1. For the parent company:

(1) The registered subsidiary can conduct independent and complete accounting, and the loss will not offset the profit of the parent company;

(2) The establishment of subsidiaries by an enterprise group can greatly develop the business areas that need to be developed in the long-term strategy of the group company, and make the whole group stronger and bigger in these areas, thus enhancing the core competitiveness of the group;

(3) By establishing the independent legal person status of the subsidiary, the operating risks of the subsidiary can be effectively limited to a certain range, and the group company only bears the risks within the scope of capital contribution, and will not cause greater losses due to the company's operating mistakes;

(4) Intangible assets such as goodwill and brand formed by subsidiaries through their own operations can enhance the overall image of enterprise groups.

2. For subsidiaries:

(1) The subsidiary only bears limited liability;

(2) economic independence, property independence from the parent company, and reporting enterprise results to the parent company is limited to production and business activities;

(3) The economic status and legal status are independent, and the subsidiary will not be directly affected by the cancellation or dissolution of the parent company due to legal, economic or investor investment strategies;

(4) The management is independent, and the influence of the parent company on the subsidiary company is limited to the influence of the major shareholder on the company;

(5) The subsidiary is an independent legal person and the income tax is levied independently. You can enjoy various preferential policies such as tax exemption period and preferential policies at the place of registration;

(6) When the applicable tax rate in the host country is lower than that in the country of residence, the accumulated profits of subsidiaries can benefit from deferred tax payment.

Second, the disadvantages of establishing a subsidiary are mainly manifested in:

1. Setting up an independent accounting subsidiary in the field has many procedures, complicated establishment procedures and high costs;

2. The establishment of a subsidiary shall conform to the conditions and procedures stipulated in the Company Law and the Regulations. Only companies authorized by the state can invest to set up wholly-owned subsidiaries, and other companies can only set up holding subsidiaries in the form of limited liability companies or joint stock limited companies;

3. The company's initial establishment of a subsidiary is risky;

4. Subsidiaries are fully obligated to pay taxes, and they need to pay income tax independently, and the tax level they undertake is relatively high.