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Business Law International - Research Paper Example

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Business Law International In order to transact business more successfully in China, a foreign company investing in China should consider forming a subsidiary in China. The establishment of a subsidiary is important because it will enable a company to do business directly in China…
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Download file to see previous pages This therefore makes the establishment of wholly owned subsidiary an alternative to consider. The legal risks Definitely Maybe will be exposing itself to if it embarks on export of Chocolates to China Some difference in law exist between China and UK and this is bound to affect important areas of business for Definitely Maybe. These areas include taxation, import procedures, currency dealings, agency distribution arrangements, protection of intellectual property and property rights. It is also important to understand that international laws and regulations in China could change and this could be applied differently from that of UK. This means that the interests if Definitely Maybe may be compromised if such changes are not friendly to foreign enterprises exporting their products or services to China. However, there is a way to overcome this potential threat. One of the best ways is for the business to draft a contraction in collaboration with a chine legal firm to ensure its interests are taken care of (Exim Guru 1). China is very sensitive when allowing the importation of goods that are directly consumed by its people. The government is also very sensitive to lawsuits involving life threatening issues like production of harmful products. Definitely Maybe is therefore exposing itself to the risk of being sued for any harm that its chocolates could cause on the Chinese people.. If the company happens to conduct business with a customer who is not trustworthy and the customer fails to pay, the government does not intervene in any way. In addition, legal actions for the recovery of such debts is often expensive and even impossible. Because of this risk, Definitely Maybe must acquaint itself with the type of law and dispute-settlement procedure which the company will apply. Dealing with a different legal system increases the risks of a foreign company becoming confused and experiencing potential problems arising out of this. It is also worthy to note that the company fails to enlighten itself on the responsibilities and issues surrounding the appointment of intermediaries such as distributor or agent, it could lead to unpleasant legal risks like legal disputes. Such legal issues are likely to arise if the company fails to follow the right procedure when appointing its intermediaries. The company must therefore obtain a list stating these issues and ensure they are included in its contract agreement, specifying the duties and rights of the parties involved. The best form of corporate entity that is ideal for Ultra-educators in China It is more significant for Ultra-educators to have wholly owned subsidiary in China as compared to operating through other corporate entities like a branch. One of the reason is that this form of corporate entity limits the liability of the parent company in UK in regard to the activities of its subsidiary in China. Unlike having a branch, there is some there is separation of legal corporate identities between the parent company and its subsidiary (Klein and Coffee 265). Because of this, the parent company is insulated and cannot be sued for the financial and legal issues of the subsidiary. If the company was to open a branch in China for purposes of physical presence, the parent company will totally liable to the legal and financial liabilities of its branch. This is because a branch is not recognised by Chinese law as an entity that is legally separate from its parent company. A wholly owned subs ...Download file to see next pagesRead More
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