Legislative Frameworks and Regulatory Policies
China Life Insurance Company Limited was founded in 1949, and it is China-based organisation which offers its services in the financial service industry. The global headquarters of the enterprise is situated in Beijing, China from where it manages all its operations (Chinalife, 2018). The enterprise offers life insurance and annuity products to its customers. In China, it is the biggest life insurance organisation and 70 percent of the stakes in the company are held by the state. The corporation has more than 100,920 employees that manage its operations across the globe (Statista, 2017). In Australia, the company manages its operations by entering into a deal with AMP Limited, and the organisation is considering the acquisition of AMP Limited (Autorino, 2018). Since China Life Insurance Company Limited has not established its operations in Australia, there is no information available regarding the number of employees in Australia.
Legislative Regulatory Framework Affecting the MNC in Australia
Multinational corporations which establish their operations in Australia have to comply with the legislative regulatory framework which provides various laws which they have to comply with in order to avoid penalties. The Australian Government has established these legislative frameworks in order to ensure that the corporations fairly trade in their respective industries and contribute to the country’s economic growth. Furthermore, it enables the government in avoiding conflicts between enterprises which is detrimental for their financial position and reputation in the market. Moreover, guidelines are issued in the legislative regulatory frameworks based on which the corporations have to ensure that their products and services meet a standard set by the Australian Government to ensure the interest of the customers (RBA, 2018). China Life Insurance Company Limited operates in the financial industry, and it offers financial and insurance services to its clients. There are various regulatory policies which apply to the operations of the company while it manages its operations in Australia by AMP Limited. Effective expansion in the Australian market will enable the enterprise in diversifying its products and provide them in other nations which have trade agreements with Australia such as New Zealand (Allender et al., 2011). However, all these opportunities can be lost if the enterprise failed to comply with the legislative regulatory framework since the government can impose huge financial penalties on the organisation and even restrict it from operating its operations in Australia.
In order to avoid these issues, the company has to comply with the guidelines given in the Fair Trading Act. The act has issued a range of policies which are mandatory to comply by both Australian and multinational organisations. The objective of this act is to ensure that corporations are not misusing the resources of the Australian market, and they are not misusing their position to cause harm to the customers or the nation (Raynolds, 2012). The purpose of this act is to promote competition between enterprises which is beneficial for customers since they get a diverse range of products at competitive pricing. Similarly, it is also beneficial for the country since it attracts more foreign currency in the nation which contributes to the nations GDP and supports its economic growth. As per the fair trading policies, China Life Insurance cannot enter into an unfair trading deal with other enterprises in order to eliminate the competition in the market. The company cannot use its position to close the business of small corporations and maintain a monopoly in the industry. Based on the fair trading regulations, the corporation ensures that companies are ethically operating their business in Australia and involving fair trade practices which are in the interest of the customers and the nation (Ariff, Farrar and Khalid, 2012).
Compliance with Fair Trading Act
Directors are responsible for managing the operations of the company and take business decisions based on which they have to comply with the guidelines issued in the Corporations Act 2001 (Cth). The act provides guidelines which companies have to comply with while managing their operations in Australia, and they can be penalised by the court for violation of such regulations (Van Der Laan and Dean, 2010). The board of directors of China Life Insurance has to ensure that they comply with the duties which the Corporations Act imposes on there while they are discharging their duties in the company. Section 180 to 183 provides various general duties of directors which they have to comply with to ensure that they focus on the interest of the company rather than focusing on personal benefits (AICD, 2017). Since China Life Insurance offers insurance services to its clients, the corporation has to consider the guidelines given under the Insurance Act 1973 in order to ensure that it enters into valid insurance contracts and comply with the issued provisions (Legislation, 2018). The Australian Securities and Investments Commission is responsible in Australia for governing and enforcing the regulations which imposed on companies operating in the financial and insurance sector (Scanlon et al., 2016). Furthermore, the company mainly operates in China based on which it has to comply with the Insurance Law of the People’s Republic of China.
In case the corporation did not comply with these regulations, it can face serious legal consequences while offering financial and insurance services to its clients. Moreover, the Competition and Consumer Act 2010 is key legislation which provides provisions regarding organisations based on which they have to comply with a standard to ensure that customers are receiving appropriate services without fraud or deception. Section 18 of this act prohibits the organisation from making any claim regarding their products or services which is misleading or deceptive or which is likely to do so (ACL, 2018). While offering financial based services, the enterprise has to comply with the guidelines issued under the Banking Act 1959 which provides provisions regarding the protection and management of depositors’ interest. A standard is issued by the Australian government based on which the organisations which operate in the financial sector have to ensure that they did not conduct any fraud with their clients and provide them effective services which meet their requirements. Similarly, the Financial Services Reform Act 2001 provides a streamlined regulatory regime which is focused on ensuring customer protection and maintaining integrity in the financial sector (ASIC, 2018). Moreover, the Reserve Bank of Australia is responsible for maintaining, amending and adding the monetary policies which apply to the financial system stability.
