It is reported that the government has invited comments from the public on a draft regulation for its procurement of domestic products a move analysts said will have limited impact on foreign companies.

According to government sources and industrial analysts the draft clearly defines domestic goods as final products made in China with more than 50% local content in value. The move is considered controversial as it could potentially affect the interests of foreign companies and has not been clarified in the previous guidelines either. The draft will be open for public comments till June 21.

Under the draft regulation, the priority for government procurement would be on domestic products. If domestic products cannot meet the criteria for local content and purchasers should give priority to foreign products assembled in China.

Mr Gao Zhigang division chief of the Central Government Procurement Center said the regulation is expected to propel the development of domestic industries of domestic and foreign companies in China.

According to the draft, bidders should provide a commitment from the producers that the final goods meet the local content requirements.

Analysts said it will mainly rely on companies' honesty and supervision afterward. Mr Gao said it is a simplified mechanism compared with the existing complicated certification procedures.

Industry insiders said though the buy domestic products first policy has sparked concerns that it will have the potential to disadvantage foreign made products in fact the draft regulation has limited impact on foreign products and foreign companies needn't worry too much about it.

Mr Gao said "China government procurement market has largely opened up to foreign products. Imported products can win government contracts as well if they are in demand and they just need to get the relevant approval from authorities. Approvals would not be difficult if the products are in demand.”

He said that the problem lies in that some projects need to purchase high tech goods from developed countries such as the United States, but the restrictions on export of those products are yet to be lifted.

(Sourced from China Daily)