Many times countries which allow child labor also allow other activity which is also illegal such as low wages, intimidation, sexual assault, physical abuse, exposure to hazardous chemicals, dangerous machinery, and being forced to work overtime with little to no extra pay. The company would risk giving off the wrong impression and consequently losing many clients.
No, a company should not rely on local laws when deciding about child labor, because there are ethical issues involved, not just simply whether a behavior is legal or illegal. Child labor is a serious moral issue, and a business should not engage in it, even if other businesses do. The business should set up elsewhere, or avoid child labor.
Companies considering operations in countries that allow child labor need to be held to the same standards in the foreign country as they are in their country of origin. Relying on the laws of the host country allows companies to circumvent established regulations and perpetuate unethical child labor practices. Companies should answer to the same rules concerning labor policies, regardless of the country of operation, as part of their ethics policies and corporate responsibility.