The perils of being a nonentity

nobody

The rapid growth in China’s economy and its propensity to trade in the 21st century has brought teething problems along with opportunities. Not least among the issues has been the navigation of a legal framework geared up for regulation, not commercial activity. China’s commercial law and indeed its legal system as a whole have traditionally been viewed as part of the apparatus of government.

While China’s lawmakers have shown signs of flexibility by adopting certain Western practices and concepts, non-compliant companies have faced severe sanctions. And those who’ve chosen to set up shop in China without even securing their status as legal entities can hardly complain when their hosts throw the book at them.

Better by far to get the right advice and play by the rules from day one. What are the options for overseas companies seeking to establish a legally recognised presence in this lucrative market?

A representative office offers a minimal legal presence, an intermediary equipped and entitled to assess market opportunities. Representative offices are low-cost and low-maintenance, but as a rule they won’t be allowed to engage in sales activity, sign binding contracts or issue invoices.

A joint venture between a foreign operation and a Chinese company offers a presence and a degree of local knowledge and credibility, but entering into this type of agreement inevitably means relinquishing a level of control, and differences in working practices can sour a partnership very quickly.

A wholly foreign owned enterprise (WFOE) offers 100 percent ownership to foreign shareholders, allowing them to conduct business in China, enter into contracts, recruit local staff, engage in research, development and marketing, and to issue invoices and accept payment in Chinese currency. A WFOE must be clear about its scope and aims, and will usually be expected to stay within the boundaries set for it.  

Whichever option companies choose, accurate advice is of paramount importance. Not only in matters of law but in matters of language. Some have tried to cut corners by using bilingual lawyers to translate important contracts, and lived to regret it. Whatever their professional strengths, a bilingual lawyer is not a qualified translator any more than a person who owns a microwave oven is a qualified chef. The mistranslation of legal terminology in the courtrooms of Beijing and Shanghai has been a decisive factor in many cases. If you’re taking the trouble to establish yourself as a legal entity in this closely scrutinised market, why risk undoing your good work and good intentions by taking the cheap option?

Taking the decision to set up shop in China, the powerhouse economy of the 21st century, is far sighted and bold. To capitalise on this boldness and fulfil the long term vision, you need specialist help. That means listening to the most suitable legal advice, as well as putting your trust in the most suitable translation service.

 

David Jones

 

 

Educate, Motivate, Comply

compliance

 

“Every company is just one bad decision or one ‘bad employee’ away from scandal, one scandal away from a salacious headline, and one headline away from a flood of lawsuits.”

William Lytton

As general counsel of fire safety and security specialists Tyco International, William Lytton was well aware of the threat posed to corporate solvency and indeed to human life by flouting of the rules.

With each new territory we seek to trade in, that threat grows more acute. The pitfalls of trading in China were discussed in detail last week at the offices of K&L Gates in Seattle. Speakers at “Anticorruption Compliance in China” outlined the struggles of multinational companies to abide by China’s rules, and in some cases even to understand them. One message repeated was that the Chinese government is on a purge, internally and externally. In 2013 alone, 31,000 of its own officials were convicted on corruption charges. And more and more local investigations of foreign multinationals are targeting what in some cases are long-standing industry practices. What is commonly followed in one country might be considered unethical or even criminal in another. It may not console GlaxoSmithKline to know it, but they have plenty of company on Beijing’s list of offenders.

Closer to home, the UK Bribery Act, passed into law in July 2011, has brought clarity and discipline to the subject and is generally viewed as the most stringent anti-corruption legislation in the world. Information technology law is moving forward under the guidance of the EU, with European data protection reform signalling the first major changes since the birth of the internet. This is a good time to know the rules, and a very bad time to flout them.

Employers across all sectors are alert to the risks. International law firms recruiting lawyers from different jurisdictions and with different professional education experience need to have everyone’s skills and knowledge aligned. Manufacturing companies whose products comfortably meet a standard in one territory but may fall short in another need key staff to be aware of the disparity and of the consequences.

When it comes to maintaining knowledge and skill levels across a diverse workforce, the advantages of e-learning are increasingly clear. The single largest cost organisations face in staff training isn’t the cost of the trainer or the materials. It’s the cost of their own staff attending the course. Take away that cost and inconvenience and the picture changes. Add the benefits that online brings to consistency and scalability and the fact that learners can move at their own pace and it’s not surprising that this has become an education medium of choice.

The best e-learning providers will look not only at delivery but at learning outcomes. Whatever you’re seeking to achieve, they will be your partner in achieving it. Long standing market leaders such as BYG Systems have a track record of breathing life and relevance into any subject matter for any industry, boosting information retention rates and constantly focusing on the client’s end goal. Sometimes that goal will be an induction that makes employees feel part of a team from day one. And sometimes it will be a detailed explanation of policies and procedures that keeps you in profit and out of the courtroom.

Compliance managers and the people who support them are the equivalent of sports referees. When their diligence nips problems in the bud, they can go unthanked and unnoticed. But take that diligence away and the consequences can be measureless. Potential loss of revenue, of credibility, even of personal freedom loom over companies and their key decision makers.

But the story doesn’t have to end that way. There is a better path to follow, and skilled partners available to help us follow it. The message is clear; educate, motivate, comply.

 

David Jones

See the sights. Catch a show. Get a divorce…

divorce

 

Paris – the city of love. 

Rome – the eternal city. 

New York – the city that never sleeps. 

London – divorce capital of the world. 

 

While the UK’s capital might have hoped for a more romantic association, its lawyers could hardly have asked for a more lucrative one. For a range of reasons, the UK in general and London in particular has become a magnet for the super-rich who are falling out of love.

