In China, local smart grid equipment suppliers trump foreign names

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SummaryChina, like the United States and some European countries such as Britain, is spending heavily to upgrade its power network.

The politically powerful chief of China's State Grid Corp, the world's biggest utility, welcomes bids from foreign firms looking to supply equipment for its smart grid but says they face formidable competition from Chinese companies.

Liu Zhenya, 61, State Grid's president, dismissed accusations of protectionism, saying China's smart grid market was open and transparent.

Local suppliers held the upper hand because they offered sophisticated home-grown technology at a lower cost, he said.  

European firms including Siemens AG, ABB Ltd  and Alstom SA have long complained about the lack of access to the world's biggest smart grid market, which is dominated by state-owned firms including affiliates of State Grid and its smaller domestic peer, China Southern Grid.

China is at the very forefront of world smart grid technology, Liu said on the sidelines of the 18th Communist Party Congress in Beijing at which the country's new leadership will be revealed this week.

China, like the United States and some European countries such as Britain, is spending heavily to upgrade its power network to a so-called smart grid that can absorb variable and intermittent renewable energy and help improve the efficiency and economics of transmission.

All equipment and materials are procured through open tenders. Whoever has the best price, technology and reputation wins, Liu told Reuters on Friday.

The EU Chamber of Commerce has been lobbying for improved market access, hoping China's new leadership will consider opening the lucrative sector after the party congress.

Foreign firms are not involved in the drafting of standards for China's smart grid. This is mainly handled by State Grid which transmits and distributes power to 1.1 billion people across nearly 90 percent of China.

In a paper published in September, the European business lobby says the practice raised concerns that the standards are used to erect market barriers. It also warns that discrepancies between Chinese and international standards have hindered Chinese companies from entering foreign markets.

The lobby declined to comment for this story.

Chinese reformers and Western governments have also taken aim at the state sector in recent years, saying it gets the lion's share of preferential loans and policies and poses unfair competition to private companies and overseas firms.

Outgoing President Hu Jintao, in his address to a Communist Party Congress on Thursday, called for further opening up of China's economy to foreign investors, as well as market-oriented reform of the state sector

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