Chinese provinces ignore 'Buy Chinese,' purchase foreign goods

“We haven't seen any change at all,” said McLaughlin, chief executive officer of Sinogie Consulting Group, which publishes the bi-weekly China Tender Bulletin. “For products like cars and computers and televisions, provincial governments still frequently specify they want particular foreign brands.”

China's June 4 requirement that local governments buy local products for its 4 trillion yuan (US$585 billion) stimulus plan risks spurring “protectionist sentiment” at a time when unemployment is rising and global trade is contracting, the Royal Bank of Scotland said last week. The European Union and U.S. complained at the World Trade Organization Tuesday that China is unfairly using export taxes to keep materials costs lower for domestic steel and manufacturing companies.

The National Development and Reform Commission, the country's top economic planning agency, earlier this month told local governments to remove “discriminatory” rules against Chinese products and buy the nation's own goods for state projects where available.

The edict is aimed at maintaining “a fair market environment for competition” and will not discriminate against foreign products, the Ministry of Foreign Affairs said June 18.

Bayerische Motoren Werke AG won approval to sell its BMW- brand cars to China's central government, BMW-Brilliance Automotive Ltd., the German company's local venture, said June 12. Brilliance China Automotive Holdings Ltd.'s shares plunged June 19 when Xinhua news agency said the central government had no immediate plans to buy BMW vehicles.

Local governments continue to request foreign products in their invitations to tender, said the Sydney-based McLaughlin. A tender issued on June 15 by the Shenyang municipal government for a server and a laptop computer specified that it wanted Hewlett-Packard Co. products, McLaughlin said.

Another tender issued on June 16 by the Zhuhai municipal government for an assortment of electronic equipment asked for a Canon camera, a Nikon camera, a Sony camera and an NEC display, he said. A third tender by the Jilin provincial government on June 16 requested 22 Volkswagen Magotan cars.

Such tenders typically are bid on by local dealerships, McLaughlin said.

The China Tender Bulletin, launched in February, monitors up to US$2 billion of local government tenders weekly via five full-time staff in Shanghai and 300 freelance workers across the Asian country.

The June 4 government order was most likely designed for domestic media consumption, said McLaughlin. “It was one of these things that was intended to make readers happy,” he said. “There are always rumblings about why the country is spending all this money when it's going to foreign companies.”

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