Comparative analysis of both countries
Paradise Pasta Pty Ltd is a company situated in Australia. The company is planning to distribute its pasta products in other countriesand has selected South Africa and China for the distribution of its products.The pasta product of the company is named San Remo Pasta for the distribution of which the company has analyzed various aspects of the two countries. The aim of the analysis is to select the best country to start the distribution of it product. The laws associated with performing the business have been taken into consideration which involved legal structure of both the countries, contract laws, agency laws, intellectual property law, torts and employment laws. By comparing these aspects of both countries, the most favourable one could be selected for the business purpose.
Business expansion is considered essentialfor a business as it develops good business sense, better brand recognition, and is beneficial increating value in business for its employees and customers. The expansion of business creates a prospect to recruit new and competent people for the company, which are a significant advantage as these people can assist bringing change in the processes and bring innovative ideas for the organization (Community Futures Stuart Nechako, 2014). In addition, business expansion exposes it to wider audiences and an increased number of prospective customers could be reached which lead to improved profitability. With improved market share and strong financial situation, financing can beeasily acquired. Considering all these benefits of business expansion, the company has planned toexpand its business either in South Africa or China or in both or neither, based on the comparative analysis of the business and legal opportunities and risks in both countries(Johnson, 2018).
The legal system of South Africa follows a mixed approach as legislations of the constitution have been taken from various countries selectively. The country has taken legislations related to civil and criminal law from the English. The country follows the common law legal system. In this system, guidance is taken by judges from the decisions taken in past legal case called as precedents. The law of the country is not codified as well (Illouz, 2012). On the contrary, the law in China is based on the Civil law system, in which, a majority of laws are codified. Trials are conducted by inquisitorial system, in which, the judges as well as the assessors contribute in the investigation of the facts of the case. However, the executive and judicial systems of China are subordinate to the legislative function. As Australia also follows an adversarial system for trials, the judicial system of the country is more like South Africa and it opposes inquisitorial system, which is followed in China.
Legal Structure of both countries
The concept of “Rule of Law” lays emphasis on the fact that no one is above the law. Everyone, whether high or low or wealthy or poor, is treated equally by the law. Everyone has to abide by the law. No one is exempt from the law, even the government of the country should work within the constraints of law. In South Africa, there is a certain negligence regarding the rule of law in the country and the negative impact of it can be observed in the society. The aim of applying the rule of law in a country is to develop a society in which the legal system is transparent, and lack of transparency in the legal system results in lack of trust of the society on the judiciary (Hahlo & Maisels, 1966). The crime rates increase in such societies and South Africa is among them. On the other hand, in China, the existence of rule of law is still a topic of debate because in Chinese law, various expressions are used and sometimes interchangeably used for the term i.e. strengthening of law, tightening of legal system, abiding by the law and such others. So, the situation in China is similar to South Africa as in both the countries, existence of the rule of law is weak or non-existent, which creates a negative influence on the society. In Australia, the existence of a written Constitution in the form of fundamental law is sufficient for proving substantial existence of the Rule of Law in the country (Gleeson, 2001). The common law created by courts, the federal Parliament and the High Court is obliged to their subsistence to the Constitution. So there is no need of any substantial principle to flow from the rule of law in itself as the Constitution plays the role of the rule of law. The rule of law is respected by the judiciary of the country which enhances the public confidence over the judiciary and law. So, both countries do not strictly follow the rule of law as followed in Australia.
South Africa has a unitary state government; however, it possesses elements of Federalism actually as well as in its Constitution. The constitution tales precedence the federal system but the executive system is regulated by the public protector as well as the Constitutional court. The constitution permits the provinces to administer their regional legislature and contribute the power to the provinces to give law-making powers to the municipal councils (Wright, 2014).As South Africa has no codified system of law, there are multiple sources of law, however, the Constitution is the highest law of the country. On the other hand, in China, the National People’s Congress (NPC) passes the national statutes along with its Standing Committee which also includes Constitution Law, criminal, civil and bureaucratic laws. The NPC as well as the Standing Committee are considered as the main authority in the country (Liu, 2005). The country has 33 sub-national units or constituencies, which include 22 provinces, 4 municipalities; straight under the central government, 5 national independent regions along with 2 special administrative regions. With the formation of 2 special administrative regions, the Chinese state is experiencing anactual structural change due to which it can neither be categorized as a unitary state nor a federation, but as a composite state (Zhu, 2012). Thus, both countries do not have significant federal systems but Australia is a federation of 6 states, which altogether with 2 self-governing territories, have their individual constitutions, parliaments, law as well as government (Parliament of Australia, 2012).
Contract law of both the countries
In Australia, the Contract Law is based on the English Law and the legitimacy of a contract is determined on the basis of six essential components of the contract which areoffer, acceptance, competent parties, legal subject matter, mutual obligation and consideration. There are generally four types of contracts that are formed for conducting business which are verbal contracts, written contracts, period contracts as well as standard form contracts. Paradise Pasta Pty. Ltd. will majorly make contracts of written and standard form type with the distributing companies in the scenario countries, which will distribute pasta products in the scenario countries.A ‘Standard form’ contract is an already prepared contract, in which all the terms are laid down in advance, with a possibility of little or no change on the basis of negotiations between the parties to the contract. However, in ‘written’ contracts, the details are clearly set after the agreement on terms and conditions by both the parties. As the company is conducting business with distributors, for the distribution of their pasta products, it is more likely that the company will make standard form contracts with its distributors. The reason behind this is that standard form contracts seems to be biased documents and benefit only the party preparing the contract, shifting the risks to the contracting party. However, to be fair with the contracting parties, the company will explain the terms and conditions of the contract to them and give them the opportunity to negotiate on their terms as well(Australian Government, 2018).
