This week, a report from the European Commission has highlighted significant barriers faced by European medical device manufacturers seeking to enter the Chinese market. The document reveals that China's procurement policies favor local suppliers over international ones, leading to both direct and indirect discrimination against EU companies. In response, the Commission is advocating for constructive dialogue with China but has also hinted at potential retaliatory measures, such as restricting Chinese firms from bidding on EU government contracts if a resolution cannot be reached.

The investigation into China's procurement practices began in April 2024, following mounting evidence of increasing market closure for EU companies. The findings confirm earlier concerns and provide a foundation for possible counteractions. Central to the issue is the "Buy China" policy, which encourages the purchase of domestic products over imported ones. This policy, along with centralized volume-based procurement strategies, appears to systematically disadvantage foreign suppliers.

Administrative procedures for importing goods adhere to the principle that government procurement should prioritize domestic products. When imports are deemed absolutely necessary, an intricate approval process must be navigated, adding layers of complexity. The report underscores a lack of transparency in China's procurement processes, noting that 87% of analyzed tenders exhibited discriminatory practices. Moreover, there has been a notable rise in explicit prohibitions against imported medical devices, increasing from 36% in 2022 to 53% in the first half of 2024.

The Commission gathered substantial evidence indicating that volume-based procurement policies specifically aim to support domestic products. These policies have constrained growth for medtech companies based in the EU and the U.S., who have repeatedly cited these factors as limiting their market expansion. With clear evidence of unfair and discriminatory practices, the Commission is now considering leveraging its International Procurement Instrument, enacted in 2022, to address these issues.

If the Commission deems it in the EU's best interest, it may restrict or exclude Chinese companies from bidding on government contracts. Any actions taken will be carefully considered to ensure they are proportional and efficient while also addressing potential supply chain disruptions. This approach aims to encourage China to reconsider its discriminatory measures and foster a more equitable market environment.