Newspaper article The Christian Science Monitor

Foreign Firms Flood Market, Making Local Industry Reel BRAZIL OPENS UP COMPUTER MARKET

Newspaper article The Christian Science Monitor

Foreign Firms Flood Market, Making Local Industry Reel BRAZIL OPENS UP COMPUTER MARKET

Article excerpt

BRAZIL is emerging as one of Latin America's largest markets for multinational personal computer firms.

After years of protectionist legislation aimed at developing an indigenous computer industry, Brazil has lowered tariffs and opened its markets. The multinationals have flooded in, and consumer prices have dropped. As a result, critics say, industry employment has declined 55 percent and Brazilian-controlled research and development has been virtually eliminated.

Brazil has an estimated 1.5 million to 2.5 million PCs, says Roberto Pinto, business-development manager at International Business Machines Brasil Ltd. Because of the large amount of contraband smuggled in every year to avoid taxes, no one is sure of the exact number. "Annual PC sales will reach about 400,000" this year, Mr. Pinto says, with IBM controlling about 10 percent of the market.

Beginning in 1984, the Brazilian government sought to develop a local computer industry that would compete with the United States and Asia. But tariffs reached 70 percent on some products, and combined with other taxes, PCs cost four to five times more than US computers. These policies shut multinationals out of the market unless they set up Brazilian partnerships.

In the early '90s, Brazil boasted more than 60 computer-hardware firms. Then, in October 1992, under pressure from the US, Brazil instituted free-market reforms that lowered tariffs to 35 percent. (Within the next few years, tariffs will likely fall to 20 percent.) The result was shocking for the local computer industry. Most of the 60 hardware companies folded. Today, six remain, and all but one have joint agreements with multinational firms.

"The attempts to develop an independent computer industry failed for sure," says Ilan Goldman, president of ASSESPRO, the Rio de Janeiro software trade association. "The hardware companies never developed new technology." So when prices came down, consumers went for brand names such as IBM, Compaq, and Sharp.

Brazilian software faced a similar fate. Today, Mr. Goldman estimates that foreign firms such as Microsoft sell 90 percent of the new programs bought in this country.

Consumers, meanwhile, benefited from the reforms. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.