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Critically consider the legal issues that must be taken into account when an exporter is attempting to penetrate a new foreign market

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Introduction

International Trade and Finance Law 4FBL602 Critically consider the legal issues that must be taken into account when an exporter is attempting to penetrate a new foreign market. Seminar Tutor: Philip Williams Student: Kevin K Y Cheung Student Number: 01084944B Submission Deadline: 06/11/2003 Word Count: 1835 words Legal issues that an exporter must consider when they try to penetrate a new foreign market are issues of the contraction of legal contracts which constructs safeguards for the exporter and avoid any pitfalls that may occur and also issues of legal juridical laws such as the different types of laws that exist such as common law, civil law, Islamic law. The exporter needs to consider the different juridical systems due to they may be similar in contents and context but the fundamental differences in business forms has a strong impact on all types of transactions and trade methods used. These business structures, although not mutually exclusive, can be strategically aligned to best suite the exporters needs. The exporter must also consider the contents of the Statutes of the International Court of Justice. The exporter must when considering the penetration of an international market the legal risks. Such as the exporters own legal approach may not be found in the importers country so the level of safety for the two companies may weaken. ...read more.

Middle

Another way of penetrating into an international foreign market would be to take up a full or partial liability joint venture or merger with an another company which is based within the country of the market where the exporter wishes to start a business and take a market share or create a new market within the new country. The company which the exporter may wish to become a partner in this joint venture should have all the background juridical knowledge needed for a new or existing product or service to enter the third party place of business. But issues arise when joint ventures or mergers occur such as if the exporter was a USA born or based company wishes to inter Taiwan due to cheap labour and high consumption of its good then the USA government may intervene due to that the exporter has certain intellectual rights which the country wishes to keep under its control thus the agreement of a joint venture may be voided by government intervention. So the exporter must be careful of the product and intellectual property it is going to give permission for specific and limited use by the joint venture third party. Not just intellectual property rights may hinder the joining of two companies. With the method of mergers for market penetration then a problem of the rights and majority control of the shareholders will need to be interpreted and depending on ...read more.

Conclusion

This would mean the physical extension of a branch to be situated within the country of penetration. Legal issues that may arise due to this way of penetration would be the government of the country in interest. The exporter will need to follow and acquire government approvals, regulations, property regulations and issues of employment of nationals. Creating a branch would be an advantage by hiring locals to be employed by the firm would promote the firm within the local business community and aid the relationship of the company with the government. A similar method would be the idea of creating a subsidiary by an independent local firm who wishes participate with the exporter but assumes total legal responsibility for sales and debts. Legal issues are contractual issues and legal disputes such as if the local firm wishes for compensation and the jurisdiction of the exporter and firm when a dispute occurs. Such as to where the hearing should be situated or taken place due to the firm and exporter may follow different juridical systems. Contractual issues that arise could be the issue of property rights, distribution and employment and termination by the exporter. From these methods an exporter wishing to penetrate into a foreign market has many choices to choose from and thus would be advised to choose one that would be more suited to them legally wise rather than profitability wise at first due to the legal issue will mean whether the exporter will succeed or not. ...read more.

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