Distribution toward some of the important element in the

Distribution agreement

A distribution agreement is known as a form
of commercial contract where giving the right to the distributor to distribute
the good or services of another party (supplier) in certain area. In China, the
distribution agreement was protecting in the China Company Law which provide
the legal enforceable rule toward the potential agree between the foreign
company and Chinese company in China (Damiano 2015).  Generally the Chinese company will try to
convince the foreign company to join into a joint venture arrangement whereby
the foreign company will be able to participate in the conduct of the distribution
business in China (Dickinson 2016).

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 In
the China distribution agreement, it usually provide the information about the
payment term, exclusivity, the territory that given to the distributor, type of
product and so on. IBL
Sdn Bhd need to take into account of some major term before entry into
distribution agreement with the Chinese company. China Supreme People Court
have certain major interpretations toward some of the important element in the application
of contract law (Huang et al 2014).

When
presenting the document as an evidence, even the legally enforceable contract
can be voidable, void by the both party, thus the document will not be having
power in China. Country like United States have help the distributors with
providing them some level of legal protection, thus it was cost consuming when terminate
a contract. However, in China, the distributor are lack of the protection from
China Law.

In
China, there have no strict legal requirement for any form of compensation to a
distributor due to the cancel of the distribution agreement (Harris 2010). One
of the biggest different between the standard distribution agreement and the Chinese
distribution agreement is that the signature line in the Chinese distribution
agreement have to provide a place for the distributor to affix the company seal
(Harris 2010). A distribution agreement that without the seal or is an unsealed
distribution contract will be treated as not valid contract under the Chinese
law (Harris 2010).

Moreover,
the intellectual property issue was also one of the main concern under the
distribution agreement. A further protection term like, distributor will not be
granted the right to use the trademark are important for IBL SDN BHD to prevent
he legal issue.

Recommendation

In
order to avoid certain unnecessary problem that related to distribution, I
would suggest IBL SDN BHD to look for the legal advisor in China first before
entering into any distribution agreement with the Chinese Party. The legal term
of China and Malaysia are different, thus, a local people who able to interpret
the Chinese law well able to help IBL SDN BHD to avoid from falling into the
trap and prevent misunderstanding toward the contract. Next, in order to
protect the intellectual property right of the product, a further protection
action have to be carry out by IBL SDN BHD. Action like register the trademark
in China is a must to prevent risk of the unethical distributors from using the
IBL SDN BHD trademark. IBL SDN BHD have to use the good faith mode in
exercising their right and focus on fairness when carry business in China to
avoid the risk of the distribution agreement from getting terminated.

 

 

 

 

Marketing
and Advertising

Under
the advertisement law in China, the advertisement about the food must be 100%
match the requirement for the public health. According to the Advertisement law
of People of Republic China 2015, article 9 state that the word like the
national, the best or any comparative word are prohibited in the advertisement.
IBL SDN BHD should not be using the comparative word when carry the marketing
or advertising campaign to avoid the legal issue. In China, the food
advertisement have to giving the true information and cannot contain any form
of wrong information (Global Agricultural Information 2015).

Under
the Food Safety Law of China (2015), the food advertisement cannot contain any incorrect
information toward the claiming of any disease prevention and treatment
functions. In China, a new advertisement law that carry the protection toward
the consumer have been carry out in 1 September 2015 (Levells 2015). Under the
new advertisement law, the meat company are forcing to revisit their marketing
budget and strategy. Furthermore, marketing campaign that claim that the meat
able to provide certain amount of nutrition have to provide the scientific
proof.

Advertisement
that concern toward the meat from endangers species are prohibited in China (Art. 19, PRC Food Hygiene Law).
Advertisement of food that fail to match the public health requirement from IBL
SDN BHD will get the sanction from the Chinese government. Sanction like that
down the advertisement will be carry out to IBL SDN BHD who fail to follow the
rule.

False advertisement law have been strictly put into the legal
framework. For example, the regulator recently fined P&G Crest brand for a
record of 963000USD for false advertising because the company use the computer
software to whiten a celebrity endorser teeth. This case show that even the
colour itself can be a severe legal problem to the company. The colour of the
meat is the main concern issue under this aspect.

 

Recommendation

In order to avoid from receiving the legal responsibility,
IBL SDB BHD have to make sure their advertisement and marketing strategy are
following the rule and regulation of China. Action like sending the meat sample
to the Chinese authority to have a pre-checking before start to conducting the
business at China. This measure is to prevent further loss after set up the
company. Moreover, it also help in identifying the potential risk that bring
along with the meat industry. IBL SDN BHD should use the word which clearly
deliver the message to the customer rather than using the word that will cause
confusing. This measure can help IBL SDN BHD to better deliver the message and
gain the trust from Chinese government and customer. Joint venture with a local
advertisement and marketing company to help promote the meat. This action
enable IBL SDN BHD to better focus on their core business, meat rather than
focus on the size business, the advertising and marketing. Hire the local
company to do the advertisement is because the local company will have a better
understanding toward the advertisement and marketing rule and regulation of
China. Hence, error can be reduce and the legal risk also can be reduce for IBL
SDN BHD.

 

 

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