Legal analysis: A wholly-owned subsidiary refers to a subsidiary wholly owned or controlled by a single parent company. The parent company can set up a wholly-owned subsidiary in two ways: the first is to set up a new company from scratch and build brand-new production equipment (such as factory buildings, offices and machinery and equipment). ); The second is to buy existing companies and use the company's equipment for their own use. Whether to set up an international subsidiary through acquisition or new construction depends largely on the business activities planned by the parent company. Although subsidiaries are actually controlled by the parent company, restricted and managed by the parent company in many aspects, and some of them are actually similar to the branches of the parent company, legally speaking, subsidiaries belong to independent legal persons, engage in business activities in their own names and independently bear civil liabilities.
Legal basis: Branch companies can be established in Article 14 of People's Republic of China (PRC) Company Law. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company. A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.