Global HR Glossary

What is a Foreign Subsidiary? 

A foreign subsidiary is a company that is partially or wholly owned by another company, known as the parent company, and is based in a different country. 

Strategic Importance of Foreign Subsidiaries 

Foreign subsidiaries enable:

• Market Expansion: Access to new markets and customer bases.
• Risk Management: Limited liability protects the parent company from certain risks. 

Setting up a foreign subsidiary requires understanding and adhering to the local legal and business environments, making it a significant strategic decision for companies looking to expand internationally.