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Beijing softens procurement policy
Published on: 2010-04-13
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China’s government has laid the ground for giving foreign businesses access to government procurement contracts for technology products, a climbdown from earlier rules criticised as excluding foreign groups from this market.

The softening comes amid a broader thaw in China’s relations with America after disagreements over issues ranging from industrial policy, its currency regime, US weapons sales to Taiwan, internet censorship and cybersecurity. Hu Jintao, China’s president, held talks with Barack Obama on Monday night.

In a document published on its website over the weekend, the Ministry of Science and Technology said any company whose products conformed with Chinese laws, regulations and technology policy and which possessed legal rights to the related intellectual property could gain accreditation under rules on “indigenous innovation” to bid for government contracts.

Foreign companies had complained that the combined requirements of local intellectual property, local brands and independence from overseas influence would make it impossible to bid in government tenders for computers, telecom equipment, software and green energy equipment.

In a survey published just three weeks ago, the American Chamber of Commerce in China said 57 per cent of respondents expected the rules to hurt their future business in China, and 38 per cent said foreign companies felt increasingly unwelcome to compete in China – up from 26 per cent in the fourth quarter of 2009.

Foreign businesses welcomed the about-turn. The European Union Chamber of Commerce in China said that in talks this month the ministry had offered important assurances that foreign-invested companies in China would receive equitable and fair treatment in future regulations aiming to promote innovation.

“We are pleased that some improvements based on that discussion are reflected in the new draft,” said Joerg Wuttke, chamber president.

“This move towards allowing cutting-edge products to be accredited for government procurement without restricting the intellectual property rights of innovative companies is most welcome,” he said. “This is an important sign that policymakers in China recognise the role that fair competition plays in developing and enhancing China’s high-tech capabilities, and that foreign-invested companies can make a valuable contribution.”

“We see China’s willingness to open these revisions to public comment as a clear step in the right direction toward injecting greater transparency in regard to policies we care very much about,” said John Neuffer, vice-president of global policy at the Information Technology Industry Council, a US technology industry group. He said that “a number of problematic aspects of the policy remain that we hope can be resolved going forward”.

The apparent compromise follows a long-established pattern in the formulation and implementation of Beijing’s technology policies. Over the past decade, the government launched several initiatives aimed at strengthening local companies and bolstering government control, but watered them down after an outcry from the foreign business community.

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