2. A wholly-owned subsidiary refers to a subsidiary wholly owned or controlled by a single parent company.
3. 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, machinery and equipment, etc.). ); The second is to buy existing companies and use the company's equipment for their own use.
Legal basis: Article 7 of the Law of People's Republic of China (PRC) on State-owned Assets of State-owned Enterprises, the State Council and local people's governments shall perform the responsibilities of investors in accordance with the principles of separating government from enterprises, separating the functions of social public management from those of investors of state-owned assets, and not interfering with the independent operation of enterprises according to law.