Businesses are proposing a set of measures to promote European manufacturing. Part of these measures is linked to scoring criteria in public procurement.

“How do we compete with China, which imports equipment at multiple times lower prices, often with questionable quality and potential security gaps? Due to the low cost, these products inevitably win public tenders, displacing all other manufacturers. For us, it is, to put it mildly, difficult, and if urgent measures are not taken, the simple solution would be to close down,” says an entrepreneur in an informal conversation with Capital, outlining the challenges the industry faces from competition with China and Turkey.

These so-called third countries (i.e., outside the EU) literally flood the European market with subsidized low-cost products, “killing” local manufacturers. This is a problem for both smaller and larger players, but especially for strategic sectors and heavy industry. Access “loopholes” for entry into the EU are another issue the European industry must tackle. Bulgaria is no exception.

The problem has been discussed for years, but it has now gained particular urgency and a potential opportunity for a solution. Earlier this month, the European Commission adopted the Industrial Accelerator Act (IAA), aimed at turning Europe toward local production. The act introduces a series of protective tools, such as quotas for European components in final products and barriers for companies from countries dominating the market (over 40% share).

However, how it will be applied in Bulgaria remains unclear. According to the Bulgarian Association of Electrical Engineering and Electronics (BASEL), the problem is even more serious, as nearly 60% of public procurement in this sector in 2023 and 2024 was won by companies from China and Turkey, resulting in declining production and risk of closure for Bulgarian firms. BASEL represents over 100 Bulgarian and international companies with a combined annual turnover of €1 billion, including manufacturers of electrical and electronic products and firms providing maintenance, repair, and component supply. Around 10,000 people are employed in these companies.

Dominant East
“The initiative ‘European Money for European Companies’ is not protectionism; it is a matter of economic logic, fairness, and EU strategic security,” commented BASEL Chairman and CEO of AmonRa Energy Dimitar Beleliev, PhD, for Capital. He stressed that Europe faces a paradox where European taxpayers fund large-scale public projects via EU funds, yet a significant portion of this funding is realized by non-EU companies. “This leads to structural competitive asymmetry. European firms invest in sustainability, comply with high social and environmental standards, and carry higher regulatory burdens, yet they lose contracts on their own market.”

In strategic sectors such as energy, transport, and critical infrastructure, this problem is even more critical. “Here, it’s not just about price, but about supply security, system reliability, and control over key technologies. Dependence on external suppliers in these areas is both an economic and a geopolitical risk,” he added. BASEL proposes that public funding ensure a significant portion of added value remains in Europe. “A threshold of 51% European content is entirely reasonable and can be implemented through criteria for supply security, sustainability, traceability of origin, and economic efficiency,” said Beleliev. Experts note that this would create a multiplier effect—ensuring additional investments, jobs, tax revenue, and technological capacity.

Beleliev noted that EU energy directives already give preference to companies producing in Europe. “We urge the Bulgarian government to ensure EU funding goes to EU companies, not, as has happened in recent years, to firms from China and Turkey.”

China and Turkey – cheap energy and labor
China and Turkey’s main competitive advantage comes from low production costs, as both countries have access to cheap labor and raw materials. Meanwhile, Bulgarian and European manufacturers face high costs due to strict environmental and social regulations. Energy prices in the EU, including Bulgaria, are significantly higher, increasing production costs.

Another challenge is that Bulgarian manufacturers, as part of the EU, must meet strict safety, quality, and sustainability requirements, raising operational costs and placing local firms at a disadvantage compared to producers from China and Turkey, who often do not follow the same standards. At the same time, Bulgaria does not provide sufficient targeted support to local producers, whereas China and Turkey actively subsidize their industries through tax incentives and other measures. “This creates an unequal competitive environment,” emphasized Beleliev.

Do you have a generator? We have
“I don’t understand why some people try to argue that cheap doesn’t come at a cost. There is a reason something is cheaper, and it is usually due to quality compromises. This approach is particularly seen in public spending, where the focus is on being cheap, even though it ends up being costly,” said Valentin Georgiev, Commercial Director at HI Engineering. The company focuses on designing and delivering electrical and backup power equipment.

“China and Turkey can also provide quality equipment—it comes at European prices, sometimes even higher—but that is not the issue here. We are talking about products with untraceable and, to put it mildly, questionable quality. This is problematic not only for operation but also in emergency situations,” he explained. Experts from his company often encounter low-quality units that cannot be maintained, making an initially cheap purchase extremely expensive in the long run.

“I am absolutely against critical equipment being imported from companies that cannot provide engineering support or authorized maintenance. Knowing the machines you supply is fundamental,” Georgiev stressed. “For example, when equipping a hospital, you cannot just buy the cheapest equipment. Yet under public procurement, the lowest price criterion dominates. There must be requirements for technical suitability, quality, and on-site inspections, not just a check for a generator or UPS on paper. This saves lives and ensures safety in emergencies.”

Consequences are clear
If the trend of low-cost imports with questionable quality continues, the consequences for Bulgaria will be severe: reduced industrial capacity, increased dependence on imported products, job losses, and slower economic growth.

The issue has been discussed in all BASEL meetings in 2025 with government representatives, including ministries of innovation, energy, and economy, but no unified solution has been implemented yet. A more successful approach might be to raise the issue with employer organizations, which can leverage influence to support domestic business. Only then could Bulgaria preserve at least part of its production and jobs, instead of replacing them with AI-driven phone orders and deliveries via platforms like Temu—from buttons to cables, batteries, and solar panels.

Public Procurement Law (ZOP)
According to BASEL, from 2016 to 2024 (except 2022), the electrical industry led all manufacturing sectors in exports. If public procurement in Bulgaria continues to be won by Chinese and Turkish firms, Bulgarian companies risk being pushed out. BASEL advocates for giving priority to Bulgarian and European products in public tenders. Currently, winners are chosen based on criteria such as “most economically advantageous offer,” which replaced “lowest price.” However, there is no explicit rule to “choose European,” and any changes to scoring criteria would likely require legislative amendments, which may take time given the political context.

“There is no need for legislative changes; it is up to the procurer, provided there is the right mindset in the country,” said Beleliev. Introducing a requirement of at least 51% European content in strategic projects in energy, transport, defense, digital infrastructure, and critical technologies could provide additional points in evaluating contractors.

Another proposal includes a criterion for supply security and local service presence, aligning with existing EU regulations such as CBAM, the Net-Zero Industry Act, and FDI Screening.

Source: Capital.bg