The Total solution for NCERT class 6-12
Basis of difference
Contract manufacturing
Wholly owned production subsidiary
Meaning
A firm hires a local manufacturer in another country on a contractual basis to produce goods as per its requirements.
The parent company buys equity in a firm in another country and acquires full control over it.
Control
The firm has limited control over the local manufacturer.
The parent company has full control over its operations in another country through the subsidiary.
Investment
Negligible investment is made abroad.
The parent company buys up the entire equity of the firm abroad and makes this firm its subsidiary.