Unlike a number of other countries such as Australia or the United States, there are no specific laws in India that apply to franchises. That doesn’t mean there are no laws, simply that there is no central code or text that can be consulted to get your head around the changing face of franchising in that fast moving continent called India.

If you thinking of starting elsewhere, for example Indonesia, Malaysia or even exotic Albania, a good place to start to check out the local laws is the web site with a summary of laws that may be found at this Unidroit guide.

A word of warning, the details do not appear up to date and so you will need to check what changes may have been made since the last update.

Like any area of expertise, if in doubt seek advice, preferably from someone with experience in international trade law and in particular the country you are looking to start your franchise.

It is a book that explains the how, the why and, importantly, the effects of technological change to the world’s economy. Why, with the ubiquitous spread of technology, it doesn’t matter where your business operates. Where the culture of hard work and enterprise is more important than resources, location and opportunity.

Why, he asked, is it cheaper and easier for Egyptians to import from China traditional lamps formerly manufactured by Egyptian peasants who earn an average of $50 per month? His explanation is the culture of hard work in China.

I was reminded of Friedman’s book last weekend when I read an article of his in the Sydney Morning Herald. He recounted a skit on Chinese TV that tells the story of a race between four children, one from the USA, one from China, one from India and one from Brazil.

The American child raced ahead to an early lead and exclaimed, “I will win because I always win” but later doubled over in pain. The explanation was given by the Chinese child: “He’s overweight and flabby. He ate too many hamburgers.” I guess that’s how they see us too.

Australia and our cargo cult mentality of relying on the mining industry to give us our national wealth, reminds me of the Papua New Guinea Highlanders in the 1970s who started a new religion where all the goods of the west would simply arrive by helicopter as a reward to the lucky few who joined the new religion.

In my last blog, I called on the government to assist Australian exporters with a lift in the Export Market Development Grants (EMDG) scheme for exporters rather than the niggardly attitude adopted by the current government.

Our real long-term prosperity cannot rely on simply digging up easy-to-mine minerals. There is no guarantee any of these ‘riches’ will be in demand into the long-term future.

We need to again emphasise our strengths in technology, our legal profession, education and manufacturing. We need to help these sectors of our economy to expand to new markets if we are also not to become “too fat and flabby”.

A proven and cost effective way is to provide exporters with grants that partially reimburses them for marketing activities in promoting exports.

My difficulty is not with the background of the new minister. It is the current Labor government’s niggardly policy in promoting private enterprise’s efforts to tap the export market.

Perhaps a look at the 2008 Review of Export Policies and Programs by David Mortimer might help the new minister. Mortimer found that for every dollar of EMDG provided to exporters, it generated between $13.50 and $27 revenue for Australia.

In addition, earlier reports found that for every dollar of grant provided to exporters, 40 cents returns to the government in taxes.

At a time when every competent economic commentator is pointing out that the best and quickest way out of the GFC is through increasing international trade, where Australia is arguably overly reliant on the export of minerals to China, where the EMDG encourages a diversified trade in goods, services and IP all around the world and the EMDG generates between 13 and 27 times the revenue for every dollar spent and the government in any event gets back 40 percent of the grant anyway, why has the Labor government reduced the total EMDG in its budget to $150 million and refused to increase it for the foreseeable future?

This compares unfavourably to the coalition’s promise to increase the total of $200 million, which in my view is also too low.

For the difference of $50 million, we can expect between $675 million and $1.3 billion less revenue to Australia.

The government promotes the EMDG scheme as providing up to $200,000 in EMDG to exporters. Good press, sounds good but it’s not true: last year exporters were guaranteed only $50,000 and this year only $27,500.

Exporters at a time of increasing value of the Aussie dollar are finding it hard enough. To compete they need to increase marketing, and yet the very scheme designed to promote exports is hamstrung.

It’s time to uncapped the EMDG scheme and really help exporters. Are any of the independents listening?

