By Laura Madden and Esmee Verbeek, Contributing Reporters
RIO DE JANEIRO, BRAZIL – Although the Chinese electronics company, Foxconn began making iPhones in Brazil last year at its new factory in Jundiaí (São Paulo), prices for the ´Made in Brazil´ phones remain high. The factory was originally built to produce iPads, but production of the tablet could not start because according to Evandro Oliveira Santos, director of United Steelworkers of Jundiaí, the manufacturer was still waiting on tax incentives from the so-called Lei do Bem (Goods Law).
Santos told O Globo that it was during this waiting period that the company began manufacturing the iPhone which is less complex than the tablet. According to the unionist, Foxconn is now installing more equipment to manufacture the “Made in Brazil” iPad.
Consumers in Brazil expected a drop in the device’s price, thinking the IPI, Brazil’s tax on imported goods, would be cut. But the costs remain the same.
“It’s nice that it was produced in Brazil, but I think it’s bad to have paid an absurd price, the price of an imported device, for a cell phone manufactured a few miles from my home state,” seventeen-year-old Gabriell Huver from Grande Vitória said.
By way of an comparison, a contract-free 8GB iPhone 4, made in Brazil which is older than the latest 4S model currently on offer, runs in the R$1,800 range in Brazil, or roughly US$1,040. The same phone costs US$549 on Apple’s U.S. site, and US$675 on the UK site.
Foxconn has not commented on the price issue, saying it will not speak about products it makes for its client, Apple, who has also kept quiet on the subject.
The Brazilian government has no intentions of interfering in the pricing of iPhones made in Brazil, according to Virgílio Almeida, the secretary of information technology policy for the Ministry of Science and Technology.
“[Foxconn] has recently begun to produce [in Brazil] and probably still is not a hundred percent benefiting from it,” said Almeida. “As for increasing production, it will be better off to reduce the price.”
“We expect that with the scale of production and market competition, prices fall. This should lead to lower prices,” he added. The secretary clarified that, through the so-called Information Technology Law, “the government has no influence on pricing.”
The Brazilian government exempted Foxconn from contributing to Social Security Financing, among other fiscal incentives the company received when it was authorized to open its Jundiaí factory.
Though the future of the price of the iPhone in Brazil remains uncertain, another Foxconn manufacturer is yet on the lease. On an initiative of the EBX Group, owned by Brazilian business tycoon Eike Batista, there are ongoing negotiations about a new Foxconn manufacture, this time in Minas Gerais.