Last week I attended Gulfood, an annual event in Dubai where food (and food service equipment) processors and exporters gather to show their wares to businesses from around the world. This year’s was supposedly the largest and it was truly gargantuan by any measure. The global nature of the exhibit was impressive, highlighting among many things the increasing trend of south-south trade. Stands in pavilions from the United States, France, South Africa, Iran, Tunisia, and China among others competed for visitors. What was particularly striking was the truly global nature of the world food industry, especially to those of us from the United States, where imported foods largely remain a luxury. It almost seems as if every country produces soft drinks, potato chips, and biscuits.
From a legal angle, Gulfood highlighted several key concerns – elements that were more highlighted when speaking to some of the people at the trade stands.
1. Everybody wants to trade but not everyone knows what that really means. My continual observation was affirmed – businesses are often unsophisticated. Even business people who have traveled across the world to attend a food show often do not really know the ins and outs of international business in their industry. Simply wanting to “sell” your products is very unclear. Do you even know all the legal structures? Here are some to think about:
- Exporting to a direct buyer/end-user
- Appointing an agent overseas who will find buyers
- Exporting to a local distributor who will sell locally
- Licensing production and marketing of the product overseas by a foreign party
2. Too much emphasis on getting a deal but little thought to negotiating a solid deal that protects and envisions contingencies. It’s amazing how many of these business people brush aside (or fail to consider) the probability that problems can arise. You can face difficulty when doing business with your next door neighbor, much moreso with a company overseas that is likely operating under a different legal regime and business culture.
Some things to keep in mind:
- Do you have a contract in place?
- How are you going to get paid?
- What happens if you don’t get paid?
- Can the foreign counterparty use your logo in its brochures and ads? If so, when and where? What if it uses your brochure on something unrelated or abuses your trademarks and content?
- What if your foreign distributor underperforms?
- Can you sue your foreign counterparty? If so, where do you want to sue? A local court where the proceedings are not in English?
- Do you have a way to secure yourself from a default?
Doing business overseas is truly an exciting proposition. However, as the above short summary illustrates, it’s best to go in informed and to be familiar with the legal concerns. You may not necessarily want to address every contingency but you should make sure the critical issues are foreseen and papered. Better to plan a way out ahead of time than to try to navigate through a nightmare scenario after the fact. A little bit of planning can help tremendously.