Last updated: 28 Mar 2013
Business risks
Doing business in China – like all cross border commercial activities – carries certain risks that Australian companies might not be aware of. These include:
- Commercial Fraud
- Breaches of Contract
- Intellectual property infringement and theft
- Bullying, intimidation and threats to physical safety
- Restrictions on movement
- Criminal charges for engaging in activities that may not constitute crimes under Australian law
Australian companies should spend time investigating the market, obtain professional advice and conduct thorough due diligence before establishing business relationships.
Australian companies should also commit to the highest levels of corporate behaviour and familiarise themselves with both Australian and Chinese laws relating to business activities in China – including Australia’s laws and penalties pertaining to the bribery of foreign officials. Bribery of foreign officials is a crime for which Australian companies can be prosecuted in Australia. Further information on the regulations governing bribery of foreign public officials is available.
Purchasing over the Internet
Internet purchasing is an increasingly common practice, and has allowed easier connections between buyers and sellers. However, this ease of buying also attracts unscrupulous operators looking to take advantage of this less interactive method of doing business. These ‘scammers’ make highly attractive offers such as low prices, fast shipping times, generous terms, or combinations of all of these supposed advantages. Very often these offers seem too good to be true. In many cases, they are.
If you are considering a purchase because it is unusually attractive, then you should look carefully at the detail of the purchase, and ensure you know whom you are dealing with. Take extra steps to verify the track record and credentials of the company and be wary of upfront requests to make payment for gifts or other items not directly related to the goods you are buying.
If you are the victim of a scam, then there are some uncomfortable facts to consider:
- By purchasing online from a seller in a third country with whom you have had little direct contact, you may have difficulty in communication, and perhaps contacting them at all. If you provide payment, you may be entering into a negotiation with little leverage.
- If you have received goods that do not meet expectations then you may quickly find that you are entering into a dispute that will require your time and significant additional expense to resolve, with no guarantee of success. Indeed, these costs can quickly outweigh the value of the transaction in dispute.
- Many of these fraudulent online operations do not have a physical address (details provided on the website may be fake), and at the first sign of threat will ‘close’ before any action can be taken. Local authorities therefore have little to go on and if the amounts involved are not commercially significant, they are unlikely to get involved.
More information on protecting yourself as a buyer online can be found on the Alibaba website at: www.alibaba.com/help/safety_security/class/buying.html.
Top Business Risks
IP Passport fact sheets
These fact sheets outline foreign Intellectual Property (IP) regimes and some of the issues and challenges which may be faced by Australian exporters.
The current fact sheets are available on the IP Australia website.
APEC Business Travel Card Scheme
Managed by the Department of Immigration, the APEC Business Travel Card Scheme was developed to make travelling within the 21 APEC member countries much simpler and more efficient.
OECD Guidelines for Multinational Enterprises
Multinational Enterprises should be aware of the OECD Guidelines for Multinational Enterprises that provide voluntary principles and standards for responsible business behaviour in a variety of areas, consistent with applicable domestic laws. These Guidelines are endorsed and promoted by the Australian Government. For more information, go to the AusNCP website.