Already we have seen massive outsourcing of back office functions to India in such diverse areas as insurance, banking, telecommunications to name just a few.

The recent outsourcing of Rio Tinto’s internal legal department to India as well as a recent string of US law firms outsourcing drafting and correction of grammatical errors in documents drafted by either unskilled or simply overworked US lawyers to Indian lawyers, should give all western lawyers reason to consider where it will all stop.

Similarly, Australian accountants should be aware of the recent MOU signed by the Indian Institute of Chartered Accountants and the equivalent body here in Australia recognising each other’s qualifications.

Australia has entered into a number of Free Trade Agreements with like-minded countries. Negotiations are currently under way between India and Australia for a Free Trade Agreement.

Globalisation with Indian lawyers and accountants with their hard work, English language skills and high achieving professionals is likely to cause a shake up in the way international trade and the professions in different countries are conducted far more than most of us are aware.

Why? Despite opposition from locals in India to opening up their economy to foreign lawyers and accountants, the pressure is such that foreign lawyers and accountants will eventually be allowed to practice in India. Naturally we can only expect the converse to apply and Indian lawyers and accountants will increasingly look to practising in western countries such as Australia.

Is this a good thing? To achieve the best result at the best price this seems inevitable and perhaps even desirable.

Our commitment to education and our nation’s willingness to develop our skill base will determine our economic future, who makes the rules on how we live just as much as what resources we can dig out of the ground. To keep in the game it’s time to upskill.

—James Millea is a senior associate at Argyle Lawyers

Australian Customs will then seize the goods. Notices last up to four years. The owner of the mark then has 10 days to commence legal proceedings for infringement of the trade mark, after which the goods are released to the importer. There is no up front fee for this service.

Note this does not grant the same rights to an unregistered common law trade mark owner. The owner must however indemnify customs for costs incurred of up to $10,000.

Trade mark owners should also consider registering their trade mark in China where it is possible to arrange for the seizure of counterfeit goods at the factory or elsewhere, on a similar basis as in Australia. Again this only applies if the trade mark is registered in China and remember, it is the first to register the trade mark in China that is entitled to enforce the trade mark. A registered trade mark in Australia will not solve the problem at source.

It’s also worth noting that from July 1, 2009 Australian exporters may be able to partially recover the cost of their IP protection including the cost of granting, registering or extending rights under foreign laws as well as insurance costs relating to the rights under Austrade’s Export Market Development Grant Program (EMDG), so the costs of obtaining IP protection in China is now partly helped by the Australian government.

Does the Stern Hu case give you something to think about?

If you are dealing with a company exporting from the People’s Republic of China (PRC), would you prefer the laws of the PRC or say Singapore, the United Kingdom, New York or Australia to apply in the event of a contract dispute?

I agree with many of the points made by Dan in response to my last blog.

But I guess it’s understandable that the China Law Blog sees virtue in having Chinese law and Chinese courts decide issues arising from a dispute between a Chinese business and an Australian or US business. I, however, find it difficult to reconcile a court system free from political control with the PRC.

It is true that the courts of the PRC are becoming better and, dare I say, ‘professional’. Is that enough?

Chris Nailer, a senior lecturer in International Business at the Australian National University and well known China expert, gave one description of the legal system of the PRC when he said: “There are situations which can arise in China where you can seek the advice of authorities, you can seek the advice of two or three different government officials and get two or three different answers about whether something is legal, or is not legal.” You get the idea.

Goodness me, whatever one says about a legal system, it needs to be certain and not arbitrary.

Not only is the legal system of the PRC only now catching up with other nations, but there is ample evidence of political interference with the courts. Both judges and even lawyers often see themselves as serving the interests of the state. The concept of an independent legal system is simply foreign to Chinese tradition where the courts are there to serve the interests of the state.

