Political and Legal Screening

Political and Legal Screening

Every government in China, Germany, France, UK, USA, and Indonesia are implementing several

import regulation to control every commodities before the goods can enter the country. All of the

countries required import licenses and permits for any imported goods (see table policy comparisons

for the certain regulations). The quality is becoming a special concern in all of those countries which

all imported goods are evaluated by State Administration for Import and Export Commodity

Inspection (China), applying Conformity to European Standards Sign (EU), implement Uniform

Safety Standard in USA (Winstar Global Logistic Ltd., 2012), while Indonesian government have law

(Republic of Indonesia Act No. 7 of 1996) concerning Food that controls the quality of imported

product (FAS Jakarta Staff, 2009).

Import Tariff is different in each country. In China the tariff is 13 – 17 % (Winstar Global Logistics

Ltd., 2012), the average rate in Germany is 16 %, France 19.6%, UK 17.5 % (Winstar Global

Logistic Ltd., 2012), USA (2 – 10%) , and Indonesia 5 – 30 % (Encyclopedia of The Nations).

European Union countries imposed that every novel food which will enter the EU countries will be

assessed first by European Food Safety Authority (EFSA). Furthermore, policies such as food labeling

in UK were supervised by The Food Standards Agency which based in EU labeling regulations

(Foreign Affairs and International Trade Canada, 2012), the Food and Drug Administration (USA),

and in Germany new types of food product have to receive authorization from Federal Office of

Consumer Protection and Food Safety. Same condition occurs in Indonesia which foodstuffs have to

be registered in Head of National Agency of Food and Drug Control (BPOM) to assess the quality and

certified as ‘halal’ food from Majelis Ulama Indonesia (MUI). Both are required in order to obtain

approval form (FAS Jakarta Staff, 2009).

EU is also implementing the product liability law and phytosanitary standard and requirement, which

the importers are responsible for the product they sell, and if the customer were hurt because of the

product, the sellers have to provide compensation for the customer. Also product packaging has some

restriction in EU countries due to the standard regulation from Environment Protection, Directive on

Packaging and Packaging waste (Winstar Global Logistic Ltd., 2012). In France, all product labels

have to be in French language and transaction above 12500 Euros must be sent through intermediary

banking (due to monetary maximum restriction) and after all administration completed the

commodities must be imported not longer than six month (Gauthier, Audran, & Henard, 2009).

Importers such as Yamazaki Pan Company have to put several concerns before importing foods, such

as receive ‘halal’ certification in Indonesia, minimize the packaging usage in EU countries, and

establish product quality/phytosanitary standard in all those countries before it can enter the local

market. Yamazaki also have to register first the foodstuff in local food bureau, to make sure that it

has fulfilled standard quality and aligned with local regulation.

There are also different situation in encountering the business regulations in China, Germany, France,

UK, USA, and Indonesia. Starts up business have to face local bureaucracy before running the

business. The similarities among those countries are the new entrepreneurs have to registers the

company’s name in local governments department (see table country comparisons) to avoid

copyrights and trademark issues from other established local company.

China has very complex bureaucracy in starting up new business (see Appendix 1 step by step

business procedures), since it has about 14 steps and have to encounter 12 different local government

bureau plus an auditing firm to conduct initial capital audit (The World Bank Group, 2012). EU

countries have simpler step, such as Germany new business need to obtain Gewerbeerlaubnis (trading

permit) and register at Commercial Register and the professional association, France (put initial

capital in Caisse des Dépôt, then publish a notice of incorporation of Company to Centre de

Formalités des Entreprises (CFE), and company books needed to assessed by commercial court), and

UK the Company have to register at Companies House and contact HRMC for business tax (The

World Bank Group, 2012).

Indonesia, France and USA implement pretty much the same business regulation, such as Importer

Identification Number (Indonesia), identification number from Registre Nationale des Entreprise

(France), and Employer Identification Number (USA), to identify every businessman before import

activities can be done (The World Bank Group, 2012). In Indonesia there are 9 local government

bureaus to encounter while in USA about 5 local Government.

