What are the differences between an exclusive distributorship and a branch?
Entrepreneur “T”
“T” has been working in Korea for several years as an English teacher.
During this time, “T” conceived a product that is not currently supplied
in the Korean market and acquired an exclusive distributorship from
a foreign company that manufactures and sells the product.
Subsequently, she sought to obtain a visa to establish a branch in
Korea with the said exclusive distributorship and operate the business
as a branch manager, but her application for
the branch office was rejected.
Decision to establish a branch is made by
the company headquarters
It is the board of directors who decide whether to establish or close a branch
and appoint the representative of the branch.
An individual who wishes to serve as the head of a branch
cannot simply establish a branch and
obtain approval to serve as the head of the branch.
Instead, the board of directors must decide whether to establish a branch and
appoint the representative of the branch.
To obtain a visa as the representative of a branch, at least one year of work experience at a place belonging to the relevant foreign company is required.
The visa required to work at the Korean branch of a foreign company is
granted to foreigners who are dispatched as indispensable professional
specialists to work at the foreign company’s affiliate, subsidiary, branch,
or office, and possess at least one year of work experience at
the headquarters, branch or other places of business belonging to
the said foreign company.
A branch is part of the company headquarters
A foreign company that does not have the minimum investment amount may consider opening a branch to operate the business.
However, as a branch comprises part of the company headquarters,
it must ensure the organic movement of funds,
and the funds are comprised of money required by the branch to
conduct its operation and management activities.
In addition, the branch’s profits are vested in the profits of the headquarters.