USITO Weekly 1/15/2010: Government Procurement Implementation Rule

SCLAO Solicits Public Comments on ‘PRC Government Procurement Law Implementation Rule (Request for Comment Draft)’

On January 11th, 2010, the Legal Affairs Office of State Council (SCLAO) of PRC posted the draft of ‘PRC Government Procurement Law Implementation Rule (Request for Comment Draft)’ (herein afterwards as ‘the draft rule’) on its website, giving an implementation guidance to the ‘PRC Government Procurement Law’ that came effective on 1/1/2003 (the Chinese version of the Law: http://www.people.com.cn/GB/jinji/20020629/764316.html).

The draft rule has made key notes to the following areas:

1. Explains the applicability of the Law, clarifies the implication of fiscal fund, defines goods/project/service, and states that GP project can be excluded from the jurisdiction of the ‘Tendering and Biding Law’ which became effective in 2000;
2. States a GP project shall be disclosed to the public on a provincial level (or above) website, and a GP project exceeding RMB 5 Million shall be announced on a State Council Finance Department designated media, whereas a state secret/commercial secret related project/information can be non-disclosed;
3. Strengthens that GP shall prefer environmental and energy efficiency related, indigenous innovation products, as well as support small and medium enterprises, less developed areas and minority regions registered enterprises;
4. On GP methods, the draft rule explains the applicable conditions for non-disclosure tendering and bidding, and the specific methods for focal service procurement, computerized GP, and under-public-tendering-threshold GP, etc.;
5. Specifies GP agencies responsibilities and qualifications;
6. Standardizes management of security deposits, and systemizes GP evaluation experts requirements;
7. On GP contracts, the draft rule forbids subcontracting preferred policy GP projects, and further legitimized the content/implementation of a GP contract.?

For more details, please check the Chinese version: http://www.chinalaw.gov.cn/article/cazjgg/201001/20100100193904.shtml.

USITO Notes: USITO submitted comments to the Ministry of Finance on the Government Procurement Law in October 2006, and followed the issue with a few programs with the government procurement authorities, such as the Summer 2008 GP training program for the MOF officials. For this regulation, it was actually delayed for quite a few years, given the GP Law was issued as early as 2002. For most Chinese laws, they always have an “implementation regulation (rule)”, generally issued after soon after the law is promulgated. The kind of rule for the GP Law was yet to be available because of wide debate the various authorities, as sources said.

The U.S. ICT industries need to express concerns over China's GP regime and indicate interest of engaging the drafting work. An initial glance over the draft tells us there are much room to improve and some areas to be justified. USITO will thus organize member comments on this subject and plans to feed back to SCLAO before the comment deadline of Feb.5th, 2010. As the first step, we will start translating the draft regulation, and members will soon receive a separate email for the translation. At the same time, you are welcome to contact our policy coordination manager Jing via JingL@usito.org to submit your points.

The Google Announcement: "A New Approach to China"

On January 12, 2010, Google posted an entry in its official blog, saying the company might withdraw from operations in China after a cyber attack from that country. It says after a coordinated and focused cyber attack that targeted Chinese human rights activists as well as larger tech companies, Google would likely cease censorship of its Chinese language search engine, suggesting it may even withdraw operations in the country. In addition, it admits the decision was made by the executives in the U.S., without the knowledge or involvement of our employees in China. For the full text please click here.

USITO Notes: USITO is disappointed seeing any of its members' attempt to leaving China, such an important market for a global company. At the current stage we have no knowledge of the backgrounds of the alleged attacks of Google website mentioned in the news. As for Google's other problems, these are old problems and we certainly hope as China is emerging as an important player in the Internet world, the restrictions posted on Internet will be incresingly more in-line with the global norms.

An interesting tip in local news said that Mr. HU Yanping, Director of DDCI Internet Data Center, one local authoritative person on internet, had predicted 3 months ago that Google would quite China market. Mr. Hu would not reveal the reasons. Base on it, it seems there are other reasons or incidences beyond what being mentioned in the latest news. Perhaps, Google has problems similar to what other international internet companies in China, not many of them faired well. The Internet regulatory and business environment is very different from other part of the world.

Some of the local press stated that if Google indeed leave China, it would be a loss to Google, also a loss to China. Google will lose China as an innovation base, with the possible closure of Google China office. China will also lose an important innovation base, with the closure of Google China R&D; especially when Chinese government is encouraging innovation. Also having less competition in China Internet industry and market is not a good thing for China netizens and the community at large. (This message is what USITO responded to media inquiries).

Green Dam Faces USD 2.2b Lawsuit

A US based software producer just filed a USD 2.2 billion lawsuit against the Chinese government, two Chinese software markers and seven major computer manufacturers for their distribution of the Internet filtering software "Green Dam Youth Escort" (short for GD) - which the company claims is pirated from a similar product it makes. Cybersitter, a family-owned software firm based in Santa Barbara, filed the lawsuit in a Los Angeles federal court, alleging that the two software makers of Green Dam illegally copied over 3,000 lines of code from its award-winning Internet content filtering software. Members please click here to track USITO's GD Issue

Member in the News: Cisco Aims at China Market With Restructuring

Cisco Systems is adding a China business unit to its Asia division, the company said late Monday, highlighting the strength of the Chinese market and Cisco's efforts to grow in the country. China, Hong Kong and Taiwan will fall under the company's new Greater China unit starting next month, Cisco said. Japan will retain its own unit and the rest of the Asia-Pacific region will remain a joint unit. Detail