In all those countries, the employees have to be protected by health and social insurance or policy for

employee compensation, such as Jamsostek program in Indonesia. The business tax issue must have

not neglected by entrepreneurs to avoid any fraud among all those countries, and business taxes have

to be paid in local tax bureau. In Indonesia, NPWP (registration number of tax payer) is required in

paying tax in local tax department; while in UK business have to be registered first in Her Majesty's

Revenue and Customs or HMRC (The World Bank Group, 2012).

Summarizing the step by step business regulation procedures in each country, Yamazaki Pan

Company have to consider the local bureaucracy before entering the market. China and Indonesia

have complex procedures because we need to go to different departments and have long time to

complete the procedure. With the complex procedures, Yamazaki have to be alert to indication of

corruption in both countries (In Indonesia, ‘unofficial administrative fee’ is needed). EU countries and

USA have shorter time to complete, and the corruption risk is smaller (see table of policy comparison

in appendix 2), because in USA, the bureaucracy is completed in only one place (New York State

Department of State). Insurance and Tax regulation must not be neglected when starting business in

each country, since all of those countries have law to protect employee with insurance and paying

business tax in local tax department.

The other consideration is a political relationship between Japan and other countries (UK, Germany,

France, USA, China, and Indonesia). Since Yamazaki Baking Co is Japanese corporation, the political

climate of Japan and those countries becoming important things to put concern. Japan – America

relationship are in good condition as Japan is backing up USA to finance their national debts and

Japan open up to foreign investment from USA (Cooper, 2011). Recently, Japan also participate the

Trans-Pacific Partnership, a regional free trade agreement between Asia Pacific and USA (plus

Australia & Chile) which reduce trade entry barriers for its member (Cooper, 2011; Ministry of

Foreign Affairs of Japan, 2011).

From the European Union Countries (Germany, France, UK), both of EU and Japan were agreed on

free trade agreement and economic partnership agreement (European Commission, 2011). These also

becoming ‘binding agreement’ between two sides as political partners and make the bond stronger

(Shiojiri, 2011). In the future, we believe that importing goods to EU countries are not so rigid,

because of the good relationship between two of them. Good relationship also have been built

between government of China and Japan, started with the discussion between Vice Premier China and

Japan’s foreign minister which aim is to toughen economic cooperation and trade issues between both

sides. One of the results is ‘agreement of direct currency exchange’ means that the transaction can be

conducted directly from Yuan to Yen, or vice versa, without converting into dollar first (BBC, 2011).

In the other hand, the tsunami disaster in Japan in early 2011 makes China banned food commodities

from Japan to avoid nuclear contamination in food. The banned policy lifted in May 2011, but some

of prefectures in Japan have to attach certification of safety inspection for radioactive materials for

foodstuffs (Xinhua, 2011).

Indonesia have good bilateral relationship to Japan since the Indonesia-Japan Economic Partnership

Agreement (IJ-EPA) were signed in 2008 (Yulisman, 2012). The impact of the agreement is that

lower tariff is implemented from the product from Japan, and technology transfer occured between

both sides.

Moreover, China and Indonesia are much recommended for Yamazaki Baking Co to penetrate its

market. China, have an advantage with the direct currency exchange agreement (See Appendix 3

summary of political condition), but the tradeoff is the very complex bureaucracy in starting up new

business & the additional certification to import food. While Indonesia, from the IJ-EPA agreement

its government has unveil the entry barriers from Japanese product. The rest of the countries

(Germany, USA, UK, and France) have advantage in simpler bureaucracy in starting up new business

and the Japanese bilateral climate is not so bad between each country, but again Yamazaki Baking Co

must not forget the local policy and regulation in each country (see table of policy comparison).

BibliographyBBC. (2011, December 26). China and Japan plan direct currency exchange agreement. Retrieved February 24, 2012, from BBC News : Business: http://www.bbc.co.uk/news/business-16330574

Cooper, W. H. (2011). U.S.-Japan Economic Relations : Significance, Prospects, and Policy Options. Congressional Research Service.

Deloitte. (2010). Indonesian Customs Guide.

