Five legal challenges for new retail exporters

From taxation to data protection norms, explore the legal environment retailers face when going global

With global retail sales expected to hit $30 trillion by 20231, the retail sector holds plenty of new opportunities for exporters and domestic businesses alike. Before you jump in though, your business will need to overcome several key legal hurdles — including tax implications, trading laws, tariffs, corporate governance, and laws around data protection.2

In this guide, we’ll explore a few of these in detail and offer best practice tips and advice on how your business can navigate through them successfully.

The regulatory environment

From tax laws to trading legislation, every country has its own set of rules for allowing businesses to set up and operate there. One of the most important steps you’ll need to take when exporting products abroad is assigning your goods a unique HS (Harmonised System) code, based on internationally-accepted standards. Using this system, the first six digits remain standard across all participating countries, then each region applies a certain code to classify different products based on various parameters.1

As well as the regulatory environment, you should also be mindful of the CSR (Corporate Social Responsibility) framework present in the country you’re setting up in — and the degree to which your product conforms to it. For example, it could be how your business manages its waste, whether your allergen labelling complies with local standards, or if your business is taking steps to address the gender pay gap. Regardless, you may want to ensure you have a crisis management system in place, just in case.2

Best practices to follow:

  • Be aware of the (often subtle) ethics and business standards in your new market. For example, detailed product labelling that conforms to nutritional or safety laws, or even behavioural standards as part of the wider CSR ecosystem.3

Trade policies, taxes and tariffs

One of the biggest considerations when expanding abroad is the trade policy of the country, or countries, you’ll be dealing with. Trade policies encompass a range of factors — each of which can have serious operational and financial implications for your business. For example, import tariffs can quickly erode your profit, plus you’ll need to ascertain whether any import or export quotas are in place, or if government subsidies are offered to local manufacturers.4

You may find your government has a bilateral trade agreement with the country you’re looking to expand into, which could help minimise trade barriers and make the process much easier for you.5

Best practices to follow:

  • Identify any existing government trade agreements in place, either with exporters or the country’s own domestic suppliers.
  • Make sure you fully understand the trade agreement policies of your destination market.
  • Keep reviewing and optimising your supply chain by seeking more reliable and cost-effective alternatives to your existing suppliers.6
  • Stay agile and proactive, so if trade policies suddenly change, you’re ready to quickly adapt and keep the business going.7

Taxation

Understanding the different tax laws in place around the world can be a complex and demanding process. These vary from sales tax and value added tax (VAT), to goods and services tax (GST) and customs duties (known as tariffs) — and they can vary a lot between countries depending on the relationship that exists. For example, tax applied to goods being imported to the USA from Canada may be very different to the same product arriving from Mexico.8 Take the time to fully understand your position and potential liability.

Best practices to follow:

  • Consider hiring an in-house or third party tax compliance expert so you have full oversight of each country’s tax laws, and can abide with them.
  • Automating your taxation process can help you manage things more efficiently, and be a big help in areas like classification, tax rate calculations, report generation, filing your returns, etc.9

Tariffs

Government tariffs can be disruptive to exporters because they cause prices to rise and often negatively affect supply chains.10 However, there are some steps you can take to reduce their impact on your business.

Best practices to follow:

  • Carefully review the goods or components affected by the tariff, and consider whether they could be modified to avoid charges. It may be worth consulting with customs/duty experts, who will be able to guide you on the specifics, and help advise of any possible modifications.
  • Reevaluate your global supply chain structure and operations management to ensure they’re as tax-efficient as possible, within the regulations.
  • If your prices must rise because of new tariffs, make sure you review the contracts or agreements you have in place — specifically their dates and terms and conditions relating to tariff-related price increases. You may need to question whether your market could even accept a price increase, or if this might simply make you too uncompetitive to operate.11

Data protection and privacy

The impact from new technologies like AI and blockchain continue to be felt in both physical and online retail spaces.12 As such, it’s vital your business complies with any data protection laws.

This is especially pertinent for retailers, where digital technologies have seen the industry become increasingly data-driven. Many other businesses are also applying various advanced technologies to gather offline and online consumer data for use in areas such as planning and forecasting, distribution and logistics, product recommendations, and even developing point-of-purchase merchandising.13

In the UK, as little as 20% of customers trust the organisations that store their data and personal information,14 so make sure everyone in your business is clear on their responsibilities when it comes to acquiring, using and safeguarding consumer data.

Best practices to follow:

  • Be transparent with customers about data collection, so they know where and how their data will be used.
  • Make sure customers can easily opt-in or opt-out of receiving marketing communications from your business. Let them make their own decision and respect their choices.

While there are numerous complexities surrounding international business regulations, the opportunities for companies are nonetheless significant. Like anything, the key to success is having a solid, informed and realistic strategy to follow — and gaining an in-depth knowledge of the market you’re looking to enter.

Visit Market Finder for Retail to assess the export potential of your business, and access free guides, support, and success stories created by Google’s team of global marketing experts.