The Apple iPhone-maker Foxconn is reportedly mulling a major move to Brazil in order to better help its customers like Apple produce things like the iPad. This would involve invest more than $12 billion in Brazil.
Reports say that Brazil is investigating the Foxconn investment plans and the deal would likely be a boon for the local economy while also helping Foxconn by letting its customers avoid tariffs and some bad press.
As you may know, Foxconn is based out of China and many companies (not just Apple) use it because of its vertically-integrated corporate structure and its low-cost products due to relatively-cheap labor. Those labor costs are rising but it’s still low enough to enable companies to sell high-end products at a reasonable rate.
Just as important as the tariffs is that a Foxconn in Brazil may lead to fewer awful headlines. Foxconn was in the news a lot last year due to allegations of abuse and worker suicide and, more often than not, Apple’s name would always be mentioned within these stories. It hasn’t seemed to impact sales of the iPhone or iPad but it’s definitely something Apple and others would like to go away, if possible.
Of course, the bigger issue at hand is the type of wages that are paid in all of the creation of consumer electronics. Part of the reason smartphones are becoming widespread in the United States is because of the relatively low entry price and that’s only possible right now with low wages abroad. People are going to have to start paying more for things in order to fairly compensate all those in the chain but it’s always tough to ask people to pay more, particularly with this economic environment.
[Via Reuters]