Encyclopedia of The Nations. (n.d.). Indonesia - Customs and duties. Retrieved February 23, 2012, from Encyclopedia of The Nations: http://www.nationsencyclopedia.com/Asia-and-Oceania/Indonesia-CUSTOMS-AND-DUTIES.html#b

European Commission. (2011, June 7). Bilateral Relations, Countries and Region : Japan. Retrieved February 24, 2012, from European Commission Web Site: http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/japan/

FAS Jakarta Staff. (2009). Indonesia Food and Agricultural Import Regulations and Standards – Narrative (Indonesia). Global Agricultural Network.

Federal Ministry of Economics and Technology. (n.d.). Import Regulations : Packaging. Retrieved February 18, 2012, from German Business Portal: http://www.german-business-portal.info/GBP/Navigation/en/Business-Information/import-regulations,did=146918.html

Foreign Affairs and International Trade Canada. (2012, February 16). Import Regulations - United Kingdom. Retrieved February 20, 2012, from Foreign Affairs and International Trade Canada Web site: http://www.tradecommissioner.gc.ca/eng/document.jsp?did=40706

foreignercn.com. (2008, August 5). Import restrictions & licensing procedures in China. Retrieved February 19, 2012, from guide.chinaassistor.com: http://guide.chinaassistor.com/2008/0805/Import_restrictions_&_licensing_procedures_in_Chin_11792.html

Gauthier, R., Audran, X., & Henard, M.-C. (2009). France Food and Agricultural Import Regulations and Standards - Narrative. Global Agricultural Information Network.

International Business Wikia. (n.d.). French Political and Legal System--Import Laws/Regulations. Retrieved February 21, 2012, from International Business Wikia: http://internationalbusiness.wikia.com/wiki/French_Political_and_Legal_System--Import_Laws/Regulations

Ministry of Foreign Affairs of Japan. (2011, November 18). Japan-U.S. Summit Meeting (Summary). Retrieved February 24, 2012, from Ministry of Foreign Affairs of Japan Web Site: http://www.mofa.go.jp/region/n-america/us/meeting1111.html

Shiojiri, K. (2011, November 24). Time to Deepen EU-Japan Relations. Retrieved February 24, 2012, from The Mission of Japan to the European Union: http://www.eu.emb-japan.go.jp/EU-Asia_Center_Article.html

The World Bank Group. (2012). Starting a Business in China. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulation: http://www.doingbusiness.org/data/exploreeconomies/china/starting-a-business

The World Bank Group. (2012). Starting a Business in France. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulations: http://www.doingbusiness.org/data/exploreeconomies/france/starting-a-business

The World Bank Group. (2012). Starting a Business in Germany. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulations: http://www.doingbusiness.org/data/exploreeconomies/germany/starting-a-business

The World Bank Group. (2012). Starting a Business in Indonesia. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulations: http://www.doingbusiness.org/data/exploreeconomies/indonesia/starting-a-business

The World Bank Group. (2012). Starting a Business in United Kingdom. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulations: http://www.doingbusiness.org/data/exploreeconomies/unitedkingdom/starting-a-business

The World Bank Group. (2012). Starting a Business in United States. Retrieved February 18, 2012, from Doing Business : Measuring Business Regulations: http://www.doingbusiness.org/data/exploreeconomies/unitedstates/starting-a-business

Winstar Global Logistic Ltd. (2012). Customer Guideline : EU Import Requirements. Retrieved February 20, 2012, from Winstar Global Logistic: http://www.wsgl.biz/en/support/rule/eu.htm

Winstar Global Logistic Ltd. (2012). Customer Guideline : USA Import Requirements. Retrieved February 20, 2012, from Winstar Global Logistic: http://www.wsgl.biz/en/support/rule/usa.htm

Winstar Global Logistics Ltd. (2012). Customer Guideline : China Import Requirement. Retrieved February 19, 2012, from Winstar Global Logistic: www.wsgl.biz/en/support/rule/china_import%20_requirements.htm

Xinhua. (2011, June 21). China loosens import restrictions on food, farm produce from Japan. Retrieved February 19, 2012, from English People's Daily Online: http://english.peopledaily.com.cn/90001/90776/90883/7415561.html

Yulisman, L. (2012, February 2). Business players, govt at odds on RI-Japan partnership. Retrieved February 20, 2012, from The Jakarta Post: http://www.thejakartapost.com/news/2012/02/20/business-players-govt-odds-ri-japan-partnership.html

Appendix 1

Bureaucratic and Legal Considerations in Opening Business in Several Countries

Every country has regulation in controlling the business to make sure the business is legal and not against the law. In this appendix, there are step by step business regulations procedures in Germany, France, UK, China, United States, and Indonesia.

