Legal Issues
When sourcing goods from Chinese companies, business owners must consider the laws of the UK/USA and the laws of China which apply to international trade.
The commercial laws of China are speedily changing to become similar to those of western companies. This change is still in progress, and from this can result in many uncertainties as to which laws still apply, etc.
In China, what the law says and how a law is implemented can often differ. Although this situation has improved in recent years, the implementation of written laws can still be inconsistent.
Unfortunately, China has a number of laws which discourage or restrict investments in certain sectors of industry. It is advised that you find out if your sourcing venture will be bound by any of these laws.
China has recently made many improvements to the laws that protect intellectual property. Enforcement of these laws still remains a problem. UK and USA companies must structure their transactions and documents in a way in which the risk of intellectual property rights violations are minimised.
China has not fully completed the transition from rule of man to rule of law. This means that recourse to the court systems of China is often ineffective. Therefore business strategies should be applied with a view to not conflicting with Chinese joint venture partners and suppliers.
Chinese and UK/USA cultural norms differ, and this may lead to either classifying a term or statement with a different meaning to the same fact. It is imperative that both parties understand what is expected of them, what their roles are in the contract and what they have agreed to.
Before importing goods into the UK/USA, a business should find out if their products are subject to any import or trade laws. If your product is not bound by any import/trade laws, you should still organise the company activities to avoid any restrictions being placed upon your business in the future.
If your company wishes to export goods from the UK/USA to China, it is important to also check if those goods violate any export laws. Most goods are not restricted for exportation, however there are severe penalties for those who do violate these laws, and it would be a worthwhile practice to find out before commencing trad.
