According to a report recently published by Reuters, Foxconn's plans to develop a huge iPad manufacturing facility in Brazil are coming up against some serious challenges.
Analysts from all over the world have pointed out that Brazil's poor infrastructure and shallow labour pool could be the main shortcomings to overcome. In addition, high taxes and the country's tight customs regulations seem to be hindering the project.
Earlier this year, Brazil's government announced proudly that Foxconn, the world's largest electronic component manufacturer, would invest $12 billion in local manufacturing facilities in order to produce iPads. For Apple this would mean easy access to an under-served market, which includes not only Brazil but also Argentina, Paraguay and Uruguay.
Currently Apple enjoys huge popularity and more fans would become purchasers if it were not for the high prices, caused by high import taxes. However, Foxconn is involved in endless negotiations for priority custom access, more tax breaks and subsidised loans from the state development bank, but lately Brazilian officials seem reluctant to pay the price demanded by Foxconn.
The Reuters' analysts conclude that the deal is far from being closed. The "Brazil cost" raises doubts as to whether Apple will be able to make the iPad cheaply enough for the Brazilian market and use it as a major base to export to the United States and Latin America.