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Legal Aspects of International Business

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Executive Summary
This report is prepared in order to evaluate the legal aspects of international
businesses and understand how these factors affect their operations. The case of
Alibaba Group is selected in this report, and the industry, headquarters location and
the number of employees is evaluated in this report. The legislative regulatory
framework which includes a range of statutes and policies which are implemented on
the operations of Alibaba is analysed in this report. Different treaties, conventions
and agreements that provide policies that are imposed on the company and their
impact on services of the company is also identified in this report.

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Contents
Introduction of Alibaba..................................................................................................3
Legislative Regulatory Framework...............................................................................4
Treaties, Conventions and Agreements.......................................................................7
References.................................................................................................................10

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Introduction of Alibaba
Alibaba Group Holding Limited is a Chinese multinational conglomerate that was
founded in 1999. The company offers its services in different industries such as e-
commerce, retail, internet and technology (Alibaba Group, 2019). The IPO (initial
public offering) of the company was the world’s highest in the history in which the
company was valued US$25 billion in 2014 (Picker and Chen, 2014). The location of
its global headquarters is in Yuhang District, Hangzhou, Zhejiang, China. The
services of the company are available worldwide and to manage them, the enterprise
has hired more than 101,550 as of 2018 (Craft, 2019). The company is a major
competitor of Amazon in the Asian market, and it is rapidly diversifying its offering by
launching new products and services such as WeChat. The services of the company
are available for Australian consumers as well. The details regarding the number of
employees that are hired by the company is not disclosed by the organisation
(Alibaba Group, 2019).

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Legislative Regulatory Framework
Alibaba Group offers its services in many countries due to which the company is
obligated to comply with their legal provisions to make sure that it did not violate any
laws that could impose a penalty on the organisation. The company has to make
sure that it assesses the key policies which apply on its operations while it
discharges its duties in Australia since these duties are imposed on them by the
government (Bottomley, 2016). The provisions are enacted and enforced through a
number of regulators with the objective to make sure that these organisations did not
engage in any practices or activities which are considered as illegal or unethical
since they can harm the interest of citizens, communities, and other parties in
Australia.
a. Spam Act 2003.
Since Alibaba offers its services through online medium, the company is obligated to
comply with provisions which are implemented by the Australian government to
protect those users that use these services. Alibaba sends notifications regarding
new products to its customers in order to increase its sales and increase awareness
regarding these products; however, it is prohibited from sending spam messages to
its users without their prior consent under the Spam Act (Adrian, 2013). Under this
Act, three key steps are given which are necessary to be followed by Alibaba when it
sends spam emails to its customers. The first step is the collection of the consent of
the users which must be express or inferred consent. The second step is identifying
which requires that the messages must contain clear, accurate and concise
information regarding its business or products (Adrian, 2013). The third step is that
all its messages must contain unsubscribe button which must be easily accessible
for users. The requests made for unsubscribing should be responded in a prompt
manner.
b. Privacy Act 1988.
While offering its online services to users, Alibaba collects their private data in order
to serve them relevant advertisements according to their preferences, and it also
uses such data to improve its services. However, the Privacy Act imposes a number

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of obligations on the company to make sure that it complies with standards, rights
and obligations regarding holding, collection, use and correction of private
information about its users (Randall et al., 2014). Under section 14 of this Act, a
number of privacy rights are given for companies such as Alibaba which are called
the Information Privacy Principles (Randall et al., 2014). These principles are
necessary to be followed by Alibaba in order to make sure that it did not violate the
privacy of its users and it also restricts the company from using their information to
gain an unfair advantage.
c. Competition and Consumer Act 2010 (Cth).
The online e-commerce organisations are subject to the competition and consumer
laws which are implemented by the government. Alibaba is subject these guidelines
as well to makes sure that its customers receive appropriate products or else it could
face legal penalties or even termination of its operations (Scollo, Bayly and
Wakefield, 2015). Alibaba is also obligated to make sure that it did not issue any
offers or form contracts that are considered as illegal or invalid based on the fact that
they limit or restrict competition in the industry.
Schedule 2 also provides provisions regarding the protection of consumers to make
sure that Alibaba did not violate their rights (Scollo, Bayly and Wakefield, 2015). For
example, various consumer guarantees are given to customers under this Act which
is necessary to be maintained by Alibaba to make sure that it did not violate their
rights. For example, it has to make sure that the quality of the products is acceptable
and safe and they must match the sample and demonstration model. Thus, Alibaba
cannot show something on its websites and include specific details regarding its
products and not provide the same product to its customer.
d. Taxation Laws.
Although the revenue of Alibaba is transferred to the account of the company;
however, the company is obligated to pay the taxes which are imposed on by the
Australian government since it generates profits from Australian citizens. The
company has to make sure that assess different taxes and duties which are provided
by the government and which apply to its operations to make sure that it is able to
avoid legal penalties. The corporation is obligated to make sure that it pays the

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corporate tax in the country and the rate of this tax is currently set at 30 per cent by
the government (ATO, 2018). This payment creates a mandatory obligation on the
company to make sure that it did not face legal penalties. The Goods and Services
Tax (GST) is also implemented on the organisation since it offers its services to the
organisation. This tax is paid by the company at the rate of 10 per cent on the
services which it offers to its customers (ATO, 2018).

