Why set up a wholly-owned subsidiary?

To dispose of a newly established company, if the subsidiary needs to be approved by the board of directors and shareholders' meeting of the parent company, if it is a Sun company, it only needs the approval of the board of directors and shareholders' meeting of the subsidiary, that is, the listed company can make its own decisions without disclosing information.

Related instructions

A wholly-owned subsidiary refers to a company that has only one corporate shareholders and is wholly owned or controlled by the only 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.

For example, when a parent company sets up a subsidiary to produce the latest high-tech products, it usually needs to build a new factory, because it is difficult to reach this cutting-edge technical level by relying on local conditions.

In other words, we can easily find many companies that make small things like bottles and cans in most target markets, but few companies produce the most advanced computer chips. The main disadvantage of re-establishing subsidiaries is that it takes too long, because it takes a lot of time to build new equipment, hire and train workers and develop products.