Chinese provinces ignore 'Buy Chinese,' purchase foreign goods

The global recession is increasing calls by industries worldwide for protection, and Chinese officials have already complained about Buy American rules imposed on government spending by Congress, and moves to restrict U.S. imports of Chinese tires and steel pipe.

China may be using the edict to try to prop up demand for its own manufactured goods to reduce factory closures and job losses, said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong, on June 17.

With manufacturing accounting for 45 percent of gross domestic product, much of the nation's stimulus spending has focused on reducing factory closures and job losses, he added.

China's need to upgrade its educational, medical and general infrastructure ensures that foreign companies will continue to win plentiful Chinese business, McLaughlin said.

“The push for long-term efficiency means China wants a good job to be done and they want the experience of people who have done this in other countries,” McLaughlin said.

There are few product areas where local and foreign manufacturers are closely matched and thus where local governments can easily find local products of equivalent quality to foreign ones, McLaughlin said.

Computer makers such as Dell and Hewlett-Packard Co. face a tough rival in Lenovo Group Ltd., which in 2005 bought International Business Machines Corp.'s personal computer business, he said. Foreign television makers also face intense competition from China manufacturers such as Skyworth Digital Holdings Ltd. and Sichuan Changhong Electric Co.

“These are the only areas that we see in Tender Bulletin where there's an obvious clash between foreign and local manufacturers in terms of competitiveness,” said McLaughlin.

“There are good quality domestic TV brands and at the moment you do see local governments specifying that they want a Sony or an LG,” he said. “That is very hard to justify because Skyworth and Changhong products are great.”

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