SEPT. 28, 2011 • Microsoft announced that its production partner Flextronics Intl. Ltd. is now producing Xbox 360s in Manaus, regional capital of Brazil’s Amazonas state. The production facility can produce up to 17,000 of the consoles a week. Sales of these Brazilian-made Xbox 360s are expected to commence in Brazil during October. Such local production is expected to reduce the cost to consumers in the country by 40%.
Impact: This is actually quite the brilliant move by Microsoft. If tariffs and duties are problem, circumvent them by producing in-country. The last time we checked, Brazil charged a 60% duty on the declared value of the imported item, plus an 18% tax. Getting rid of that 60% import duty should make the Xbox 360 very attractive compared to the PS3, that went on sale officially in the country last August for 1,999 Reais ($1,130).