Every entrepreneur in the early stages of business development sees global expansion as a clear sign of growth, something extraordinary to look forward to and something to celebrate. While this is indeed a cause for celebration and proof that you have managed to go beyond your humble beginnings and increase brand awareness, there are certain challenges that come with such incredible growth that each of these owners has to face. A range of these challenges revolve around the legal issues surrounding this global expansion, as you begin to work beyond your initial boundaries and attract an entirely new audience. It is important to register patents, design rights, and trademarks in the country you want to sell. UK intellectual property protection does not always apply in other countries. In addition to these considerations, other factors must be taken into account, such as tax issues (taxation of profits, VAT, parent-subsidiary tax benefits, transfer pricing), labour and employment law issues (status of expatriate or local employees), cross-border protection of intellectual property rights (patent, trademark, know-how) and possible regulatory restrictions on foreign investment in the target market. Some countries, such as China, Iran or the United Arab Emirates, require or strongly recommend the creation of an independent local entity on their territory. Globalization has dramatically changed the way companies work. It has created global opportunities for businesses and marked a stronger transition to an integrated global economy by removing trade barriers. It has also changed buyers` preferences, as goods and services can now be easily purchased abroad. Following the same logic, your company should consider different hiring and collaboration options. If you offer them a position in your own company, you need to create locally relevant contracts to ensure adequate protection for employees and clearly define the conditions under which you hire or fire someone.
Home News International law Key legal issues of international business development Any company that transfers data outside its own country must be aware of the issues related to the protection of personal data. A big advantage is that they are often tax-efficient for both employer and employee. What laws govern trade agreements? Contracts often use an amalgam of contract laws from each country. Do foreign countries recognize and protect intellectual property rights? What are the legal obstacles in the import process? What duties, taxes, customs procedures, etc. apply to the importation of goods? Which labor laws apply to the company? A subsidiary, i.e. an entity legally independent of its parent company, can be a good option if the company wants to duplicate its production or marketing model and its way of working abroad. If you sell to individuals, whether consumers or employees, you need to know the legal status of your business in the country you enter. If your business sells digital products, it must ensure that it has the right to sell any product in any jurisdiction where it has customers.
You must own the copyright yourself or have permission from a copyright holder. These permissions typically take the form of licenses that specify where and under what conditions you can offer the digital product for sale. For most licenses, your organization is also responsible for informing your customers of license restrictions or ensuring that they cannot make unauthorized copies of the licensed product. Velocity Global is thrilled that Tyler Rauert is now a guest author. Tyler is a partner at Polaris Law Group, an international law firm focused on bringing global trade to small and medium-sized businesses. Tyler advises companies operating abroad. His practice focuses on cross-border business transactions, business formation and financing, intellectual property protection, regulatory compliance, dispute settlement and international trade policy. Tyler`s legal practice is based on a decade of foreign policy and national security experience for the U.S.
government. He helped negotiate a number of agreements with European, Russian, Chinese, Arab, Israeli, Turkish, Afghan, Pakistani, Indian and Iranian partners. This list is not exhaustive. Operating in a foreign market can result in specific legal hurdles or barriers for foreign companies. Creating a joint venture with a local partner will help the company rely on a market player who knows the market and how it works. The creation of a joint subsidiary creates a contractual partnership that makes it possible to respond jointly to each call for tenders for a specific project. This type of structure can be a good way to meet the commitment of some countries (China, Iran and the United Arab Emirates) to work with a local company to start and grow a business. Here are our top ten things companies can do wrong when expanding internationally. Design any legal document in minutes from a library of 200+ templates. International expansion does not happen overnight.
It takes time and research to decide which new markets you should enter, and you need to be aware of all the legal issues that may arise. The UK`s Employment Rights Act makes it clear that anyone who receives a salary is an employee, regardless of how the relationship is characterised. Essentially, each region has its own marketing boundaries that you need to follow to ensure your brand reputation is protected and you don`t waste your budget on unnecessary fines. If a customer has a complaint about a product or service in another country, they can take legal action in their local jurisdiction against a company based in another country. If you are not registered as a company or limited liability company, you may be held personally liable for everything your company does. If the buyer and seller are located in different countries, they may be subject to conflicting laws that apply in those jurisdictions. Materials offered for sale in the United States may not be legal in other countries. If your business inadvertently violates the law of another jurisdiction by selling to its residents, you can sometimes rely on the protection of U.S. courts, which may rule that the laws of the other jurisdiction do not extend to U.S. companies. To avoid legal complications and costs, learn about the laws of another country once your business records significant sales to its residents. International e-commerce differs from ordinary retail because the buyer and seller are located in different jurisdictions, have not entered into or signed binding agreements, and the buyer has not inspected the goods.
These differences raise legal issues that companies must face. If you comply with the laws of the jurisdiction in which your business is located and adhere to some basic international business principles, your business should be able to meet key legal requirements. First, make sure that an independent legal expert verifies that your terms of use or sales contracts are legally enforceable in the countries in which you currently operate and in which you intend to do business. In addition to the exchange rate, you should also consider inflation rates. These vary from country to country and can affect local labor costs, material costs, and other prices related to products and services. Knowledge and understanding of the exchange rate and inflation rates helps to estimate the value of products in different countries. Europe has strict data protection laws that require companies that receive or process personal data to follow strict rules for its receipt, storage and use. Explicit consent or disclosure must be given to the owners of the data, which cannot be transferred outside the EU, without proper records being made, in order to ensure their protection and correct use.
Establishing a presence in a foreign market or entering a foreign market is not something that can be done overnight, as it can present a real risk to any company that is not sufficiently prepared or has not chosen the legal structure or approach best suited to its expansion project and target market. Regardless of your company, you can only work through your employees. If you hire/subcontract in a foreign country, you are subject to the labor and labor laws of that country. Here, a partner like Velocity Global is essential. Velocity Global can help you with compliance, benefits, and risk mitigation to simplify collaboration on a global scale. Note that it is much harder to get rid of underperforming agents and distributors – choose your partners wisely! The development of an export business is expensive and the company must immediately identify the human and financial needs it can provide for this form of expansion.