Treaties, Conventions, and Agreements which affects the products and services of the MNC
Compliance with Corporations Act and Insurance Act
The main objective of treaties, conventions, and agreements is to build new trading channels between two nations and promote trade practices between them in order to support the economy of both countries. These treaties, conventions, and agreements create new business opportunities for multinational organisations since it assists them in expanding their business in overseas markets. However, they create new threats and challenges for multinational corporations as well since the governments can introduce new laws and guidelines which international companies have to meet which limits their expansion projects. There is a wide range of treaties which the Australian governments have entered into which affects the enterprises operating in the financial and insurance field. The treaties formed between the government of Australia and New Zealand assist in creating new expansion opportunities for China Life Insurance based on which it can establish its operations in both countries strongly. For example, ASEAN-Australia-New Zealand FTA is an agreement which is formed between the two countries which are focused towards opening new channels for foreign investment between both nations (Kawai and Wignaraja, 2011). Based on this treaty, the government has established free areas in which it supports and promotes the organisations to establish and expand their operations in both nations.
The treaty enables the organisations which offer financial and insurance services to its customers to increase their customer base by establishing their operations in both nations. Based on this treaty, both nations have reduced the number of regulations which corporations have to comply with while offering their services to customers. The treaty encourages them to offer their services in both nations which supports the economy of both nations and creates new growth opportunities. Moreover, the objective of this treaty is to create employment opportunities in both nations based on which citizens in both countries get jobs in such multinational corporations. Furthermore, both governments have entered into another treaty titled ANZCERTA or Australia New Zealand Closer Economic Relations Trade Agreement. This is a key treaty which is specifically focused towards contributing to the economy of both nations by creating new growth opportunities (Scollay, Findlay and Kaufmann, 2010). Since financial and insurance industry is a key contributor in the economic growth of both nations, the governments are encouraging corporations to exploit the opportunities in this market. Based on this treaty, the government is targeting organisations which have the potential to expand their customer base by relying on the products and services offered by them. The treat has removed various guidelines which financial and insurance corporations have to otherwise fulfil in order to assist them in expanding their operations in both nations.
Financial Sector Regulations and Treaties
The ultimate goal of the governments in both nations is to reinforce the economic stability and growth in the countries. The treaty enables financial and insurance service organisations in creating new products and services and offering them in both nations which result in sustaining their future growth. The audit committee China Life Insurance Company Limited comply with the guidelines issued in the US Sarbanes-Oxley Act of 2002 to maintain a high standard of the audit which assist the company in maintaining a high standard in its book of accounts which assist its international operations (Chinalife, 2017). Moreover, the treaty formed between the People’ Republic of China and Australia creates new business opportunities China Life Insurance. The treaty is called China Australia Free Trade Agreement or ChAFTA, and the objective of this treaty is to build new trade channels between the two nations which increase the contribution in both nations which supports their economy (Song and Yuan, 2012). Based on this treaty, the corporations operating in these two nations are able to expand their operations in either of the nations in order to increase their customer base. The treaty simplifies the process of expansion in these two nations which enable the companies in increasing their customer base (Zhang, 2018). The products and services offered by the companies in either of these nations can be easily offered in another based on the availability of products and services. It opens new business markets for the enterprises which result in increasing their profitability by increasing their customer base.
The laws which govern the multinational enterprises in both nations are strictly based on which the companies find it difficult to expand their operations in either nations. However, this treaty has opened new ways for the companies to grow their operations since they did not have to comply with complex legal regulations while entering and operating in either of these fields. The Australian and Chinese government has also formed a Double Taxation Agreement based on which corporations operating in both nations did not have to pay tax twice on the income generated by them from their operations situated in either nations (Koehler Group, 2018). This is a key agreement between the two countries since it assists the corporations in increasing the number of products and services offered by them in both nations because they did not have to pay double tax. China Life Insurance did not have to pay double tax which increases its retain earning and improves its pricing strategy which benefits the organisation since it expands its customers base along with profitability. Thus, treaties, conventions, and agreements have a significant impact on the products or services offered by companies since it creates new business opportunities and challenges for the organisations.
References
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