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Foxconn's $12 Billion Plan for Brazilian iPad Production in Trouble


Reuters reports that Foxconn's previously-announced $12 billion plan to begin producing iPads in Brazil appears to be faltering as Foxconn and the Brazilian government have been unable to reach an agreement.
A much-hyped $12 billion plan for Taiwanese manufacturer Foxconn to produce iPads in Brazil is "in doubt" due to stagnant negotiations over tax breaks and Brazil's own deep structural problems such as a lack of skilled labor, government sources tell Reuters.

[...]

"The talks have been very difficult, and the project for a Brazilian iPad is in doubt," one official said. "(Foxconn) is making crazy demands" for tax breaks and other special treatment, the official added.
Reports in the Brazilian media have indicated that the country's development bank is on the verge of withdrawing funding for the project, a move that would likely kill the plan as it currently stands.
One option could be for Foxconn or a Brazilian partner to simply assemble foreign-made parts to the iPad, rather than producing screens and other components locally. Other steps could also be taken to reduce the project's scale, which may simply have been too ambitious for all parties.
High import tariffs and taxes push the entry-level iPad price to approximately $900 in Brazil, nearly double the model's $499 price tag in the United States. By moving production into Brazil, Apple would be able to address the country's market of 190 million consumers at lower price points.

Related roundup: iPad Air

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Posted: 37 months ago
Dear Foxconn,

Canada is also very close to the USA.

Signed,
skilled workers.
Rating: 7 Votes
Posted: 37 months ago

Unfortunately i don't think the US workers would like the same treatment the china workers get. Im sure there is a reason they committed suicide, and i don't think its high wages and a lovely working life that did it. See Mike Daisey's show, The Agony and the Ecstasy of Steve Jobs


Just to reiterate a point that has already been made a lot of times over the past couple of years: the workers at Foxconn committed suicide at a rate significantly lower than that of the general population in China. And those suicide rates are the official Chinese ones, which if anything would probably be understated with regard to suicide in the general populace, because they certainly do not want to look bad.

(Unfortunately, we do not have numbers for China broken down by age. So it may well be that Foxconn's suicides *were* out of the ordinary, for people of that age. However, since we don't know, it seems somewhat irresponsible to assume that that is the case.)

If a company in the US had, say, 50,000 employees, and those employees committed suicide at 2/3 the rate that other people in the US commit suicide, would we hold a Spanish inquisition?

This is not to say that Foxconn is a great place to work, or that there aren't real problems. All I'm saying is, using this as evidence that there are real problems is either slightly ignorant or extremely disingenuous.
Rating: 5 Votes
Posted: 37 months ago
For those who want the ipad produced in US: Lets face it, the ipad is a hand built electronic product. It is not designed for automated assembly. Go look at the teardowns. Its one reason it is so well made, I am afraid to say. No American could handle the workplace necessary to assemble it. Unless you were willing to double the price.
Good, Fast, Cheap -- Pick two.
Rating: 4 Votes
Posted: 37 months ago



$900 for a baseline iPad? Wow that's freaking expensive


You're damn right. I am Brazillian, and I'm sick with the tax policy applied here. This week a chinese car manufacurer dropped all plans to build a factory here because our "magnific" politics raised the tax over cars. 13,000 jobs trown away! I just can't get it in my mind!
Rating: 4 Votes
Posted: 37 months ago

Dear Foxconn,

Canada is also very close to the USA.

Signed,
skilled workers.


But producing in Canada won't solve Apple's problem, which is high import taxes when importing products to Brazil. Producing in Canada would probably also triple the unit production cost because wages are way higher in Canada compared to Brazil...
Rating: 4 Votes
Posted: 37 months ago
How about the United States, we have skilled unemployed workers, plus states are giving huge tax breaks for people willing to create jobs. Just automate the plant. Look BMW makes the x3 here for export globally. We can make products in the USA competitively, Dells were all assembled in Texas until 2006, and they were competitive.

Designed in California. Made in USA.:apple:
Rating: 4 Votes
Posted: 37 months ago
I say make them in the US and smuggle them into Brazil at a profit. It's better than guns or drugs.
Rating: 3 Votes
Posted: 37 months ago

Dear Foxconn,

Canada is also very close to the USA.

Signed,
skilled workers.


I think the point is to produce for the Brazilian internal market, not the US market. And I think wages in Canada are probably higher than in the states right now anyway - stronger Canadian Dollar (and economy) not helping much there.
Rating: 3 Votes
Posted: 37 months ago

If you go into logistics, you don't want to have a transport empty - ever! so, for the round trip: Drugs north, iPad south! Just fill the Cessna and make double the money.

You know how to find out if someone adopted the model? If you go to an apple store and right in front of it, someone offers Coke in pound-sized bags! :p


Grow up and at least try to learn that Brazil does NOT produce drugs (like Colombia or Bolivia) and is NOT Mexico (which, by the way, is only suffering from that horrendous drug-dealing violence because of nonstop arms smuggling FROM the US into Mexico). We don't have "coke" to ship up north; (unfortunately) our domestic market for drugs is big enough to sniff whatever comes from Latino (hispanic) countries, thank you.

If at least you were able to control your own borders and stop those idiots from selling AK-47s like candy to any little kid out there, your Spanish-speaking neighbors wouldn't be suffering so much now.
Rating: 2 Votes
Posted: 37 months ago

what makes it expensive? Importing finished goods into Brazil have high tariffs applied?

If you don't have the workers to build from scratch, why not part-build, and then finish assembly in Brazil? Keep it simple for the skill level of the available workforce, and by supplying 'parts' you'll avoid import tariffs.

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its quite disappointing that these large growth BRIC economies seem to be able to justify almost anything and get away with it due to the desire to trade with them. eg protectionist practices like damaging import tariffs.


I think people need to understand one thing clearly: apart from the fact that they are all "fast/faster growth economies", there is absolutely NOTHING in common between on one hand Brazil, a huge Western/Christian nation with a much smaller population and, on the other hand, eastern States like China or India (Russia is kind of in the middle) - Brazil has ZERO issues with widespread, officially-sanctioned IPR infringement like in China, and practically no outsourcing/sweatshop features like in those two populous countries.

As for protectionism, it must be clear that, when it comes to WTO disputes, it was the US who lost at least THREE times against Brazil in high-profile cases due to illegal trading measures on industrialized orange juice, steel bars and ethanol.

High import tariffs are NOT illegal and can be used to foster local industries, as was and still is common for other advanced economies since the 1960s (try to import meat into Switzerland and you'll see what a high tariff is)...
Rating: 2 Votes

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