Vietnam’s economy is currently experiencing a period of expansion, which is attracting a considerable influx of international investors. Notably, Ho Chi Minh City alone boasts over 10,000 foreign representative offices, with comparable numbers in Ha Noi, Dong Nai, and Binh Duong. Opening a representative office in Vietnam is one of the authorized means for foreign investors to conduct business in the country. Under Vietnamese law, foreign representative offices established in Vietnam to conduct authorized market research and promotional activities are considered dependent units.
To aid international investors in comprehending the process better, W Business Center is able to provide all relevant information about opening a representative office in Vietnam.
A representative office is a type of business entity that allows foreign companies to have a presence in Vietnam without fully incorporating or registering as a branch or subsidiary. Some potential benefits of establishing a representative office in Vietnam include:
- Market research: A representative office can conduct market research and gather information about the Vietnamese market, which can help the parent company make informed decisions about future investments in the country.
- Business development: A representative office can help the parent company establish and maintain relationships with potential clients, suppliers, and partners in Vietnam.
- Cost savings: Compared to incorporating or registering a branch or subsidiary in Vietnam, setting up a representative office can be a cost-effective way for foreign companies to establish a presence in the country.
- Brand recognition: Having a representative office in Vietnam can help the parent company establish its brand and increase its visibility in the local market.
While establishing a representative office in Vietnam has its benefits, there are also some challenges that foreign companies should be aware of, including:
- Difficulty in obtaining work permits: In order to work in Vietnam, foreign employees of a representative office must obtain work permits. However, the process of obtaining work permits can be time-consuming and complex, and there are strict requirements that must be met.
- Limited duration of operations: The operation of a representative office in Vietnam is limited to a maximum of five years, after which it must be either renewed or converted into a branch or subsidiary.
- Limited liability: A representative office does not have its legal personality and is not able to enter into contracts or engage in legal disputes in its name. Instead, any legal liabilities arising from the activities of the representative office will be borne by the parent company.
- Complicated bank account opening procedures: A representative office may face challenges in opening bank accounts in Vietnam due to the strict regulations and requirements of the local banking system.