The European Chamber of Commerce just came out with a massive and massively helpful report, entitled, “Public Procurement in China: European Business Experiences Competing for Public Contracts in China.” The thrust of the report is that European companies have not fared very well at all in terms of securing Chinese government contracts. Near as I can tell, you can substitute “American” for “European” without needing to change anything substantive in the report.
My law firm has been worked with foreign companies seeking to secure Chinese government in the IT, environmental, and medical arenas and it has been tough going in every instance. The problem is not China’s laws on foreign company bidding on government contracts. The problem is that the governmental entities simply prefer going with Chinese companies first, joint venture companies second, and WFOEs third.
The report lists the following as the “common challenges encountered by EU businesses when competing for public contracts” in China:
- Difficulty in obtaining timely, accurate information about upcoming projects
- Lack of communication of detailed evaluation criteria for projects
- Trend towards decentralization of tenders leading to more costs, less transparency
- Unfair implementation of public procurement awards
- Unsatisfactory appeals procedures
In my experience, you can reduce all of these down to one: foreign companies are just not going to be chosen by most Chinese governmental entities unless there is an overwhelming reason to do so.
The report provides the best overview I have seen on the topic of foreign company bidding for Chinese government contracts. Among other things, the report contains the following:
- The Legal Framework of Public Procurement in China
- The Government Procurement Law
- The Bidding Law
- The Government Procurement Agreement of the World Trade Organisation
- Size of the Public Procurement Market in China
- The Typical Bidding Process in China
- Government Approval
- Publication of the Bid Announcement
- Bid Announcement and the Eligibility of Bidders
- Bid Documents
- Bid Evaluation Process
- Bid Award
- Appeals
- Experiences from Three Sectors: Medical Equipment, Information and Communications Technology (ICT), and Windpower Equipment
If you are bidding for Chinese government contracts or contemplating doing so, I uge you to check out this report.