International visitors value the even-handed approach and discretionary elements of English divorce law. And they will be aware of the eye-catching financial settlements of recent years:

  • In 2006 insurance broker John Charman was ordered to pay his wife Beverly £48m.
  • In 2008 Heather Mills was awarded £24.3m in her highly publicized split from Sir Paul McCartney.
  • In 2011 Russian oligarch Boris Berezowsky is believed to have agreed a payment of £220m to his wife of 20 years, Galina Berashova.

More international and commercial arbitrations take place in London under English law than in any other city in the world. Added to this, the Times has reported that one case in every six that come before courts in England and Wales include an international element. With so much at stake, financially and personally, there’s no room for error in the presentation of evidence. Every word and every nuance matters. When a client’s native language isn’t English, translation and interpreting from a proven legal specialist will convey information precisely, in sense and spirit, giving other professionals the platform to do their jobs equally well. 

Those seeking to end a marriage in the UK will find few jurisdictional barriers in their way. It’s not necessary for either spouse to be British born or British domiciled to file divorce proceedings under English law. Jurisdiction can be established through residence of either party, or sometimes simply by the proof of a commercial connection to the country. And for both parties, there are firm arguments in favour of a London settlement.

English Courts recognise that there should be no discrimination between the contributions of a homemaker and breadwinner in a marriage, so the starting assumption in all cases is an equal division of matrimonial assets. While this has been refined to allow exceptions, it remains a compelling point.

Crucially, Pre-Nuptial and Pre-Marital Agreements have no statutory force in England and Wales. They may be looked at on a case by case basis as part of the tapestry of a marriage, but won’t be given the weight they receive in other territories.

It’s also fair to say that overseas citizens seeking legal representation may be attracted to the UK by the quality of the professionals who practice there. Long standing leaders such as Farrer & Co continue to balance their clients’ emotional and economic interests with consummate skill, while Stowe Family Law have proved for decades that London has no monopoly on quality. The firm has a London presence along with five offices in the north of England, and is home to some of the country’s most respected practitioners. 

Divorce capital of the world may not be the most romantic title, but when it signifies fairness and professional competence it’s nothing to shy away from.

 

David Jones

South America – Risk and Reward

pros and cons

 

International business opportunities invariably come with potential pitfalls. Where the rewards outweigh the legal and financial risks, we move forward. But to make that judgement we first need to be aware of what lies ahead and have a solid risk management strategy.

Clients across all sectors face the same key risk and reward questions time and time again, and the answers will go a long way towards shaping their financial future.

Do your credit and payment arrangements adequately protect your interests? What are the possibilities of non-payment, and where would that leave you financially?

Are your products satisfactory for this new market? Are there quality stipulations that you haven’t taken into consideration?

Are there exchange controls or trade controls between countries that might impede you? Might there be in the future?

In the most fundamental terms, can you move your goods from A to B safely intact? It’s sometimes easier said than done.

Again, in the most fundamental terms, do you have sufficient funding to cover your trading cycle? If you have a potential credit risk, how will that affect this funding?

Is your website localised?  Are your marketing and technical materials suitably targeted? Having invested time and money perfecting your product and identifying a suitable new market, have you taken that crucial final step to make sure your message is conveyed as effectively as possible?

South America is rich in natural resources, and fresh reminders of the continent’s potential greet us with each news cycle. It’s estimated that $131 billion will be invested in copper mining opportunities in Peru and Chile by the end of this decade, and Brazil’s oil reserves are set to make it a global energy power within the same timeframe.

What of Argentina? South America’s second largest economy and the 22nd largest in the world, is already home to over 100 UK companies. Over 30 FTSE 100 companies have a base in the country, and the attractions are clear.

Argentina’s energy reserves haven’t been trumpeted as loudly as Brazil’s, but it has the third largest deposits of shale gas and fourth largest deposits of shale oil in the world. Add to the equation its largely untapped reserves of lithium, copper and gold, as well as the silver that gave Argentina its name, and the country’s atlas begins to resemble a treasure map.

Moving away from natural resources, opportunities exist in education and information technology.

Four million laptops and netbooks have been given to children throughout Argentina as part of a national educational programme, and nationwide demand exists for educational software and English language teaching materials. It’s a also notable that Argentina has bought into the concept of ‘big data’. It has the highest proportion of mobile phones per head of population in the Americas, and a higher proportion than the UK. And by the end of next year its fibre-optic broadband network is forecast to increase by 300%. Opportunities are emerging for the supply of mobile phone technology and content for the broadband networks.

Among the challenges are import restrictions which can be convoluted, high inflation and low growth. A decade of impressive growth stalled in 2012, but vast potential remains.

And UK companies that commit to this market can benefit from a double taxation agreement which allows tax paid in one country to be claimed back in the other.

As always, good legal advice is crucial. While UK firms have built impressive links with counterparts throughout Asia, Africa and Eastern Europe, limited connections have been made in Argentina. But there are exceptions to the rule.

Verification of documents for use in different territories is a crucial element of any international growth strategy, and the signature and seal of a Notary with specialist understanding of a country’s law can open doors and keep them open.

With a twenty year track record of impeccable service, Saville & Co offer industry expertise for sectors including shipping, banking and insurance, and country expertise that spans Europe and South America. Two of the firm’s notaries have studied and worked in Argentina, bringing perspective and credibility to all that they do. Skilled professional notaries supported by a skilled professional language service deliver skilled professional advice, adding value where and when it’s needed most.

As with all business development activity, international trade is a balance of risk and reward. But it doesn’t have to be a lottery. There are sensible steps you can follow to protect your legal and financial interests, and when it comes to cultural credibility there are reliable partners who can make sure you’re always speaking to your target audience in a language they’ll understand.

Legally, financially and linguistically, it pays to balance risk and reward.

 

Vanessa Vander