The parent company and the subsidiary company are two relatively independent economic entities, both of which are independent legal persons, which are different from the parent company and the branch company, and the branch company is not an independent legal person. The parent company is an economic entity that has control over the subsidiary, sometimes it is the shareholder who contributes the most to the subsidiary, and sometimes it may be an economic entity that indirectly controls or has a great influence on the subsidiary, but it does not mean that the subsidiary cannot engage in business that is competitive with the parent company.
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.