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Nintendo Puts Business In Brazil On Hiatus

Posted by Soulskill on from the big-market-to-leave dept.

jones_supa writes: Nintendo has announced that it will end distribution of its consoles and games in Brazil. In a statement, Nintendo attributed the move to high import duties, which makes doing feasible business difficult. The company could avoid those duties with a local manufacturing operation, but has chosen not to establish one, presumably for the costs involved. In a statement e-mailed to Polygon, Nintendo of America said that the company's distributor for Latin America would no longer send products to Brazil, but it would continue to distribute Nintendo goods to other parts of South America. Nintendo will also keep monitoring the evolution of the business environment in Brazil and evaluate how to best serve Brazilian customers in the future.

11 of 111 comments (clear)

  1. Brazil has long had a very protectionist by Crashmarik · · Score: 5, Informative

    Environment for electronics and just about anything else. http://www.insidesources.com/c... . The problem is this doesn't serve them well. Trying to recreate the rest of the worlds industries internally just insures they have many second rate products, or have to pay hefty premiums for the tools they need to get things done. Really surprising after all these years they haven't tried to emulate more successful models, ala Japan, Singapore or Taiwan and encourage their industries to pursue ventures where they can have a competitive advantage.

    1. Re:Brazil has long had a very protectionist by Billly+Gates · · Score: 3, Insightful

      Kind of hard to debate to go more free when your neighbors are vastly more poor with zero taxes. Wouldn't it be easier to go Uruguay or Venezuela?

      The US too lost and still the middle class never has recovered from NAFTA. Wages have not increased in 20 years regardless of inflation! The US can argue it will benefit CEOs and lobbyists as the companies are at least owned here. Not true for Brazil so cutting taxes would only cut your revenue as nothing is based there.

      --
      http://saveie6.com/
    2. Re:Brazil has long had a very protectionist by Anonymous Coward · · Score: 3, Interesting

      There are no local industry to be protected. Brazil has almost no electronic industry, and absolutely no computer/videogame/high-tec industry.

      The whole protection excuse is meant only to justify absurd taxes, that goes directly to the pockets of politicians. While most import taxes in EUA are about 3%, the default rate for imports in Brazil are about 80%.

      And it doesn't get better if you put a local subsidiary, you still have an absurd amount of local taxes. Except if you're a friend of the government, you have no way to be competitive in the internacional market.

    3. Re:Brazil has long had a very protectionist by jonwil · · Score: 3, Insightful

      It doesn't matter if the taxes and tariffs in Brazil are set at 0%, 50%, 100% or even 1000%, it wont do a thing to encourage electronic manufacturing in the country. In fact, I suspect there is nothing that the Brazilian government could do that would get electronic manufacturers to build product there short of dropping wages and other costs low enough to make building there (instead of building in super-low-labor-cost countries like China) viable.

    4. Re:Brazil has long had a very protectionist by Crashmarik · · Score: 4, Insightful

      I was thinking of a similar experiment -- if a company refuses to sell a product in your country, then it loses all copyright / trademark / patent protection. Locals would then be free to open up shop and start making the hardware or copying the software. I'm not sure if this would work, but I'd be interested in seeing the result nonetheless.

      Ok let me get this straight.

      1. Put into place a law that lets you steal the patents of products not being sold in your country
      2. Raise Tariffs on said products to the point they can't be sold
      3. ....
      4. Hope your military is sufficient to deter retaliation from the countries you have been robbing ?

      Now admittedly a military response maybe a little much. At the very least you can certainly expect the other nations to go after your assets abroad, pursue economic retaliation, hell they could issues letters of mark and reprisal against your merchant shipping.
       

    5. Re:Brazil has long had a very protectionist by vux984 · · Score: 3, Insightful

      The problem is this doesn't serve them well. Trying to recreate the rest of the worlds industries internally just insures they have many second rate products, or have to pay hefty premiums for the tools they need to get things done. Really surprising after all these years they haven't tried to emulate more successful models, ala Japan, Singapore or Taiwan and encourage their industries to pursue ventures where they can have a competitive advantage.

      And yet, day after day, post after post, we see people here on /. advocate that US at least be able to manufacturer everything locally, to reduce dependency on foreign tech, to reduce brain-drain to foreign manufacturing, etc, etc, etc.