The contract laws of China and South Africa are almost similar in the process of formation of contract, so there would be no difficulty in the formation of contract with either of them. The Contract Law of Australia is based on the English Law, while the Contract Law of South Africa resembles the Roman-Dutch law, but the Contract Law of China is not codified(Traore & Xiao, 2011). However, the contractual obligations and responsibilities of both the parties to fulfil the requirements of the contract are almost similar in all three countries.
There will be no requirement for hiring an agent for the process of business expansions in either of the countries, as after analyzing the legal and contractual process of both countries; it has become easier for the company to conduct business with either country without requiring an intermediary or agent. However, anagent can be hired for the purpose of exploring the market so that thebest suitable distributors could be selected in either country for the distribution business.
The provisions of the Employment Law are stringent in Australia as the government of the country aims to protect the interests of both the employer as well as the employees. In a similar manner, the South African Labour Law regulated the relationship between the employer, employees and the trade unions in the country. In a similar manner, Employment and Labour Law in China regulates all the provisions related to employment in order to maintain a relationship between employers and employees(Barratt & Snyman, 2018). To conduct business in foreign markets, the company will have to be more flexible to work within the guidelines of the local laws and regulations. The labour and employment laws of both countries should be reviewed by the company as the distributors will hire personnel in accordance with the Employment law withinthat country(Kahindo, 2014). The reason is that Paradise Pasta Pty. Ltd. cannot get a hold on the business practices, fulfil regulatory needs, employ and administer local workforce and increase possible customers in either of country and it has to rely on the distributors for that. The employment law of the country selected by the company for the purpose of the distribution business will be followed by the distributors and the company will have to follow accordingly(Fu, 2010).
The legal provisions related to the protection of Intellectual Property are a key consideration in the Australian Industry. The law in Australia protects various types of intellectual properties through trademarks, patents, copyrights, registered designs, plant breeder’s rights, geographical indications and trade secrets. As the company is planning to perform distribution business with other countries, it can utilize trade secrets to be protected under the law of Australia(Australian Government, 2018). The trade mark considers specific products and services of a trader specifically and trade secrets provide creators with certain rights and privileges on the basis of types of IP protection. The confidential information such as secret formulas, processes as well as methods utilized in the process of manufacturing cannot be disclosed under trade secrets (Davies Collison Cave, 2018).
Paradise Pasta Pty. Ltd. can utilize trade secrets and trade mark to claim rights over its pasta products. The products are being registered with the company and the company has theright to protect its production from others imitating the original products. The company is planning business in China and South Africa and the distributors of the country selected for the distribution of pasta products will have to take into consideration the IP rights of the company, to not be infringed by them(Velocity Global, 2015).
The Law of Torts provides provisions of certain compensations to the sufferer by the wrongdoer in case the harm caused by a person is a civil wrong, which includestrespassing, possession over land, negligence, misrepresentation, defamation or interference with employment and many others. The law of torts provides certain liabilities of a person towards others while doing certain acts or omissions and those acts or omissions must not harm others, otherwise, the action doer will be liable for the desirable compensation.After analysis of the Tort Law of both countries, it has been identified that the law of torts in both countries follow similar provisions as in Australia. Remedies to the sufferer parties depend on the extent of the loss , which is decided by the relevant court. The remedies are generally provided in afinancial form, and the wrongdoers can be penalized before criminal court if the wrong done is criminally intended and severely harms the other party.
The law of tort could be relevant for the company in case of defamation, negligence, and misrepresentation with the reputation of the company and its products is conducted by the distributing companies in either country. If the distributors commit any of these wrongs , the company can claim for the desired financial compensation for the loss of reputation in the relevant country and for its financial loss as well.
Conclusion and Recommendations
As Paradise Pasta Pty. Ltd. is planning to conduct its distribution business in other countries, and analysing various aspects in China and South Africa for the same, it has been realized that the legal structure, contract law, employment law, intellectual property law, torts law and various other aspects are almost similar. So selection of the country should not be based on these factors. All these factors are similar in both countries and the company can select either for the purpose of business. However, in order to operate in both countries, the company should select the distributors on the basis of objective market assessment. The company should select distributors who have the ability to develop markets instead of those who have few apparent customers. The company should treat the local distributors as lasting associates and not the temporary mediums for entering the market so that the distributors can become the marketing associates and are eager to invest in the continuous development of the market for the products (Arnold, 2000). The company should regulate the marketing strategy from the very beginning in order to establish itself in the foreign market. Therefore, the analysis of both countries provides an idea that the company should expand its business in both countries but operation strategies should be planned effectively to get established and achieve success (Abner, 2015).
References
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