Representative offices allow foreign companies to establish a local presence for limited purposes without engaging in commercial activity. They serve as a low-commitment way to explore markets, build relationships, or support existing customers.
Permitted Activities
Activities typically allowed include market research, promoting the parent company, liaison with customers and suppliers, and coordinating activities. Representative offices generally cannot negotiate or sign contracts, process orders, invoice customers, or generate revenue locally.
Employment Limitations
Representative offices can usually hire local staff, but only for permitted non-commercial activities. The office itself is typically not a legal employer, so employment may be through the foreign parent or via local arrangements. Staff numbers are often limited.
When to Use
Representative offices suit companies exploring new markets before committing to full presence, maintaining customer relationships without local sales, or conducting ongoing research. They provide legitimacy without the cost and complexity of a subsidiary or branch.