It is this last issue that the Stern Hu case raises in its most stark form. What is or what is not a state secret is a matter determined by the government of the PRC and what is and what is in the interests of local government officials in the PRC is determined by the local leaders of the ruling party of the PRC.

While Dan, in his response, suggested that the courts of China are more reliable than those of its developing rival India, we at least know that in India we are dealing with a robust democracy where the courts are not representatives of the government and its ruling party.

If there is anything that all countries need for both social stability and long term growth is the rule of law based on an independent robust legal system and judiciary.

See also James’ article on Choosing the right law

—James Millea is a senior associate at Argyle Lawyers

Throughout Chinese history, a happy life was predictable, where there was no war, famine or arbitrary rule. In short, where there is law and order, where disputes would be settled, if not always in your favour, at least applying consistent rules.

At the turn of the 20th century, Australia and Argentina were two of the most wealthy countries in the world. Both had abundant natural resources, an expanding well educated population and links to Europe. On paper, neither had an advantage over the other.

Australia, however, had a secret weapon. With its stable political history and legal system its citizens felt safe in investing for the future and Australia grew in wealth.

Argentina, with a different political and legal culture, saw military coups and the breakdown of law and order and a steady decline in its economic fortunes. Only in the last years of the 20th century, with the overthrow of its military government and the establishment of democracy, has Argentina again found growth.

It’s a no-brainer that a stable legal and political system is the bedrock of economic growth. This applies in both domestic and international trade.

This is why the recent events surrounding the arrest of Stern Hu, a senior Rio Tinto executive, and the apparent involvement of China’s powerful spy agency in Hu’s arrest are so disturbing. The suggestion that his arrest is because of revenge over the failure of the Rio-Chinalco deal is hard to resist.

Minister for Trade Simon Crean is right when he says that when you trade with another country you are bound by their laws and their courts. But it raises the old perennial question and concern of exporters to the Peoples’ Republic of China: is the the system rigged in favour of the Chinese government?

Enforcing an agreement is problematic at best and impossible if government officials prefer that you do not enforce the agreement.

It is an issue to consider when drafting contracts: what laws and which courts will adjudicate disputes. If you are exporting to or importing from the PRC, if there is a dispute, which of the laws and courts of the PRC or Australia would you prefer?

—James Millea is a senior associate at Argyle Lawyers

We need to remember that we are on the cusp of completing negotiations for the Australia-China Free Trade Agreement and as members of the World Trade Organisation (WTO) have agreed to work towards lowering barriers to trade and in goods and services. Members of the WTO such as Australia eagerly entered into negotiations to lower trade barriers because it is in their self interest.

Australia and all state governments are bound by the General Agreement on Trade in Services (GATS). The GATS is not designed to secure free trade in services but to ensure fair competition in the supply of services – particularly market access – and that government measures that affect market access do not create unfair competition in favour of local service suppliers.

Discrimination in favour of local service suppliers is not only a breach of GATS but inevitably may be reversed by the disputes procedures of the WTO, which leads to the question: why do it?

Apart from GATS the only legally binding agreement dealing with government procurement under the WTO umbrella is the Government Procurement Agreement (GPA), based on the principles of openness, transparency and non-discrimination as those principles apply to government procurement.

This means that a Chinese company competing with a company from another signatory to the GPA for a government contract in Shanghai, may not be favoured against the competing non-Chinese company.

While it is true that Australia is merely an ‘observer’ while China is a full member of the GPA, and so Australia and NSW are not technically bound by the GPA, isn’t it perhaps wiser to consider our long term economic goals rather than a short term fix of our problems?

We should well remember that China is NSW’s largest trading partner with $16.4 billion two-way merchandise trade in 2007/08 with exports to China rising from $749 million in 1997/98 to $2.2 billion in 2008/09. For those who can count, this is a tripling in NSW’s exports in 10 years.

May be it’s time we grew up a little and realised that the best way of solving our financial problems is to be better than our competitors.

—James Millea is a senior associate at Argyle Lawyers