The risks of doing business with foreign countries: the example of China with Ghana and Nigeria

Résumé du document

While the companies more and more move throughout the world with the assistance of the globalization, the subject of international business law sees his importance increasing. The reason is quite easy to understand: more businesses are dealt with foreign countries more are the risks, then it is primordial for a company to be prepared and to know the legal factors of each transactions that it realizes throughout the world. By the way, to ignore the previous elements could be dangerous and become catastrophic in some cases.

The choice to do business with a poor and compromise state by example could prevent a company to receive money and it is the reason why all the aspects from international business law have to be known. It concerns the legal environment of course but the economical, cultural and social too by example. The report, which follows, will permit us to understand these elements with a case study and the different risks, which are a part of the contract. Secondary it will permit us to study the different way to start business in one foreign country like trade, international licensing of technology and intellectual property, or foreign direct investment.

The principal step of our study is the analysis from legal risks. Because we are working for a Chinese company we have to illustrate our points in comparison with its reference country to be efficient. Because two countries manage the oilfield, which is interesting for our client, we have to treat both of them. In a first time we will analyze Ghana, then we will study the second country: Nigeria.

Extraits

[...] It is really important and positive to do business with countries, which have ratified this convention, because it is a real security: we have seen previously that Ghana is under one other legal system than China and the ratification of CIGS plays a major role on this point. By the way it permits for a company from one country, which is dealing an international trade with one company from one other country, to apply the law system that it knows the best. In our case, our client could in case of problems, ask to apply the Chinese law system. It would avoid a lot of problems due to the unknowing of the law system in Ghana. [...]

[...] Concerning the three classical forms used to enter on a new market; trade, international licensing of technology and intellectual property or foreign direct investment, we have to advise to our client the way the most adapted for all the situations from these two countries. The first one, the trade, is really good if we are looking for an investment without too much risks and engagements. By the way, it permits to do business without any investment in the country and with the possibility to stop the contract at the first problem. [...]

[...] My advice here is in fact always to invest in this venture because the first country is one of the best safe for foreign investors in Africa and even if Nigeria is not a safe one and suffer of some troubles in political and civil situation, it is not the worst of Africa. The balance seems then to be in favor of join the venture. The cultural risks As well as the previous risks factor, the cultural seems to be really important for a foreign investor. The reasons are multiple and we will analyze it in this part of the study. [...]

[...] Ghana here is one of the countries, which are currently member of this organization. The advantages, like concerning the CIGS, are multiple, but we have to highlighting the fact that it permits to secure trades and to guarantee efficient and respectful solutions in case of problems during the contract between the foreign companies. Our client will receive help from this organization if it needs it and one other important point is that to be member from the WTO authorize our client to be protected by this organization and to have the certitude that all the international rules will be respected. [...]

[...] With our case we have learned that some countries in Africa by example are really different and that we have to keep informed as well as possible to choose the best ways and forms of business and to keep in mind that there is a lot risks for a foreign investors. We have seen in this case that the China National Offshore Oil Corporation has to study the financial, political, cultural and legal risks before to choose the form of business that it will have. It is an interesting point to show how much is precious the information and studies before making any decisions. [...]