Should State-Owned Enterprises Engage in Bidding Processes for International Trade Purchases?

The problem: procedures killing deals

It has been reported that many state-owned enterprise (SOE) trading desks lose business not because of market competition but because their own procurement procedures are too slow. A downstream client might issue a purchase order with prices valid only until mid‑afternoon. By the time a SOE completes announcement, registration, bid opening and evaluation, the price and the supplier have moved on. Should a trade desk really wait out a month‑long tender when commodities move by the hour?

For Western readers: the core mismatch is between procurement rules designed for engineering and construction projects and the realities of commodity trading and international purchases, where the business model depends on speed, market judgment and short windows of opportunity.

Legal and policy context

China’s Tendering and Bidding Law (招标投标法) and the 2018 NDRC order (16号令) historically focus on engineering construction. Trade purchases — buying steel, chemicals or agricultural products to resell — are fundamentally commodity circulation, not building a road or a plant, and thus are not automatically in the statutory mandatory‑tendering scope. In July 2024 the State‑owned Assets Supervision and Administration Commission (SASAC, 国务院国资委) and the National Development and Reform Commission (NDRC, 国家发改委) jointly issued Guidance (国资发改革规〔2024〕53号) clarifying four non‑tender procurement routes for central enterprises: inquiry/price comparison (询比采购), competitive pricing (竞价采购), negotiation (谈判采购) and direct procurement (直接采购). That document does not greenlight arbitrariness — it expressly requires clear internal rules on applicability, approval authorities and record‑keeping.

Operational realities and compliance risks

Trade procurement lives on three short windows: price, supply and customer confirmation. Commodities can reprice within hours; suppliers will sell elsewhere if you ask them to wait; customers’ offers often expire in days. Standard tender cycles frequently miss all three. At the same time, regulators and auditors care about process integrity: the issue is not which procurement route you chose but whether decisions are recorded, justified, market‑referenced and free of collusion or related‑party favoritism. It has been reported that some SOEs simply copy engineering procurement logic into trading operations, producing “complete” but commercially sterile workflows.

What should change?

The policy signal from the 53‑document is clear: procurement methods should fit business scenarios. For international trade purchases this means designing compliant but agile pathways — with explicit thresholds, approval matrices, documentation requirements and post‑deal transparency — so speed and compliance coexist. Geopolitics complicates matters further: sanctions, export controls and supply‑chain restrictions make timely supplier selection and contractual flexibility strategically important. In a market that punishes delay, should SOEs let a rulebook cost them markets? The answer emerging from Beijing’s recent guidance is: not if their internal controls are strong and their rules sensible.