Lately, the United Arab Emirates has become a very important global business hub. Businessmen from all over the world are setting up businesses in the UAE as it is the gateway to the Middle East. For the companies which have been already established in different locations, UAE is a very lucrative location for business expansion as it will allow a business to enter into new markets.
For such companies, it is possible to open a subsidiary company that will allow the company to be part of the markets in the Middle East. There is a difference between branch companies and subsidiary companies. A branch company can be considered as a part of the parent company. It comprises of only an office which conducts all the business in the foreign location.
A Subsidiary Office is a type of company that can be considered as a completely different entity. The ownership and the complete control of the company are handled by the parent company. A subsidiary company has more control as the parent company has the control and ownership of the company.
Why should a Business set up a foreign Subsidiary Branch in the UAE?
There are many reasons due to which a business should consider setting up a subsidiary Branch in the United Arab Emirates. These reasons are given below
- It Provides Access to New Markets
As the subsidiary company is set up in a new jurisdiction, it has access to new markets. As this access increases, the company will have a new customer base to tap into. The company can also prepare carious products and services according to the requirements of the particular jurisdiction. This can lead to an increase in the product line and can even lead to country-specific products.
- Makes Production and Manufacturing more Cost-Effective
Many jurisdictions have better access to raw materials required, access to markets or better logistics services. It can be very profitable for a company to develop a subsidiary company in such a location. This will make the business operations more cost-effective which will, in turn, lead to more profitability.
- It helps in the expansion of the Brand Recognition
It may be possible that a particular brand is not present in a jurisdiction. People will not know about this brand in that area. By setting up a company it will be possible for a company to increase the brand recognition of the company and will also allow the government to enter into new markets and tackle new problems.
- Access better Technical Labour and avail new Skills
The labour in different countries can be skilled in different ways. By setting up a subsidiary company the management will be able to get a varied and technically skilled labour pool which they will be able to use for their production and manufacturing.
- Expand According to New Tastes of the People
When a company enters into a new market it takes into account the needs and demands of the people of the jurisdiction. This will provide the company with new ideas for products and services to work upon. This will help the company to expand into new territories and markets.
- Taking part in Local Economic Opportunities
Many times local government provides business opportunities to the companies which have been established in the jurisdiction and can take their own decisions. To take full advantage of such economic opportunities it is necessary for a company to have a subsidiary company in the jurisdiction.
These are some of the reasons due to which setting up a subsidiary company can be a very important and lucrative option for the companies.
Need for Accounting and Auditing for Subsidiary Companies
Setting up a subsidiary is a very lucrative option for a company but it is also very much necessary to avail such services which will help in the easy and error-free continuance of the business activities. This is why the company management should avail Accounting Services and Auditing services from professional and reliable sources. With proper Accounting and Auditing Services, a subsidiary company will be able to make the most of the business environment and will also be profitable.
If you are looking for such services in the United Arab Emirates then you must have a look at all the services which are provided by JAXA Chartered Accountants. JAXA is one of the most reputed Chartered Accountancy firms in the United Arab Emirates and aims to provide the best services possible to a company. For more details about the services provided by the company, feel free to Contact Us. We will be happy to assist you.