Legal analysis: the object of guarantee is the subsidiary, and the parent company has absolute control over it. The parent company knows its operating conditions very well, so accordingly, the financial risks are within the controllable range. Based on this control relationship, the guarantee of the parent company will not harm the interests of the company and shareholders. The guarantee behavior of the parent company has injected financial support and motivation into the operation and development of the subsidiary company and safeguarded the interests of all shareholders, so it is generally beneficial.
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.