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Handheld Technology

Why is branded tech so expensive in Argentina?

In Argentina, technology is much loved. However, Argentinians pay dearly for this love. Indeed, prices for technology gadgets are typically double or triple those for consumers in the USA and they even pay a staggering 30% to 70% more [Spanish language] for their technology than other Latin American countries. These high prices are a source of great resentment amongst a population eager to keep up with the newest gadget releases which are often priced out of their reach.

Gustavo, a Buenos Aires businessman tells IDG Connect: “I love to read about the new gadget releases in the technology press and I can see how easily they can be obtained by people on average incomes in Europe and the USA, but for the regular Argentinian, even one with a comfortable income, the newest and smartest technologies remain frustratingly expensive.”

Argentina is a complex country and there are numerous social, fiscal and political motivators behind the pricing of consumer goods. However, when you boil it down, there are three main contributing factors behind these exaggerated costs: logistics, transportation and taxation.

For some years now the Argentinian administration has actively encouraged and developed the technology industries in the southernmost province of the country, Tierra del Fuego. A perhaps surprising choice due to the severe climate and sparse population, this level of investment has at its root interesting geopolitical motivations. With the disputed territories of the Falklands and the controversial land tussles with the Chileans in that area, the government has made the tactical move of strengthening the province and growing the population.

map-of-argentina-via-wikiDaniel Agustino, a local opposition politician says: “The development of industry in the south is to be much applauded, however, the wealth that has been generated by this investment has either stayed local to the production centres or left the country with the foreign investors. We would welcome a more even development plan so that all Argentinians could benefit.”

However, while Tierra del Fuego has benefitted from these initiatives and from heavy overseas investment and tax breaks, the effect on the cost of the technology which is produced there has been marked.

Most of the technology components are imported from China into the ports of Buenos Aires. Here the products often incur their first additional charges. If there is any sort of issue with the documentation for the load – which is commonplace – a daily levy is then charged by Argentinian Customs while any issues are resolved. Once past this hurdle the parts are then transported some 3000 kms down to Tierra del Fuego where they are assembled before often then making a return journey back to Buenos Aires, as finished products, to join the distribution channels.

These transportation costs alone already add on a slice to the eventual retail price. On top of this is the effects of the poor safety conditions and level of crime which plague the country. There are many documented instances of lorry drivers being kidnapped and loads being stolen pushing insurance costs for the transportation ever higher. Another cost which ultimately finds its way onto the retail price.  

Once into the distribution channels further layers of cost mount up. The supply channels are long and at each stage more commissions are incurred. Importers pass the products along to distributors who may again pass to a smaller distributor before the retailers eventually receive the items.

All retailers are then obliged to pay a levy known as ‘Cargas Sociales’ [Spanish language] or social taxes for each of their employees. These are contribution taxes to cover healthcare, pensions and so forth. The level of these employee taxes are set so high that they often eclipse the actual salary which the employee receives and of course the costs are recouped by the retailer by adding to the costs of the goods they sell.

Pablo Maggio, a computer repairer and technology retailer from the Santa Fe Province in the north of Argentina says: “Our hands are tied in the prices we can charge to our customers. We’d like nothing more than to be able to supply technology gadgets at lower prices as there is real demand. Often the only way our customers can obtain these products is by signing up to pay in ‘cuotas’ [payment plans] which incur interest which is of course not popular but is often the only affordable option.”

These social taxes are only one of many applied to technology gadgets. As these are classed as luxury items, and therefore non-essential, there is a high government levy imposed upon the importers. On top of this, the consumer is faced with ‘Impuesto al valor agregado [IVA]’ or VAT. This has varying levels for different items, but at its highest rate it is set at 27%. To further add to the misery, each of the 23 provinces and the city of Buenos Aires impose an additional further local tax. These are known as ‘Impuesto sobre los ingresos brutos (IIBA)’ which range from an additional 3% to 6% depending on the Province.

Another financial hurdle for the hard pressed Argentinian consumer is the ‘impuesto al cheque’ [Spanish language]. This levy was introduced in 2001 during the economic crisis with the aim of raising more funds for the government. This levy is a fee paid to the state for movement of funds in and out of bank accounts.

All in all, the technology consumer in Argentina is battered from many sides. Yet owning the latest tech still remains highly desirable and the sector is still fairly buoyant. Maybe it just all goes to show, where there is a strong enough love for something, there is always a way.

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Victoria Fuller

London based bilingual Spanish/English writer with a love of technology and all things South American. Victoria has spent much time in Argentina and has particular experience in writing about many aspects of Argentinian life and society.

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