      Then we see a country try and do that. And we tell them its wrong...

      I realize /. is of course many people and many opinions... but I wonder how many people were reading your post nodding; while simultaneously thinking the US should be producing more locally, despite the competitive advantages of outsourcing the manufacturing (which is precisely is why we do it.)

    6. Re:Brazil has long had a very protectionist by jittles · · Score: 3, Interesting

      Wouldn't it be easier to go Uruguay or Venezuela?

      I've lived in Venezuela. It is not a poor country. The people are poor, but they have huge oil reserves, diamonds, gold and many other natural resources. They used to be the largest oil exporter to the US until Hugo Chavez started diverting that oil to Cuba for free. Venezuela also charges import duties on all products (with some exception in the state of Nueva Esparta, which is mostly duty free). They also charge an income tax that most people do their best to avoid ever paying.

      The real problem with Venezuela is corruption. When I lived there, I did not keep an ID on me at all times, even though it was required by law. I kept my passport in a safety deposit box because it was cheaper to pay the fines for not having proper ID than it was to pay the bribes to get my passport back from the National Guard when they would do one of their regular shakedowns. If you were a mere janitor for the state-run oil company (PDVSA), you were probably set for life. If you didn't have some important friends or family, you probably couldn't get a job for PDVSA.

  2. Gray-market Nintendo smuggling by Guppy · · Score: 3, Insightful

    In a statement e-mailed to Polygon, Nintendo of America said that the company's distributor for Latin America would no longer send products to Brazil, but it would continue to distribute Nintendo goods to other parts of South America.

    So in other words, Nintendo's legitimate subsidiary cannot compete with gray-market smugglers who evade the tariff to bring in consoles and games from the neighboring countries.

    So they're just going to pull out and let the smugglers be their de-facto distribution channel.

  3. Re:customers should get pissed at their government by RogueyWon · · Score: 4, Interesting

    Agreed it's moronic. But this is Nintendo we're talking about. Region locking isn't about the money; it's about a combination of their messed-up corporate structure (the various international companies are only loosely integrated) and nasty control-freakery. They have a long history of liking to say "title X does not fit with our irrationally conceived stereotype of region Y, so we won't release it there, or will cut it to hell first". Region locking is one of the tools they use for that.

    The whole "region locking for differential pricing" thing at least had a simple motive behind it ("more money"), but it doesn't work all that well (markets where you need to sell cheap tend to have too much piracy to be worth it anyway). Most people who region lock for that reason are moving away from it now (Sony and MS have ditched it entirely).

  4. I can understand by mseeger · · Score: 3, Informative

    I am working for a small (65 employees) company in Europe that serves customers with locations around the world. Of those locations that we have to deal with, Brazil is the worst nightmare.

    Money (taxes, customs duties) is a solvable problem: it just costs the customer more. But getting definitive answers about the process, reliable delivery schedules or any kind of planning dependability is extremely hard. Due to the bureaucratic overhead, nobody there wants to deal with it.

    I would rather skip the business than ruining our reputation through uncontrollable external influence.

    1. Re: I can understand by Anonymous Coward · · Score: 3, Informative

      I live in Brazil for work on a longterm assignment.

      It is a disorganized shit hole. The beauracracy is just as you described, a giant shit show. Nobody knows what the rules are, at the same time they seem to be constantly changed, and nothing can be completed quickly/effectively/efficienty.

      My process for obtaining a badge in the USA for plant access involved an email, an appointment, and me showing up for that appointment. Two days and I have a functional badge.

      For Brazil? A month, a myriad of paperwork, a physical examination by a doctor.

      It's one of the most dysfunctional places in the world, and the cost of all goods besides labor is absolutely outrageous. Brwzilians are literally paying two to three times the American USD Msrp for almost all goods.

      700 BRL for your drivers license, 3000 BRL to insure your car, 40,000 BRL for a base Ford Fiesta, 4,000 BRL for a play station 4. All on a salary of 60,000 BRL if you're fortunate enough to be a "middle class" engineer. Minimum wage is about 700 BRL.

      And what do brazilians get for all of the taxes they pay? ridiculously high crime rates, shit infrastructure, shit schooling, shit hospitals, and a corrupt and worthless shitty government (at all levels, local, state and federal).