Beijing’s recent move to clarify standards for “domestically made products” in government procurement is designed to shore up the confidence of foreign companies operating in the country, according to an analyst.
Effective January 1, “Made in China” goods will be granted a 20 per cent price preference over foreign-made goods in bidding for government contracts, according to a notice released by the State Council on Tuesday.
Companies with different ownerships – state-owned, private or foreign – will be equally subject to the supportive policy, with the notice barring procurement bodies from favouring or discriminating against suppliers based on brand, form of ownership, or the nationality of the investor.
To qualify as “locally produced”, the proportion of the cost of components produced domestically must reach a prescribed threshold. And for some products, critical parts and processes must be made or completed in China.
Authorities plan to refine sector-specific criteria over the next five years and provide a three- to five-year transition period after the release of industry-specific standards.
The new measures – particularly regarding the proportion of components made locally – mirror practices in the United States and European Union, said Xu Qiyuan, deputy director of the American Studies Institute at the Chinese Academy of Social Sciences.
In an article, he said that the revised definition of “domestically manufactured” is more transparent and objective, creating a more predictable and favourable environment for foreign firms.
