The advantages of greenfield investments include increased investor control relative to investing in an existing local business, as well as the opportunity to form marketing partnerships and avoid 澳洲幸运5官方开奖结果体彩网:intermediary costs.

Greenfield projects are just one way to make 澳洲幸运5官方开奖结果体彩网:foreign direct investments (FDI) and are often used to expand into 澳洲幸运5官方开奖结果体彩网:emerging markets. They typically involve a parent firm establishing a subsidiary in the foreign country. Coca-Cola and Starbucks are examples of multinational companies that have made numerous greenfield investments worldwide.

When Greenfield Investments Matter

Greenfield investment is an alternative to foreign 澳洲幸运5官方开奖结果体彩网:portfolio investment, where an individual or company merely buys the stocks or bonds of an existing company. It is also an alternative to 澳洲幸运5官方开奖结果体彩网:brownfield investing, in which an investor buys an 𒊎existing business or production facility.

Businesses undertake greenfield projects when there are no 澳洲幸运5官方开奖结果体彩网:acquisition opportunities in the target market, or when market research show𒉰s that there is little local competition in a particular line of business.

A Means of Greater Control

A greenfield enterprise provides the investor with control over the business in several ways that he probably wouldn't have if simply investing in an existing local company. One is in establishing an overall strategy by, say, determining what sort of product or services it will sell, and then setting rates of production and the pace of expansion in the target market.

For example, the investor can decide whether it wants to begin operations on a small scale and gradually increase its presence or prepare for a large-scale roll-out of its products. It wouldn't usually have such freedom of action if it were to invest in an existing local business.

Greenfield investments enable easier and more effective adaptation to the foreign market. The investor can adapt both products and pricing to local conditions and has greater control over assuring product quality. Having complete ownership of a 澳洲幸运5官方开奖结果体彩网:subsidiary allows the investor to extend offers to custom꧟ers or potential customers, such as discounts, rebates or warranties, as market circumstances dictate.

Other Benefits

An on-site presence ca🌄n also facilitate the tailoring of advertising and marketing efforts to the local market environment, and the formation of partnerships with native businesses to increase market penetration.

It also allows the investor to avoid almost entirely the cost of using intermediaries such as lenders or other investors. Depending on the country's economic policies, companies can also profit from government tax incentives aimed at attracting foreign investment.

The Downside

Greenfield investments are one of the riskier forms of FDI. Some countries ban FDI altogether in certain politically sensitive industries.

But even where it's allowed, there can be high 澳洲幸运5官方开奖结果体彩网:barriers to entry, such as "local-content requirements" that require foreign firms to use domestically manufactured components or domestically supplied services in order to do business.

Greenfield projects usually⭕ come with high fixed c൩osts, because they often involve building facilities from the ground up (hence the term).

They are also more vulnerable to 澳洲幸运5官方开奖结果体彩网:political risk because it's harder to divest from a who🥃lly owned production facility, for instance, than it is to sell a passive por🅺tfolio investment in a local business.