With the ongoing disruption caused by the pandemic in recent years, brick-and-mortar businesses have been significantly affected. However, money-savvy Australian Chinese have already discovered that selling online makes it easier than ever to serve international markets.
That said, selling products and services globally online requires consideration of the following:
Where your company is established
What your agreements stipulate
How disputes are resolved
When engaging in cross-border e-commerce sales, you must consider:
Where your company is legally incorporated
Your customers and their location
Your business terms and conditions
Where is your business legally incorporated?
Setting up companies in several countries at the same time (known as a dual structure) affects your rights and obligations. Legally, this means you must comply with the regulations applicable in your country of operation.
Advantages of adopting an Australian company structure:
Helps you plan for growth;
Reduces your personal liability risk
If your business is headquartered in Australia, it means all transactions between you and buyers are subject to Australian law. For various reasons, this may change your rights and obligations when selling certain products overseas.
For example, the diplomatic and commercial relationship between Australia and the other countries you sell to may affect how you operate.
In online business, your website and content presentation are the international face of your operation. Therefore, make sure your website:
Effectively markets your products
Complies with local data privacy laws
Uses trademark- and copyright-protected brands and content
Where are your customers?
The legal dimensions of a cross-border e-commerce business also depend on where your customers are located. Your target customers will affect:
What you can sell
The regulations you need to comply with
Your sales channels and dispute resolution mechanisms
Foreign regulatory regimes
The destinations where you plan to sell will also affect the regulations your business faces. For example, if you intend to target a niche market in Europe, you may need to comply with the EU’s GDPR laws. Likewise, targeting an international market may subject you to that market’s regulatory framework.
For instance, in the United States, your products may not pass the review of federal agencies such as:
U.S. Customs and Border Protection
Environmental Protection Agency
Consumer Product Safety Commission and other agencies
Conversely, if you are not intentionally targeting a particular country’s market, customers in that market can still purchase your products on international platforms, without necessarily considering their country’s regulatory regime. To determine whether and to what extent you can sell products in a particular country, you will need to seek legal advice in each jurisdiction in which you operate.
Who are your customers?
Whether you are subject to certain foreign regulations may also depend on who your customers are.
For example, Australian wine can only be imported into the United States through licensed importers. The distribution of wine across U.S. states is subject to further restrictions. As a result, if you run an online wine business, you cannot sell directly to individuals.
So consider whether your product or service category may be managed differently depending on who you sell to.
Intellectual property
If you are selling overseas at scale, it is essential to protect your brand name and logo. Your trademarks and names are among the most important components of your brand, as they help customers associate the purchase experience with your business. Even if you have an Australian trademark, it is best to consider registering the trademark in the countries where you intend to operate.
Copyright protection in Australia is automatic. However, this is not the case in some other countries, such as the United States. If you have ambitious growth plans, it is best to err on the side of caution and protect your intellectual property.
Practical considerations
When selling online, you need to consider how to handle payments. In Australia, online sales are relatively straightforward. You can use third-party payment service providers, such as Stripe, to process AUD payments and deposit them into an Australian bank account.
However, when selling internationally, you will be dealing with foreign currency payments, and you will need to consider how to convert them into AUD. For example, some banks offer foreign currency accounts that can hold payments made in USD. Similarly, payment service providers like Stripe can also manage currency conversion.
What are your terms?
All online businesses should have business terms. This document will set out your business policies under terms such as returns, shipping, and dispute resolution. The right type of business terms will take into account the unique circumstances of your business, including:
Who your customers are
Where they are based
What products or services you will be offering
When you are selling internationally online through cross-border e-commerce, you should consider whether the returns and shipping policies that suit Australian customers are also workable for your international customers.
Tax
When conducting international cross-border e-commerce sales, your products or services may be subject to tax, tariffs, customs duties and other charges. These depend on the specific market you serve and the distribution channels you use.
Finally
Running an online business is an excellent way to reach vast international markets.
Compared with setting up a foreign subsidiary or branch, it also requires far less upfront investment. It is important to remember that, although your intellectual property is protected in Australia, it may not be protected overseas. When you target international markets online, be aware that your products or services are subject to foreign regulations.
If you need help understanding your Australian online business, as well as the legal information around cross-border e-commerce international sales, please contact us.