China

The Procedure is (The World Bank Group, 2012):

1. Obtain a notice of pre-approval of the company name2. Open a preliminary bank account, then deposit initial capital in the account in order to obtain

the certificate of deposit3. Obtain capital verification report from an auditing firm4. Obtain registration certification “business license of enterprise legal person” with State

Administration of Industry and Commerce 5. Approval from police department is needed to make a company seal6. Make a company seal7. Attain the organization code certification issued by the Quality and Technology Supervision

Bureau8. Register for both state and local tax with the tax bureau9. Apply with the local statistic bureau10. Open a formal bank account of the company and transfer the registered capital (after verified

by auditing firm to the account11. Apply for the authorization to print or purchase financial invoices/receipts12. Pay for uniform invoices13. Contact local career service center to apply for recruitment registration 14. Register with Social Welfare Insurance Center

Germany


1. Check uniqueness of company name at the local chamber of industry and commerce to avoid copyright

2. A notary is needed to notarizes the articles of association and memorandum of association3. Open a bank account to deposit initial capital4. Notary public files the articles of association with the local commercial register, which then

will be set aside at local courts5. Report the local office of business and standards of the establishment of the company6. Apply with the relevant trade of professional association 7. Notify the local labor office of the establishment of the company8. Register employees for health and social insurance9. Mail out the documentation to the Tax Office

France


1. Check uniqueness of company name by the Institut National de la Propriété Industrielle (INPI) to avoid copyright

2. Deposit the initial capital through notary, local bank, or Caisse des Dépôt3. issue a notice of incorporation of the company4. apply request for a company’s registration by the Centre de Formalités des Entreprises (CFE)5. pay money for company books (minute books, inventory books, ledgers) in order to be

stamped and initialed by the clerk of the commercial court

Indonesia


1. Obtain the standard form of the company deed (need local notary to reserve electronically) and company name have to be checked first at Ministry of Law and Human Rights to avoid copyright

2. Notarize company documents before a notary public3. Pay the State Treasury for the non-tax state revenue (PNBP) through notary 4. Apply to the Ministry of Law and Human Rights for approval of the deed of establishment5. Apply for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) and

the company registration certificate (Tanda Daftar Perusahaan/TDP) in Ministry of Trade6. Register with the Ministry of Manpower (company that employed > 10 person have to be

registered)7. Apply for the Workers Social Security Program (Jamsostek Program) or independent social

security program agency8. obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP)

United Kingdom


1. Check name for uniqueness to avoid copyright at companieshouse.gov.uk web site2. Prepare memorandum and articles of association, then fill out and sign Form IN01

(application for registration) which can be obtain in the same web site3. Apply document of incorporation by the Registrar of Companies at Companies House4. Contact HMRC (Her Majesty's Revenue and Customs ) to apply for VAT (value added tax)5. Contact HMRC (Her Majesty's Revenue and Customs ) and register for PAYE (pay-as-you-

earn)6. Sign up for employer’s liability insurance

United States


1. Reserve the company's name and file the organizational company articles in New York State Department of State (Division of Corporation)

2. Apply for federal identification number (EIN) for tax and employer principle3. Register to collect State sales tax in New York State Department of Taxation and Finance

4. Register as an employer with the Unemployment Insurance Division of the state Department of Labor

5. Arrange for workers' compensation insurance and disability insurance6. Arrange for publication and submit certificate and confirmation of publication

Appendix 2

Table of Policy Comparison between Countries

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Appendix 3

Summary of Political Condition

Documents

Political and Legal Screening