Our company is U.S. based that holds a patent on the technology that offers affordable computerized sewing machines so that the consumers can feel an ease in stitching, designing and even in embroidery, and they become able to make different designs at home easily. Further, our company has decided to export the raw material used in manufacturing of sewing machines to Hungry, and license the patent rights to the factory that deal in manufacturing of sewing machines. Once, manufactured, we import the sewing machine back into the United States so that the domestic consumers can also be benefited from their use. The method of transportation is air in order to ensure secure delivery of the product without any damage. Furthermore, for the staffing of the employees at the manufacturing plant overseas, host country national strategy is adopted, where the people that are born in the country where the business is operating are employed.
Moreover, the economic, political, and the legal factors of Hungary are very supportive and provide an opportunity for conducting the business successfully. The licensing arrangements and procedures are streamlined, and the business environment is further regulated by the, rule of law, freedom of trade, freedom of business, freedom of the investment and property rights. But, high tariff rates are the barriers to free trade with the country, further the import restrictions, quotas, restrictions in accessing certain markets of products and services, restrictive standards and regulations are some of the non-tariff barriers that present problem in trade with the country, and also increase the cost of the trade.
Analysis of International Business Risks and Benefits
Since, the company has patent for providing the technology of computerized sewing machines so Unifrom Commercial Code i.e., UCC applied. According to UCC §2312, software license agreement has exclusion of the implied warranties, and have no provisions of the infringement indemnities (Carrington and Jones). So, the use of the UCC in the software license arrangements helps the parties to solve the problems easily as it provides them a solid framework for effectual functioning. The United States, however, put restriction on the export of the encryption technology, and these restrictions are also applicable to the companies that are conducting business overseas (Saper).
Furthermore, in the United States certain employment standards are set as the social norms under which the contractors and the employees are allowed to work considering the minimum conditions that are socially acceptable. Further, in the United States, United States, the Consumer Product Safety Commission is developed in order to establish consumer safety standards. The commission is U.S. Federal Government’s independent agency. Further, 15 U.S. Code § 2056 defines Consumer product safety standards, according to which the provision of such technology is restricted that causes injury to the individual.
Moreover, the Convention on Contracts for the International Sale of Goods is designed that is applicable to the transactions, which satisfy the international criteria. In this regard it is advised to consider the concept of the good faith and attempts should be made for the mitigation of the risks associated with the use of technology. Additionally, in the United States, WIPO i.e., the World Intellectual Property Organization is established for the protection of the intellectual property. This WIPO provides protection from the unfair competition in the domestic as well as in international market.
In Hungary, with regard to the intellectual property, there are separate legislation on the patents for the trademarks, designs, inventions and the indications on the basis of geography for the protection of the copyright. Further, Hungary enforces the directives of the community. The intellectual properties of the country are of a technical nature and not protected by the copyrights, they are under the protection of the properties related to the industry. Further, there is civil code that helps in the protection of the technical, economic and the organizational knowledge as well as experience having material value. The regulatory process of Hungary for ensuring health and safety, is, however, transparent. The environment, labor, tax, health and safety laws are consistent with the European Union regulations.
Hungary is a member of World Trade Organization, i.e., WTO that allows the ease in the imports and exports of the country. The WTO also assists the country in changing its existing schedule of the goods and services, whenever there is foreign direct investment from the other country. Furthermore, Hungary has also pursued trade opportunities with the Central European Free Trade Agreement, i.e., CEFTA and European Free Trade Association i.e., EFTA, which has made it easier for us to make an investment in the country and to trade with the country.
Furthermore, Hungary is economically sound, Great economic activities can be found in the country. Business are doing a great job and are achieving desirable outcomes, the banking sector of the country is also performing well. Two-third of the banks are foreign owned, the rest is privatized. The foreign banks are enjoying a competitive edge over the Hungarian banks to provide consumer services (Bacskai). So, this is also presenting a positive sign for our company to start business in Hungary. The retail sector of Hungary is mainly a cash based economy (Papp). The economy is very also very supportive of the portfolio investment.
Moreover, the political sector of Hungary is also very stable, despite the regular protests, the political violence is not the characteristic of the Hungary’s political landscape. No violence is, however, directed to the foreign owned organizations (Zimmermann), which is also very encouraging for us to start the business over there. Furthermore, labor is also easily available in Hungary, most of the students of Hungary are attending the business schools of the United States as well as the institutions that are affiliated with the European countries, and are aquiring different skills. That is why we have adopted host country national strategy so that people can find employment in their country, and also our country gets benefits from their innovative skills.
Since, the Patent protection law of Hungary deals with the use, import of the patented product, and offering for the sale, and considers the person involves in the selling or offering of the patented product will be accountable if it that individual is proven to be familiar with the fact that the means can be used for the purpose of infringement, so we have to be very careful in the provision of the technology that it will not violate the rules and regulations of Hungary, and should not cause any demage to the consumers and the people dealing with this technology.
In a nutshell, Hungary is a suitable country for starting a business. The political, economic and the trade aspects of the country are very supportive of the foreign companies, and provide opportunities and ease for the conduction of business. Collaboration of the country with EFTA and CEFTA has further made trade easier with the country. The WTO is regulating the trade of the country with different countries.
Sapper, Nathan. "International Cryptography Regulation and the Global Information Economy." Northwestern Journal of Technology and Intellectual Property 11: 673-688. Print.
Carrington, Paul D. Law and class in America: trends since the Cold War. New York: New York University Press, 2006. Print.
Zimmermann, Ekkart. Political violence, crises and revolutions theories and research. Abingdon, Oxon: Routledge, 2011. Print.
Bacskai, Tamas. "The Reorganization of Banking System in Hungary." Eastern European Economics 28: 79-92. Print.
Papp, Marton. "Social Economy, as a Special Section of the Informal Economy in the Northern Great Plains Region of Hungary." Acta Universitatis Sapientiae, Social Analysis1: 47-65. Print.