Amid Regulation Issues, Tech Data Halts Brazilian Operations
Distribution giant Tech Data is making a big cut before the new year: All its commercial operations in Brazil are being halted. How does this affect VARs, and why is Tech Data pulling out? Read on for the details …
According to Tech Data, enough was enough in Brazil. Straight from the press release, Tech Data said the closing is due to “Brazil’s complex tax, legal and regulatory environments which make it difficult for the company to generate a sufficient return on invested capital. Tech Data will maintain a legal entity in Brazil to address its fiscal and legal responsibilities. The company will continue to serve the Brazilian market through its Miami export operation.”
That likely means VARs working in Brazil don’t have to fret about losing business, but it certainly means Tech Data will be incurring some losses. In fact, Tech Data estimates that due to the “complexities of operating in Brazil,” the distributor will “incur operating losses and other charges in the fourth quarter of fiscal 2012 of approximately $22 million to $25 million.” Tech Data also expects almost another $10 million lost due to currency exchange and other tax asset issues.
While this may hardly affect VARs working in the United States, it’s worth knowing should Tech Data take any measure in the future to recoup its losses in Brazil.