Doing business overseas? What you need to know

In the world we live in today many Australian business are transacting internationally not just selling goods but engaging resources to carry out work or manufacture for them. Many businesses are also looking at actually expanding their operations into the international market by establishing operating bases overseas. This can bring with it many rewards such as cheaper labour and goods, new and often larger markets to transact in, but it can also be a threat to your business.

So, let’s look at a few of these different models below.

Selling my goods and services overseas

Many Australian businesses have had great success selling their goods and services overseas.

In our experience, the successful ones have taken the time to assess the markets in detail of where they want to sell into and have understood those markets before taking the plunge.

Cultural, legal and government regulatory factors can often be very different to what you have been used to.

Australia has a number of free trade agreement around the world which assist this but you need to understand their implications for your particular business.

You will need to consider if your current policies and procedures will fit and if not what needs to be done?

Some of the matters that you will need to give detailed consideration to are:

• Contracts and your terms of trade including terms and conditions
• Consumer protection laws
• Dispute resolution
• Intellectual property protection
• Language related issues
• Product standards and compliance
• Restrictions relating to your product or service
• Taxes and how you will be treated

In addition to this it is important to consider the business structure you operate under and is it preferable that your Australian operations are kept separate for asset protection and liability reasons.

Contracting overseas business to carry out work

Due to our global economy more and more businesses are contracting overseas businesses and individuals to carry out work for them.

Most businesses will look at engaging a contractor to do the work rather than an employer/employee relationship and due to the very different employment laws, many businesses believe it is preferable to stay away from employing people overseas.

One of the benefits of overseas contractors is the cost and often very unique skills which can be harder to find in Australia.

Contracting overseas to carry out manufacturing has been very popular for some time especially since our own manufacturing industries in many areas have dwindled. 

One of the huge growth areas is in IT field and more recently the administrative and financial services areas.

With these tangible benefits come risks. Your level of control over the quality of the product and the service is difficult due the lack of full time supervision and management. Also, how do you handle disputes when they arise including delays and substandard work.

You will often be disclosing your intellectual property to the contractor or employee and the protections in many countries are non-existent and impossible to enforce.

It is also important to remember employment laws and tax implications are very different and you could fall foul of those countries authorities without knowing it.

Starting a business overseas

This is a big step for most businesses and should be thought through and a detailed analysis undertaken before committing to it.

You will be liable to laws in a country which could be very different to those in Australia and sometimes the local business practices can be difficult to reconcile from a professional perspective to our expectations.

Often you will be left with no choice as you may be required to set up a branch or subsidiary office if you want to conduct business in that country.

When our clients look at setting up overseas, we strongly advise them to:

• Do a detailed analysis of the country and market and prepare a business plan
• Look at your competitors and what will give you the edge
• Make sure you engage local advisors you can trust
• Consider what if any funding options are needed
• Ensure you comply will all local laws including tax, employment and licensing
• Understand how to repatriate your funds and profits without breaching international tax treaties and laws
• Ensure you have adequate and detailed monitoring measures in place
• Finally, be prepared to be there for the long run as many overseas markets will test newcomers

How can FC Lawyers help?

The team at FC Lawyers have helped many businesses with their overseas related business opportunities and expansions as well as assisting businesses coming to Australia. We have a vast network of legal, accounting and business consultants throughout the world to assist and advise our clients.

Contact our team today to discuss your how we can assist with your business overseas, or begin setting it up.