Benefits of setting up a Representative Office with Cekindo
A Representative Office in Vietnam - What you need to know
A Representative Office (RO) in Vietnam means an established presence in the local market without a large capital investment. Starting a Representative Office, or a Representative Company, in Vietnam is one of the legal ways for foreign investors to do business in Vietnam.
The primary purpose of a Representative Office is to test the water and gain market presence before setting up a profit-generating business.
In accordance with the Commercial Law of Vietnam, Representative Offices are allowed to undertake business activities that do not generate profits or earnings. As such, activities such as market research, promotion of investment activities, representing the parent company in events, and being the liaison office to the parent company overseas are permitted.
Benefits of a Representative Office in Vietnam
Recruiting a Local Team
Under a Representative Office legal structure, you are allowed to fulfill your local recruitment needs. You are legally allowed to recruit employees (including foreign employees) for contracts handling, sales promotion, market research and search for local partners.
Research & Development
The main purpose of setting up a Representative Office, versus other entity types is simply doing market research to make sure the current market fits your business portfolio. Furthermore, you can seize this opportunity to purchase goods and services that you may need for your business’ operational needs.
TRC & Work Permit Sponsorship
Even though it’s not permitted to generate revenues, a Representative Office is entitled to sponsor work permits and temporary residence cards (TRC) for any foreign employees including the company representatives in the country.
Low Incorporation Cost
Compared to other business entities like Limited Liability Company (LLC) and Joint Stock Company (JSC), a Representative Office is the most affordable. This is due to the fact that it is not able to generate profits or be listed on the stock exchange. Once your market research has been complete and you decide to launch your business commercially you may switch to an LLC or JSC in order to generate profits.
What to Know Before Setting Up a Representative Office
In order to establish a Representative Office, foreign investors must satisfy the following requirements: