The Ministry of Finance issued a few days ago the Budget Management Method for Government Procurement of Self-innovated Products ("Budget Management Method"), the Evaluation Method for Government Procurement of Self-innovated Products ("Evaluation Method") and the Contract Management Method for Government Procurement of Self-innovated Products ("Contract Management Method"). It was reported that China, for the first time, promulgated special policies on government procurement for encouraging self-innovation.

The above three methods regulate the entire process for procurement of self-innovated products by government agencies, public institutions and commercial incorporations in regards to budget control, bid evaluation and contract management.  　

According to the Budget Management Method, self-innovated products shall be a priority of budget planning for the purchaser and local financial departments.

The plan for government procurement of self-innovated products is prepared at the same time as the government procurement plan, but is listed separately. If self-innovated products are not included in the government procurement budget, but are actually used, the budget for self-innovated products should be added and submitted for approval. Financial departments at all levels should have rules for reward or punishment in procurement of self-innovated products. In particular, they may refuse to pay the procurement fund if purchasers fail to prepare a budget or planning or fail to comply with the budget for the procurement of self-innovated products. 

The Evaluation Method is to offer favorable policies to a self-innovated product during procurement by lowering the qualification requirement to its supplier and reforming the evaluation methods for self-innovated products. 

No organization or individual should obstruct or impose restrictions on the access of self-innovated products suppliers to the government procurement market for a certain region or industrial sector, nor should they differentiate or discriminate against self-innovated product suppliers. Moreover, bidding documents should not require or note any specific supplier or product, or contain any discriminatory content excluding potential self-innovated product suppliers. Purchasers may lower the threshold for self-innovated product suppliers in terms of business size, performance, qualification or credit, but not repel or limit them. Also, this method requires that a variety of evaluation methods shall ensure favorable treatment to self-innovated products, including but not limited to a 5-10 percent price deduction or 4-8 percent extra evaluation credit, if applicable. In particular, if a self-innovated product bid and a common bid are equal in terms of satisfying the purchasing requirements for quality and service, but the self-innovated product bid is 5-10 percent higher than the lowest of the common bid, the self-innovated product supplier should be awarded the contract. 

The Contract Management Method ensures the implementation of self-innovated product policies in the conclusion and performance of the contract. The contract of government procurement for self-innovated products must include self-innovation as an essential clause and provide support, if applicable, to self-innovated product suppliers in performance security and terms of payment. Moreover, if any foreign product is approved for purchase, the purchaser should insist that the procurement must be favorable for absorbing the core technology from foreign companies and give priority to foreign companies which transfer core technology. 

During an interview with journalists from this newspaper, Yang Jinming, chief of Government Procurement Management Section, Treasury Department, Ministry of Finance said that the ministry prepared incentives for self-innovated product government procurement by referring to general international practice, WTO rules and China's specific situation. The incentives would give full play to the government's purchasing functions, guide other social subjects in procurement, and encourage enterprises to do self-innovation work. 

However, the Catalog for Government Procurement of Self-innovated Products which appeared frequently in the Three Methods are not enclosed in the above three methods, which is a pity indeed.  　

"The three methods without a catalog, as we plan, just mean a warming-up to purchasers and enterprises," said Yang Jinming. "The catalog is the basis for the three methods. Without it, the three methods would be meaningless. Now that the Ministry of Finance completed the promulgation of the policies, the formulation of self-innovated product catalog is the responsibility of the Ministry of Science and Technology and other similar organs."

The Ministry of Science and Technology is busy preparing the Instructions for Declaration of Self-innovated Products in China, according to resources. The certification of the first patch of self-innovated products will be launched by the end of this year. The first Catalog of Self-innovated Products of China is expected to be completed this year. 

According to Qin Yong, Deputy Director General of the Development and Planning Department, Ministry of Science and Technology, a self-innovated product should:  　

a. comply with the laws and regulations, industrial policies for technology and other industrial policies;

b. be covered by an independent intellectual property right;

c. be under an independent brand;

d. be highly innovative;

e. be technically advanced and have a leading position compared to similar products in other countries;

f. be reliable in quality by passing the test or examination of a lab or tester qualified by the Certification and Accreditation Administration of China or by departments of quality and technology supervision in any province, autonomous region or municipality directly under the Central Government; and

g. have a potential economic effect or great market vision, or may substitute imported goods.  　

In addition to the self-innovated product catalog, the matching policies and supervision also mean a basic guarantee for the government procurement function. "The Three Methods were innovative in themselves and will surely encounter problems in their implementation," Mr. Xu Huandong said, "such as, accreditation of self-innovated product, the purchaser's avoidance of self-innovated products, and preferential treatment and priority. Therefore, the financial departments must do a good job in providing matching measures: Firstly, prefect the self-innovated product certification mechanism through doing wide propagation, encouraging suppliers to participate in certification, publishing the standards, procedure and method of certification, and ensure a fair and objective list of certified self-innovated products. Secondly, enhance supervision and examination of the implementation, and strictly guard against the purchaser's avoiding self-innovated products or fraudulent or false practices, the collusion between purchaser, purchasing organization and supplier, or the insufficiency of supervision and administration of the procurement."