Representative Offices vs Market Research Solutions
Date: Wed, 11 Jul, 2018
Is the establishment of a Representative office the best way to analyse the UAE market?
Before deciding whether to enter the UAE market or committing substantial resources into a new venture, it is essential to conduct market research and feasibility studies to analyse the market, obtain information on potential competitors and gather valuable insight into whether there is a need for the service or product you are offering.
As part of researching the market, the decision may be made to establish a Representative Office in the UAE which enables foreign companies to promote and market their products but restricts businesses in the sense that they are not allowed to earn profits. The establishment of a representative office will provide companies with an insight into how well received their product will be in the UAE; however, it is essential to understand the costs of setting up a representative office.
In the UAE, a representative office has the legal status of a “Foreign Branch” which is an entity owned 100% by a foreign company and classed as an extension of the foreign company, but it is not permitted to earn profits. As it is with the establishment of a foreign branch, there is a need to have an Emirati Local Service Agent who can be an Emirati Individual or a Limited Liability Company wholly owned by Emiratis. In addition to the local sponsor, there is also a requirement to deposit a bank guarantee of AED 50,000 into the representative office bank account which is payable to the UAE Ministry of Economy, and there is a requirement to have office space before obtaining your license.
Establishing a representative office in the UAE can be a cost-effective way of entering the UAE market, and it is a powerful marketing tool for your foreign business. However, although the outlay may be lower, there are still significant costs involved and cause business owners to look elsewhere for a more cost-efficient and practical option.
At JacksonMSV, our team have over 15 years proven experience in providing solutions to foreign companies to enable them to conduct their market research studies and promote their product with a view of determining whether their service offering will be successful. Under our “Market Research Solution”, JacksonMSV provide foreign companies with the ability to send a company representative to the UAE in order to legally conduct the market research onshore in the Emirate of Dubai, the option of utilising our premium office space at the iconic Fairmont Hotel so that all administrative tasks can be completed, the ability to invoice through JacksonMSV in addition to the completion of all necessary VAT submissions and a business service package which includes mail collection, serviced reception and a dedicated PO Box and telephone number.
The Market Research Solution that JacksonMSV offer is the most cost-effective and efficient way to analyse the UAE market and market your product before starting your UAE venture.