The Cost Of Doing Business In Nintendo

Nintendo is a fairly well-recognized company all across the globe, with many characters and franchises that people have come to know and love. At the very least, most people know of their mascot character, Mario. Despite their characters seemingly undying popularity and their companies great financial status however, it would seem that there was one place where Nintendo simply could not seem to make a decent profit, and ultimately had to cease doing business in that area. The location in question is the country of Brazil and a few of the reasons why would be: high tariffs, cheaper competition, diminished demand for their products, and the fact that a rather sizable portion of Brazil’s population lives in poverty.

The first major reason, and

The import duty tax runs on the basis of the insurance of an item, the freight expense of an item, and the overall cost of an item ("Brazil - Import," 2017). It is federally mandated by the Brazilian government and can range anywhere from 10 to 35 percent of the items initial cost, depending on certain conditions ("Brazil - Import," 2017). The industrialized product tax is a tax leveled at most if not all manufactured goods, regardless of whether it is an imported good or it is a domestic good ("Brazil - Import," 2017). The industrialized product tax is generally a bit more lax that the import duty tax, as it can cost anywhere from zero to 15 percent when it comes to imports ("Brazil - Import," 2017), but it is not entirely ideal. For starters the industrialized product tax is based off of how much the Brazilian government thinks a product is needed in the country ("Brazil - Import," 2017), so for something like medicine and helpful machinery the cost would be low. For

That company is Sega, whose Master System and Genesis/ Mega Drive consoles still sell very well despite being well over twenty to thirty years old (Smith, 2015) (Nunez, 2016) and is one of the many factors that helps to diminish demand for Nintendo systems. During the 1980’s when the NES was dominating the US and the Master System was struggling in most areas around the world except for the UK, Sega approached a fairly large Brazilian company called Tectoy and struck up a licensing agreement for them to distribute the Master System in the country, along with other Sega systems in the years to come (Smith, 2015). This was something that Nintendo, at the time, had failed to do since they were somewhat ignoring this particular market (Smith, 2015). They did eventually release the NES there, but there were so many unofficial clone versions of the system in the market at the time (Smith, 2015), along with a plethora of pirated copies of their games that they simply did not have a chance to make a name for themselves in the country like they have almost everywhere else (Smith, 2015). Also, they didn’t have a local manufacturer, they had a distributor (Witmer, 2015), which means they had to pay import fee’s while Sega does not (Smith, 2015). Even today the Master System still continues to do well, often selling around one