Australia: Doing business overseas? Here is what you need to know

Your business is doing well in Australia and you've decided to expand your horizons overseas. Given that Australian imports and exports of goods were worth $256 billion and $270 billion respectively in 2014-15 (Austrade), it's no wonder that many businesses are thinking along the same lines.

It is important however, that you do your due diligence. Doing business overseas can be a great way of reaching a much larger audience but there are also pitfalls. What works well in Australia won't necessarily translate well into an overseas market. The following checklist will help you prepare to successfully do business overseas:


Thoroughly research cultural similarities and nuances before setting up shop in the country of your choice. For instance, how might language differences impact how your product is perceived? You may need to change a product name or description to suit your overseas demographic. A well-known example of this the Mitsubishi Pajero, which is known as the Mitsubishi Montero in Spanish-speaking countries due to a commercially undesirable translation of the name.

Also, consider whether you will need to take on a local partner to assist in managing and promoting your business. In some countries, there can be barriers in acquiring customers when a local isn't on board. In others, it is a requirement that you have a local shareholder. Remember that a local partner may help you to navigate the best way to do business in the country of origin and the most acceptable business structure from the perspective of market appeal.

The legal/contractual side

Focusing on your legal obligations is no less critical than focusing on your market. For instance, do you know what constitutes 'acceptance' of an agreement in your chosen country. Who can sign and bind your overseas supplier? What evidence do you need to be convinced that your contract will be binding?

Lawyers love to argue about whether Australian law or the law of the overseas contracting party should apply, but it is a decision that cannot be made without an understanding of the implications of both. And in some countries, regardless of the applicable law, you may find your practical ability to enforce the contract to be questionable, particularly if you are trying to enforce a payment obligation against a company about who's financial viability you have little information.

The 'Vienna Convention'

The 'Vienna Convention' for the International Sale of Goods 1980 aims to create uniform regulations, remove legal barriers and promote international trade amongst signatory countries. The Convention has been widely adopted around the world with 88 current signatories and governs matters such as formation of contract, governing law and dispute resolution.

The operation of the Convention is automatic where you do business with a country that is a signatory, and if you do not want to be bound by the terms of the Convention your contract needs to contain a provision under which you expressly opt out of its operation. Good legal advice is important in determining whether or not you want to be bound by the Vienna Convention.

Protecting your brand

Don't make the mistake of thinking that the brand protection you have obtained in Australia (trade marks, patents, copyright, etc) is automatically applicable overseas. For example, to obtain international protection of your trade mark, you will need to lodge a separate application in each overseas country or a single international application (ideal if expanding into several different countries) where your target countries fall under the Madrid Protocol. Certain elements of your brand may need to be tweaked to fit eligibility criteria and the proposed marketplace. You should protect your brand before starting to operate to prevent potentially expensive headaches down the track.

Whilst confidentiality or non disclosure agreements are often discounted as of little value, having one gives you significantly more protection than not having one and sets the scene with your overseas contact that you are serious about protecting what you own.

Business 101

Financial viability is key for any business. Have you considered how you will get paid and, if you have problems in getting paid, how you will obtain judgment and enforce it?

Often it is preferable to avoid the issue of non payment by requiring payment before delivery or by requiring an irrevocable letter of credit against which you can draw. This also avoids the need to consider whether or not you need to take and register a security interest in goods that you are supplying pending receipt of payment.

Liability for goods supplied

Where you are importing goods from overseas you are likely to be the 'Deemed Manufacturer' for the purposes of the Australian Consumer Law, with ultimate responsibility for complying with the consumer guarantee regime. You should ensure that your supply agreement gives you adequate protection in the form of recourse against your supplier if goods you are provided with (and that you on-supply within Australia) are faulty.

Where you are selling goods through an overseas distributor your distribution agreement needs to clearly restrict the representations that your distributor can make about your product to those that you approve. It is often useful to require all overseas advertising of your product to be approved by you and to require any warranties being offered to be vetted by you to ensure that they are reasonable for your particular product.

Who bears the cost of a product recall? A number of motor vehicle manufactures and importers have recent experience of the cost of product recalls. You should ensure that your contract allocates responsibility for any such costs and that your insurance cover (or that of your distributor) will contribute to those costs.

Where to from here?

Coleman Greig is a member of First Law International, a global network of over 75 independent full-service, high quality law firms. As the only Australian member, the firm's involvement in FLI opens a great range of opportunities for clients looking at offshore activities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Peter Stewart
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