According to Reuters, IPhone maker Foxconn is mulling a $12 billion investment in Brazil. The move is aimed at expanding Apple and other tech firms’ global market share to the world’s eighth largest economy.

The Reuters report said Brazilian President Dilma Rousseff’s administration is studying Foxconn's investment plan, the latest move by the manufacturer to expand its manufacturing operations beyond the booming southern Chinese city of Shenzhen.

A majority of Chinese major manufacturers have been forced by rising costs to set up base in cheaper parts of China. However, with a foray into Brazil, Latin America’s biggest economy, Foxconn will help tech firms sidestep hefty import tariffs on products they sell in the South American country, said Reuters.

Whereas demand for high end electronics has been on the rise from Brazilian consumers, gadgets are most times priced out of market thanks to high production costs and import tariffs. Gadgets such as Apple’s iPad retail in Brazil for double their price in the US.
 
International investors have always found Brazil’s import taxes punitive, but serving the Latin America market is better undertaken by a presence in Brazil. President Dilma Rousseff revealed the plans during her Asian tour. According to President Rousseff, Foxconn has a range of investments that vary from $300 million, $400 million to $12 billion over 5 to 6 years.

President Rousseff’s administration is having discussions with a number of tech firms in a bid to lure them into investing in the Latin American country. According to President Rousseff, Foxconn approached her administration with a proposal for a Brazilian investment.

Foxconn, a Taiwanese company that also controls Hon Hai, manufactures most of Apple's products — including the latest hit gadget, the iPad — at its Shenzhen factories. China's largest private employer made headlines last year after a string of worker suicides blamed on harsh living conditions and unrelenting pressures.

Rousseff herself has identified tablet computers as a relatively cheap way to promote Internet access for Brazil's emerging lower middle-class, which accounts for about half the 190 million population.

Brazil has one of the steepest import-tariff regimes in South America, and is one of the world's most expensive places to do business because of a heavy tax load, an overvalued currency and restrictive labor laws, said Reuters.

Besides Foxconn, other Taiwanese companies that operate factories in Brazil include Compal, the world's No. 2 contract laptop PC maker.

26th April 2011