Here is an interesting article from CNET on the price of iPod Nano in 26 countries. Brazil tops the list with $327.71, while the same iPod can be bought in the US for $149.
Now, let me say that this doesn't reflect reality. The cost of living in São Paulo (Brazil's biggest city) is about 4 times less than an average US city. Which means that paying $327 in Brazil is the equivalent of somebody paying $1,308 in the US. Would you pay that price? Brazilians do.
Here is another one for you: XBox 360 in Brazil costs R$ 2,999 which means US$ 1,404 in the US according to today's exchange rate. Now, apply the 4x cost of living. Would you pay $5,616 for an XBox 360? Brazilians do.
That is insane.
Here are some of the factors contributing to that:
Foremost, there is an 70% importation tax on eletronics (and other) goods. So, if it costs Microsoft $400 to produce an XBox, by the time it gets to a distributor in Brazil the cost is already $680.
Brazil has a good size market (e.g., 20+ MM Internet users), but not big enough to justify an investment in manufacturing the products in the country or creating versions only to Brazil. So Apple and Microsoft mostly ignore it and let Importers do their work. Of course, Importers need to have profit as well, so they do as they can.
The government still believes that protecting our frontiers from imported products is the best way to help develop a healthy national industry. I though we had already proved that this is a mistake in the 80s and 90s.
Now Brazil has a strong-left president, that doesn't even have a high school degree, and cannot think for himself. He loves to visit countries where their presidents (or dictators) are as ignorant and crazy as he is. How is he suppose to understand the nuances of international trade and industry development and create a policy to advance the country?
Well, China and India will take (are taking!) Brazil's place on the INTL landscape and that will be very costly to the country.
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. Brazil tops the list with $327.71, while the same iPod can be bought in the US for $149.
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November, 2007