Question: As we are planning to source more products from Vietnam, we need to build up a local team that can work with 3rd party suppliers to ensure product quality and timely shipment.
The initial thinking is that we want to setup a new entity in Vietnam near the Hochiminh City area. This entity will hire up to 10 employees at startup, with expansion potential.
The company is likely be a subsidiary of our company in Hongkong, and the company will earn service fees from same. In other words, Vietnam office will be just a cost center and we won’t book sales & purchase locally.
I would like to engage a firm that can help me with setting up a new entity which should include getting a business license and fulfill the statutory requirements. As a start, I would like to get a proposal from your firm how you can help me, and what you plan to do with timing specified. I would also like to get a quotation.
Answer: Having studied your request, we are of opinion that you shall have two following options:
+ Option 1: Setting up a representative office. The representative office shall allow you to recruit and manage a small team for contacting and working with your suppliers in Vietnam. The team can also conduct market research, liaising with relevant parties for following your contracts with business partners in Vietnam. However, we would like to note that the representative office is not allowed to carry out any activities for profit making purpose. You are not to commit an investment amount into the representative office other than financing necessary expense for operating the representative office.
The inconvenient point of this option is that the representative office cannot directly carry out import/export of goods for supporting OEM activities in Vietnam.
A representative office can be licensed for operating up to 05 years (renewable).
+ Option 2: Setting up a FOC. This FOC shall allow you to conduct activities for profit making purposes. However, you shall have to commit an investment capital amount for running your business activities in Vietnam. Depending on your proposed business activities in Vietnam, an amount of investment capital shall be suggested.
A FOC can be licensed for operating up to 50 years (renewable).
In our opinion, if your company wants to source products from Vietnam and you need to control import of raw material and export of completed products, a FOC shall be good choice. Otherwise, you can consider setting up a representative office.
