Choosing Right Route to Market Is Vital; WHERE Can Fast-Growing Companies Look to Continue Their Expansion? Ward Hadaway Commercial Law Partner DAMIEN CHARLTON Gives Some Pointers on International Trade
MANY of the businesses in the Fastest 50 have already achieved notable success with their overseas activities and with economic growth rates in countries like China and India barely affected by the global slowdown, more companies are looking abroad to expand their enterprises.
So from a legal perspective, what do companies exporting for the first time need to watch out for? One of the key decisions is choosing the right route to market. You could appoint an overseas agent who sells on your behalf, appoint a distributor who buys from you and sells on his own account, use a franchising model or create a joint venture with an overseas partner.
Each of these routes has its own practical and legal implications and businesses need to think carefully about what they want to achieve before choosing which route to take.
You also need to think carefully about the choice of your agent, distributor or joint venture partner. Find out who you are going to be dealing with, do background research, visit them and try to ensure that they are a good match and have the right resources, contacts and know-how to deliver what is required.
When you're ready to make a legal agreement with your international partner, consider carefully which country's laws it should be made under. Every country's laws are different and will have a different approach to commercial agreements. Should a dispute arise, a decision on the outcome could be made outside the UK, which may not be to your advantage.
If you are happy for the agreement to be governed by the overseas country's legal system, it is a good idea to use the services of a local lawyer. No matter how good your UK adviser is, they will not have the same inside knowledge of the potential pitfalls awaiting the unwary in a foreign legal system.
Local lawyers will also have more knowledge of a country's particular legal quirks and unwritten rules which could prove crucial.
New legislation has also made it more important than ever for UK businesses to tread carefully when trading abroad. …