Page 102 - Export and Trade

Legal

underestimated in relation to many types of products. • No foreign intermediaries or employees means no
• There are intellectual property transfer risks that need language, culture or divergent interests.
to be carefully thought through.
Negatives
Other considerations •Willbedirectlyliablefortradingobligations.
• If possible, for better control, keep a critical •Exportertakesallbusinessrisksincludingthecredit
ingredient or component isolated from the contract risk on customers.
manufacturer. This might be supplied to the • Some customers will not want to deal with a foreign
PDQXIDFWXUHU IRU LQFOXVLRQ LQ WKH ¿QLVKHG SURGXFW EXW entity located in a different time zone.
the ‘secret formula’ or other key intellectual property • Increased shipping costs due to small (customer by
is not revealed and the ingredient or component is FXVWRPHU VKLSSLQJ TXDQWLWLHV
supplied is a form that cannot be easily reverse- •Exportermay be subjecttoarangeoflocal laws (e.g.
engineered. consumer protection, privacy and data protection
laws, censorship, advertising controls, age-related
Offshore manufacturing restrictionsandprohibitionsonsupplyofcertain
Key legal characteristics JRRGV RU VHUYLFHV GHVSLWH VHOOLQJ DQG VXSSO\LQJ
‡0D\EHWKURXJKD-9& ZKROO\ RZQHGVXEVLGLDU\ RU from New Zealand.
branch.
• Exporter has an equity interest in the manufacturer. Other considerations
•Still need to getproduct messagetomarket. This
Positives PD\ UHTXLUH VLJQL¿FDQW WUDYHO DQG RU PDUNHWLQJ
• As with contract manufacturing, there are savings investment (both online and through traditional
in import duties, shipping and cheaper in-market FKDQQHOV RU PHDQ WKDW ORFDO VDOHVSHRSOH DQG
manufacturing costs. or other business partners/intermediaries are still
necessary.
Negatives
• Considerable upfront capital investment (except, in the Other Structures
FDVHRID-9&ZKHUHWKH-9&OHYHUDJHVRIIDQH[LVWLQJ •Limited partnerships.
-9 SDUWQHU IDFLOLW\ •Trading trusts.
•Mayrequirelocalregulatorylicences andapprovals. • Unincorporated joint ventures.
• As with contract manufacturing, it is harder to manage
qualitycontrolfromadistanceandthereisno ‘Made in 'LVFODLPHU
New Zealand’ brand value. This article is intended only to provide general
‡ :KHUH D -9& LV EHLQJ XVHG DV D YHKLFOH IRU ORFDO information and a summary of the subjects covered.
PDQXIDFWXUH DQG WKH -9 SDUWQHU KDV WKH DELOLW\ It does not purport to be comprehensive or to provide
WR IRUFH WKH H[SRUWHU WR H[LW WKH -9& WKHUH DUH legal or other professional advice. No person should act
intellectual property transfer risks (as with contract in reliance on any statement contained in this article
PDQXIDFWXULQJ ZLWKRXW ¿UVW REWDLQLQJ VSHFL¿F SURIHVVLRQDO DGYLFH
Jonathan Wood is a partner of Morrison Kent Lawyers
Other considerations in Auckland and a director of the Nekta group of
‡ :KHQ PDQXIDFWXULQJ RIIVKRUH WKURXJK D -9& DV ZLWK companies. He has wide experience in international
contract manufacturing, retain the right to supply a trade, both in the commercial sector and within the
critical ingredient or component if possible. legal profession. Email: jonathanw@morrisonkent.co.nz
Averill Dickson is a partner at Simmonds Stewart in
Direct sales (including online) Auckland. Simmonds Stewart is a boutique technology
Key legal characteristics ODZ ¿UP SURYLGLQJ FRUSRUDWH DQG FRPPHUFLDO OHJDO
• Exporter sells directly to end customers offshore. services focused on the New Zealand technology sector.
• No intermediaries, subsidiary or branch. Averill has advised on many international technology
and intellectual property transactions.
Positives Email: averill.dickson@simmondsstewart.com,
•Low cost. ZZZ VLPPRQGVVWHZDUW FRP

100 NZ Export & Trade Handbook 2018