5 Most Basic Rules for Doing Business in a Foreign Country

by Dan Harris

Over the weekend, a U.S. company emailed seeking our help in finding them a criminal lawyer to represent one of their employees who had been arrested in a foreign country for trying to buy cannabis. The employee’s excuse was that he “thought cannabis was legal.” I took this to mean he thought that because cannabis is legal in his home state in the United States he thought it was legal everywhere in the world.

At one point in our email conversation, the company owner told me how irritated he was with his employee for not “at least checking on the legality of cannabis in that country before he bought it.” When my two kids did their foreign study (one in Vietnam and the other in Spain), I lectured them (endlessly, they might say) on the importance of what I called Rule Number One when in a foreign country: do not do anything you think might conceivably be illegal, because you just don’t know.” Another way to put it is that you must follow the laws of the country in which you are located.

The need to abide by the law of the country in which you find yourself holds equally true for companies as well.

All this led me to think about the top five most important rules for doing business in a foreign country and the below are those rules.

• Rule Number One. It is incumbent upon you to know the rules in the countries in which you and/or your company operate.
• Rule Number Two. Do not assume anything about how to operate legally in a foreign country. In particular, do not assume that what is legal in your home country is legal in the foreign country.
• Rule Number Three. Do not sign a foreign language contract unless you know exactly what it says as you will be bound by that contract. Do not believe the translation provided to you by your foreign counter-party and with some countries — China in particular — do not even believe the translation provided to you by your foreign lawyer. See China Contract Drafting Scams: From Bad to Much Worse.
• Rule Number Four. Line up your IP protections before going into any foreign country, or even talking with any foreign company. See e.g., China Trademarks and the Real Life Meaning of First to File.
• Rule Number Five. Do not use anyone as your lawyer except your own lawyer. This one really ought to be obvious, but having seen at least two dozen companies violate this rule and pay the price for having done so, it apparently isn’t.

Anyone have any additions to the above list?

About the author

Dan Harris is internationally regarded as a leading authority on legal matters related to doing business in emerging markets. Forbes, Business Week, Fortune, The BBC, The Wall Street Journal, The Washington Post, The Economist, CNBC, The New York Times, and many other major media players have looked to him for his perspective on international law issues.

This article originally appeared on the China Law Blog and is reproduced here with the kind permission of the author.