Why set up a wholly-owned subsidiary?

Because the establishment of subsidiaries can bring a series of convenient conditions for the parent company, such as policy, finance, company development strategy, capital operation and so on. Subsidiaries can be established according to different products, regions and categories to give full play to their respective expertise in various fields, and each subsidiary will occupy more market share in a market segment.

Advantages of entering the market as a wholly-owned subsidiary:

Managers can completely control the daily business activities of subsidiaries in the target market and ensure that valuable technologies, processes and other intangible assets remain in the subsidiaries. This way of complete control can also reduce the opportunities for other competitors to gain the competitive advantage of the company, especially when the company takes technology as its competitive advantage, which is particularly important.

In addition, the manager can maintain complete control over the output and price of the subsidiary. Different from authorization and franchising, all profits created by subsidiaries must also be handed over to the parent company.