European Chamber South China Chapter Meets with the Guangdong Provincial Heatlh Commission to Discuss the "Buy China" Issue

2020-11-19 | South China

European Chamber South China Chapter Meets with the Guangdong Provincial Heatlh Commission to Discuss the "Buy China" Issue

On 19 November, the European Chamber South China Chapter lead by South China Chapter Board Vice Chair, Klaus Zenkel, had a meeting with the Guangdong Health Commission’s Finance Department. The priority issue discussed were the concerns surrounding Guangdong Province's policy encouraging hospitals to buy domestic medical products over foreign medical products.The Commission assured the European Chamber that hospitals were encouraged to buy domestic products and not forced. Moreover, if government funds are allocated to hospitals, it is only using those funds can hospitals not buy foreign medical products; there is no issue if hospitals wanted to use their own profits to buy foreign products. 

This year the Health Commission of Guangdong Province published Letter of the Guangdong Provincial Health Commission on the Opinions of the Committee on Proposal No. 20200567 of the third Session of the 12th Guangdong Provincial Committee of the CPPCC, which brought to the Chamber’s attention the effect the “Buy China” policy would have on public hospitals. We understand that in response to the “Buy China” initiative, Guangdong had been taking measures to restrict local hospital’s access to foreign medical equipment and encouraging them to buy domestic branded equipment. 
 
Articles 9 and 16 of the Foreign Investment Law state that foreign-invested enterprises (FIEs) in China enjoy access to the same preferential policies as other companies, and that they will receive equal treatment in government procurement activities, including with respect to products manufactured in China by FIEs. Additionally, Article 1 of the Notice on Promoting Fair Competition and Improving the Environment of Government Procurement, issued by the Ministry of Finance (MOF) on 30th July 2019, states that FIEs will receive equal treatment in government procurement activities.1 However, many local procurement policies include a provision that hospitals are encouraged to buy domestically-made medical devices as long as they meet quality requirements, and either explicitly or in practice stipulate the purchase of ‘domestic brands’. First, the requirement to purchase ‘domestic brand’ medical equipment violates the principle of fair competition and equal treatment of registered companies in China. Second, the allocation and use of medical equipment and instruments in public hospitals should be based on open market competition, the needs of medical service providers and the ensuring the best clinical outcomes for patients, instead of focussing solely on the origin of the brand. This issue has been brought to the attention of the Ministry of Commerce and CCPIT. 

This was the core issue that was discussed. The Guangdong Provincial Health Commission assured the EUCCC delegation that this regulation expires at the end of the year, which at that point the Foreign Investment Law comes into effect on this issue.

A copy of the South China Position Paper was presented to the Guangdong Provincial Health Commission at the closing of the meeting.