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Treaties, Conventions and Agreements
Alibaba is a multinational corporation due to which the company is subject to the
guidelines and provisions which are implemented by countries. These provisions are
introduced under treaties, conventions and agreements, and they resulted in
imposing mandatory obligations of multinational companies since they are obligated
to comply with these guidelines (Castle, 2018). These are used as mediums by the
governments to make sure that they build new trading relations with nations that
resulted in increasing the flow of foreign capital in the market and unemployment
opportunities which is crucial for the growth of the country. The services and
products which are offered by Alibaba are also affected based on the provisions
which are implemented through these policies.
1) China Australia Free Trade Agreement (ChAFTA).
Alibaba is a Chinese corporation, and the treaties which are formed between the
company’s home country and other nations affect its operations. ChAFTA is a good
example that is a major free trade agreement formed between the two developed
nations with an objective to promote trading practices. Through these policies, the
government wanted to make sure that companies in both nations did not face
difficulties when they expand their operations in another market. This goal is
achieved by these countries by removing strict guidelines and frameworks which are
otherwise imposed on organisations when they expand their operations in these
markets by giving them relaxations in legal compliances (Dickson-Smith and
Mercurio, 2018).
Along with the implementation of these policies, the governments have also lowered
the rate of taxes and duties which are imposed on corporations that resulted in
reducing their overall profits and making international expansion an unprofitable
option for them. The benefit of this treaty is received by Alibaba, and it also affects
the products and services of the company. For example, the company is able to
bypass many of the legal compliances which adversely affect its operations by
reducing its efficiency (Dickson-Smith and Mercurio, 2018). The company also find it
easier to offer its e-commerce services to customers and contract local distributors
by removal of legal compliances which improves availability and quality of its

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services. Due to the reduction of taxes and duties, Alibaba is able to make sure that
its products and services are received at affordable prices to its customers.
2) Australia New Zealand Closer Economic Relations Trade Agreement
(ANZCERTA).
The positive trading relations between countries in which Alibaba offers its services
benefit the company by making it easier for the organisation to reach out to a large
number of customers. ANZCERTA is a good example which is a treaty formed
between Australia and New Zealand to support the economic growth of both nations
by ensuring that companies are able to easily expand their operations in both nations
(Castle, 2018). Since Alibaba operates in Australia, the company is able to rely on
this treaty to make sure that it offers its services in New Zealand as well. The
transportation channels which are used by Alibaba in Australia also assists the
company when it expands its operations its New Zealand. There is relatively less
legal compliance which is imposed on Alibaba when it conducts its operation in both
nations due to positive trading relation making it easier for the organisation to offer
high-quality services to customers.
3) ASEAN Australia New Zealand (AANZFTA).
This is another treaty that is formed between these two nations that benefit Alibaba.
The purpose of this treaty is to make sure that free trade areas are situated in both
nations which can be used by companies when they offer their products and services
to customers in both nations. The government has implemented policies for the
removal of legal compliances and taxes on companies that operates in those areas
(Okamoto, 2014). The logistics and distribution network of Alibaba relies on these
free trade areas to make sure that they efficiently deliver its products without facing
strict compliances and payment of duties or taxes. It improves the services of the
company by making it easier for its customers to reach their products as early as
possible.
4) Australia-China Double Taxation Agreement.
This is a major tax treaty that is formed between both nations with the objective to
eliminate the issue of double taxation which creates obstacles for multinational
companies such as Alibaba. Without the availability of this treaty, the revenue

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generated by Alibaba in Australia is taxed in the country of origin and its home
country as well which resulted in reducing the profitability of the enterprise (Chinatax,
2019). However, this treaty has addressed this issue by making sure that companies
are not subject to double tax which encourages them to expand their operations in
these nations (Chinatax, 2019). Alibaba did not have to pay the double tax that
affects its services since the company did not have to increase the delivery charges
which it imposed on its customers when they purchase products through its website
which resulted in increasing the customer base for the company and increase the
popularity of its services.

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References
Adrian, A. (2013) How much privacy do clouds provide? An Australian
perspective. Computer Law & Security Review, 29(1), pp.48-57.
Alibaba Group. (2019). Company Overview. [Online] Available from:
https://www.alibabagroup.com/en/about/overview [Accessed on 10/05/2019].
ATO. (2018). Company tax rates. [Online] Available from:
https://www.ato.gov.au/Rates/Company-tax/ [Accessed on 10/05/2019].
Bottomley, S. (2016) The constitutional corporation: Rethinking corporate
governance. Abingdon: Routledge.
Castle, M. (2018) Embedding regional actors in social and historical context:
Australia-New Zealand integration and Asian-Pacific regionalism. Review of
International Studies, 44(1), pp.151-173.
Chinatax. (2019). Agreement between the Government of the People’s Republic of
China and the Government of Australia. [PDF] Available from:
http://www.chinatax.gov.cn/n810341/n810770/c1152993/part/1152995.pdf
[Accessed on 10/05/2019].
Craft. (2019). Alibaba. [Online] Available from: https://craft.co/alibaba [Accessed on
10/05/2019].
Dickson-Smith, K.D. and Mercurio, B. (2018) Australia's Position on Investor-State
Dispute Settlement: Fruit of a Poisonous Tree or a Few Rotten Apples. Sydney L.
Rev., 40, p.213.
Okamoto, J. (2014) The Australia-ASEAN Dialogue. New York: Palgrave Macmillan.
Picker, L. and Chen, L.Y. (2014). Alibaba’s Banks Boost IPO Size to Record of $25
Billion. [Online] Available from: https://www.bloomberg.com/news/articles/2014-09-
22/alibaba-s-banks-said-to-increase-ipo-size-to-record-25-billion [Accessed on
10/05/2019].

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Randall, S.M., Ferrante, A.M., Boyd, J.H., Bauer, J.K. and Semmens, J.B. (2014)
Privacy-preserving record linkage on large real world datasets. Journal of biomedical
informatics, 50, pp.205-212.
Scollo, M., Bayly, M. and Wakefield, M. (2015) Availability of illicit tobacco in small
retail outlets before and after the implementation of Australian plain packaging
legislation. Tobacco control, 24(e1), pp.e45-e51.