China's Huawei Plans To Build Or Buy Factory In Brazil
Chinese telecommunications equipment maker Huawei Technologies Co. is planning to build or buy a plant to build handsets and tablets in Brazil, as it expects a significant shift in sales, the chief executive of Huawei Brasil said Monday.
Huawei mostly prefers to use third-party manufacturers, such as Flextronics International Ltd. (FLEX) and Foxconn International Holdings Ltd. (2038.HK), to build its equipment in Europe and Latin America, but because of the complexities of operating in Brazil, and taxes in particular, the company is looking at owning its own facilities, Li Ke told reporters on the sidelines of the Futurecom conference.
The company hasn't ruled out the acquisition of a local manufacturer instead of starting from scratch, he said.
Huawei's first mobile handset produced in Brazil has just rolled off the line at a local Flextronics plant, and the first tablet will be made in the first half of 2012, Li Ke said.
Huawei's manufacturing partners are already producing most of the telecoms infrastructure equipment that it sells in Brazil to mobile telephone operators, to build out their networks.
Infrastructure accounts for about 75% of Huawei's total sales in Brazil, which are expected to total more than $1.8 billion this year, while the other 25% are handsets and terminals, Li Ke said.
In mid-August, Huawei said it was on track for global annual revenues of about 199 billion Chinese yuan ($31 billion).
But the company's growth in Brazil is in handsets and terminals, sales of which are expected to grow 80% this year, Li Ke said. Infrastructure products, meanwhile, will grow at about 10% year-on-year, he said.
The executive said the strong appreciation of the Brazilian real against the U.S. dollar in recent years hasn't affected the company very much, as most of its costs are fixed in reais.
"The volume of remittances to China is very small," he said.