South America is poised to become a cell phone manufacturing center; companies in Brazil and Cuenca announce plans for expansion

The announcement this week that China’s Xiaomi, the world’s No. five producer of smartphones, is entering Brazilian market, is another indication that South America could become a cell phone manufacturing center like China.

Known as “China’s Apple,” Xiaomi is making its Redmi 2 smartphone available at its online store to Brazilian consumers for about $160 starting on July 7. It also announced plans to build it’s first manufacturing facility in Brazil, its first outside of China.

Grun cell phones, made in Cuenca, will expand its models in 2016.

According to Xiaomi Vice President Hugo Barra, the company sese enormous sales potential in South America, especially Brazil, and sees the expansion as a logical step in its growth. Barra spoke Tuesday in Sao Paulo in which he detailed Xiaomi plans in Brazil and South America.

“One of the difference makers in being able to offer high tech products at highly competitive prices is direct sales to consumers via the Web site and advertising only via social networks virally, without investing in other media,” Barra said. “It makes sense for us to produce our products in this fast-growing market.”

Xiaomi, which was founded in April 2010, has 100 million customers using its MIUI operating system. The company, which is estimated to be worth $45 billion, sold 61 million mobile devices in 2014.

Bloomberg business analyst Roger Allis says that South America is a good choice for locating cell phone manufacturing facilities. “Sales are booming and the potential is still enormous for the region,” he said. “Brazil and Argentina are obvious choices for tech companies to consider locating in and, oddly enough, Ecuador is being looked at closely by several companies, because of its central location between the North and South American markets.”

Allis says that Cuenca, in southern Ecuador, will probably be the focus of country’s industry as it develops. “There are already small manufacturing operations there, so there is a knowledge base that’s necessary to grow the industry.”

GrunMobile, headquartered in Cuenca, has announced plans to increase smart phone production from current levels by the end of 2015. Grun makes low-cost phones, using locally manufactured components as well as some from China and Korea, that have received good reviews from users and technicians.

Currently, Grun sells its phones in Ecuador, the U.S., Peru, Bolivia, Colombia and Venezuela. The company says it hopes to sell its products in most Latin American countries and Canada by the end of 2016.