The difference between Branch and Representativ Office(R.O)
We would like to mention about the difference between Branch and Representativ Office(R.O) in Vietnam as follows:
1.Setting up Branch in Vietnam
Basically, a Branch of foreign invested company has the same nature of a foreign invested company. In addition, to be established a Branch in Vietnam, there is a legal requirement that the parent of company in abroad needs to be operated at least 5 years since establishment.
However, in actual practice, Vietnam government does not favor of setting up Branch for foreign investor. The investors to have branch license in VN mostly comes from international Banks. Therefore, if you want to set up branch in Vietnam, we will consult you to newly set up a 100% foreign owned company and we will not recommend you to set up branch in Vietnam due to actual legal barrier.
2.Setting up Representative Office in Vietnam
Representative Office is a dependent entity of foreign company. Representative Office is not permitted to offer service(s) for PROFIT MAKING PURPOSE on its behalf. This is the most important thing between business entities and Representative Office. Operation fields of R.Os include:
1. Operating as liaison office
2. Promoting cooperation projects of foreign businesses in Vietnam
3. Researching market to push up chances to purchase commodities, supply and consume commercial services of foreign businesses in Vietnam
4. Supervising implementation of foreign business’s contract signed with Vietnamese partners or related to the Vietnamese market.
5. Carrying out other activities as allowed by the law of Vietnam
In short, A representative office can not directly enter into contracts in order to purchase and sale of goods.