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Tue, Nov 01, 2005 - Page 12 News List

Foreign firms complain about Olympic `lockout'

CONTRACTS Foreign firms have won few contracts for projects related to the Beijing Olympics, and many say the bidding process is unfair and favors local companies


Beijing's spending bonanza for the 2008 Olympics is proving a disappointment to foreign companies, who say they are being effectively locked out of most contracts.

With China allocating billions of dollars to the games, the frustration among foreigners over so far scant opportunities, voiced privately for months, broke out in the open last month. A senior executive with General Electric Co, in published remarks, criticized the bidding process as opaque and skewed toward domestic firms.

"The authorities are currently unable to ensure that the bidding process is fair," the American Chamber of Commerce-China's monthly magazine quoted Li Jianbo, in charge of GE's relations with the Chinese government, as saying.

Both the city government office in charge of Olympic construction and the Beijing Olympic organizing committee have promised that bidding would be fair and open and that foreigners would be welcome.

The two agencies didn't respond right away to requests for comment on the matter.

Foreigners have not been completely excluded, though US officials said no US company has won a sizable contract.

Australian and European architects are designing several venues, including for the 3.1 billion yuan (US$386 million) National Stadium, the games' signature architectural work.

London-based Ove Arup & Partners is providing design, engineering and project management services for a handful of venues and related infrastructure projects.

But the foreign share pales in comparison with the huge sums involved: China is spending US$2.4 billion on Olympic venues alone and another US$35 billion-US$40 billion on remaking the city for 2008. Projects range from new power, water and sewage treatment plants to the world's largest airport terminal.

The disparity and the discontent generated have thrown a spotlight on China's less-than-free-market economy, in which the communist government and state-connected companies often play decisive roles.

"The bidding process is a nightmare," said a foreign consultant who is trying to land Olympic-related contracts for European companies.

The consultant complained that anyone who wasn't an insider didn't know what was going on and requested anonymity so as not to jeopardize his already limited chances of business success here.

Part of the frustration stems from years-long trade frictions.

Three years ago, Beijing raised the bar for foreign participation in construction projects, requiring foreign construction firms to set up local entities and foreign architects to work with local partners. That has helped keep most major Olympic contracting in the hands of state-run Chinese construction companies, executives with foreign companies say.

But a larger part of the foreign criticisms are directed at the often close relationship between Chinese business and government and the resulting disregard for regulations and standard practices.

Although China has laws and rules for government procurement and bidding, foreign executives said that much Olympic contracting is governed by neither.

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