updated 08:46 pm EDT, Fri June 22, 2012
High taxes, low market penetration factors in departure
HTC has not only cancelled the planned launch of the One series of Android phones in Brazil, it has announced plans to pull out of the Brazilian market entirely. The company will maintain a skeleton force in the country to support current devices. HTC's marketshare, at 0.11 percent, is last in the country -- behind Nokia, Samsung, Apple, Sony, LG, Motorola, RIM, and ZTE.
In regards to the departure, HTC issued a statement: "After careful analysis of our lines of business, HTC is closing our office in Brazil. We will continue after-sales support for our products, so this should not result in a change in service for current customers. This decision does not have an impact on HTC's business outside of Brazil."
Brazil's citizens purchased nearly 9 million smartphones last year, and is on pace to becoming the fourth largest cell phone market in the world by 2016. In the past, HTC has only had a minor interest in the country, with weak advertising and retail presence as compared to its competitors.
Another factor in HTC's departure may be due to a 60 percent tax on electronics goods not manufactured in Brazil itself. To avoid this tax, several companies including LG, Sony, Samsung, and Nokia maintain manufacturing plants in Brazil. Brazil's government has also approved special tax breaks for the Foxconn plant sponsored by Apple in the country, lowering the tax on Foxconn-produced devices like the iPad and iPhone, amongst others.