an independent, impartial review and remedies board to enforce the tendering procedure, which companies can complain to.

The study, Public Procurement in China: European Business Experiences Competing for Public Contracts in China,estimated the public procurement market in China represents over 20 per cent of the total contract opportunities in the country.

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