On September 20th Apple released the latest version of its flagship product, the iPhone 5s, and the newest introduction to its line-up, the less expensive iPhone 5c. Between record breaking lines outside stores in several countries and online sales, the iPhone 5s sold out in less than 24 hours. The mobile phone provider sold 9 million phones, topping the 5 million phones sold during the weekend following the release of the iPhone 5 last year.
While Brazilians can purchase Apple products through Apple’s online store just like citizens of 24 other countries, Apple has yet to open a brick and mortar store in Brazil. Its first retail stores outside the U.S. opened in the Ginza district of Tokyo, Japan in 2003. Since then, Apple has expanded its global footprint to include 13 countries including China, Hong Kong, France, Spain, and the United Kingdom.
So Why Doesn’t Apple Have a Retail Store in Brazil?
Apple has planned to open 30 to 35 new stores in 2013, with 75% of those stores located outside the U.S. However, even though Apple has targeted Brazil in its expansion plans, it has yet to open a retail store in Brazil.
According to a statement made by Apple officials, the first Apple retail store in Brazil is scheduled to open during the first week of December 2013. The store is set to be located in Village Mall, an upscale shopping mall in Rio de Janeiro.
Apparently, the opening of the new store has run into two specific roadblocks: finding employees and deciding how to deal with high import taxes. Even though Apple started hiring employees for the Rio de Janerio store in December of 2012, it is struggling with filling the 13 remaining open positions. Apple’s even looking to recruit employees from other countries to fill management positions.
Still, Apple’s biggest hurdle seems to be Brazil’s high import taxes. Not only are Brazil’s import taxes high, they are also very complex. If Apple chooses to pass along the import tax to consumers, it’ll have trouble competing with domestic mobile device producers. If Apple chooses to absorb the tax, it’ll have to live with lower profit margins. Either move may have a negative effect on its stock price.
The import tax is such a major issue for Apple that Apple is reportedly working with its assembly partner Foxconn to move a portion of iPhone and iPad production from China to Brazil. With a market value of more than US$550 billion, Apple’s struggle is just one high-profile example of the challenges faced by foreign companies seeking to expand into the Brazilian market.
