Foxconn thinking of moving to Brazil

The maker of the iPhone, Foxconn, appears to be finding labour in China too expensive and demanding and is thinking of setting up shop in Brazil.

According to Reuters, Foxconn is thinking of spending $12 billion in Brazil, with the idea that it can flog its gadgets in one of the world’s biggest economies.

Brazilian president Dilma Rousseff is apparently looking at Foxconn’s investment plan which would expand the outfit’s manufacturing operations beyond Shenzhen.

Foxconn is finding China increasingly problematic. Labour costs are rising, which has forced the outfit to set up operations in cheaper parts of China. Authorities are also getting concerned about the increasing number of suicides at Foxconn’s plants. Journalists who investigated have been beaten up.

Moving to Brazil however is also a way of shipping goods into the country without having to pay import tariffs. Brazil has tough import taxes on products made by Apple, HP and Dell. If the gear is made locally then it would not be taxed at the same rate.

It is not the first outfit to work this idea out.  Toshiba has been doing something similar.

However Brazil is a huge market and tech companies are keen to sell in the country. The government also wants to get cheap tablet computers as a method to promote Internet access for Brazil’s emerging lower middle-class, Reuters claims.

It is interesting to see what is on the table. Brazil has highly restrictive labour laws, so we suspect an outfit like Foxconn would like to see a get out of jail free card as part of its sweeteners.