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International expansion has increasingly become an important phenomenon in the world economy. This research examined customer and supplier wealth effect when international Greenfield investment is announced. There were two powers in this research. One was productive efficiency and the other was market power. Then, industry concentration, firm size and other control variables were used to testify supplier industry and customer industry in order to determine which hypothesis was valid. The sample data was obtained from the world wide M&A Section of the Securities Data Company (SDC) in 261 publicly-traded firms which have announced international Greenfield investment and the sample period is from 1989 to 2003. This study categorized suppliers into main suppliers and dependent suppliers, and the same to customer industry. This study measured the cumulative abnormal return of suppliers and customers and used the cumulative abnormal return to be dependent variable for the regression model. In term of suppliers, this study found that market power is stronger than productive efficiency. Also, there was a negative effect to suppliers. In term customers, customers had benefit effect from larger announcing firms. The study also found that dependent suppliers and dependent customers give a significant result which is more consistent with the hypothesis than those of main customers and main suppliers.

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