European businesses still face discrimination in China

23 September 2011

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24 September 2011 | Adam Leach

Foreign businesses continue to face an uphill struggle trying to win public sector contracts from the Chinese government.

The European Business in China Position Paper 2011/12, launched in the UK yesterday by the European Chamber of Commerce in China, concluded that despite progress being made, foreign companies competing, or looking to compete, for contracts in China still face “discriminatory measures”.

Speaking at the launch of the paper, Jens Ruebbert, vice president and chair of the banking securities working group, European Union Chamber of Commerce in China, said: “Further reform and opening up is needed.”

In his presentation Ruebbert highlighted in the past year the Chinese government had repealed a number of barriers for foreign companies looking to compete for public procurement contracts. This summer the Chinese government changed its rules, which dictated that government contracts would only be awarded to domestic products and suppliers. The paper also recognised that the Chinese government had asked for comments on both the tendering and bidding law and government procurement law.

However, the Chamber’s public procurement working group called for further progress to be made. Despite the changes, the study concluded foreign companies are still discriminated against when it comes to competing for contracts.

This is due in part to the definition of domestic products being allegedly set as “one that is made within China’s borders”, and where the domestic manufacturing costs exceed 50 per cent of the final price. This limits the opportunity for foreign businesses to compete.

The Chamber also called for China to make a stronger offer to join the World Trade Organization’s Government Procurement Agreement. The Chinese government resubmitted its offer last year.

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