Companies entering a new market usually choose a structure based on cost, then discover that the decision mostly determined their exposure. Three factors matter more than the setup fee.
Liability
A subsidiary is a separate legal person. Its obligations are, as a general rule, its own, and the parent’s exposure is limited to what it has invested — subject to any guarantees it gives, which in practice is where the limitation often disappears.
A branch is not separate. It is the foreign company operating locally, and liabilities incurred are the parent’s directly.
An agency or distribution arrangement keeps you furthest from local liability, at the cost of controlling far less. Note that agents can acquire protections of their own, including compensation on termination, so read the arrangement as a long-term commitment rather than a trial.
Tax treatment
All three create tax consequences; they differ in shape. A subsidiary is taxed locally as a resident company, with its own filings, and distributions to the parent raise withholding and treaty questions.
A branch is generally taxed on the profits attributable to it, which requires a defensible allocation between head office and branch — an area that attracts scrutiny precisely because the allocation is judgemental.
Even a pure agency model can create a taxable presence if the agent habitually concludes contracts on your behalf. This surprises people, and it is worth checking before the model is set rather than after.
How fast can you leave
The factor least often considered and most often regretted. Closing a subsidiary is a formal liquidation: a process with a timetable, requiring tax clearance and settled obligations, and rarely quick. Deregistering a branch is usually simpler. Ending an agency is a matter of contract and notice — assuming the contract was drafted with that in mind.
If the market is a genuine test rather than a committed expansion, structure the exit before you structure the entry. It is a different conversation, and a much cheaper one to have first.