TOKYO -- Economics and a lack of government incentives are behind Sony's decision to cease manufacturing its line of smartphones in Brazil, the company's marketing director said this week.

Ana Peretti said the company would consolidate product assembly in China and Thailand, leaving in doubt its previously announced plans to invest millions in the South American country.

Sony has been outsourcing manufacturing in Brazil to Foxconn and Arima, both outside São Paulo. Neither company has commented, but Foxconn had reportedly angered Brazilian officials for its failure to invest at previously announced levels.

The decision reverses Sony's expansion strategy, which called for the OEM to spend more than $80 million toward establishing a firmer hold in the Brazilian market, where hefty import duties and other regulations strongly encourage local manufacturing.

Sony's smartphone competitor Xiaomi, which also announced major expansion plans in Brazil last year, is also cutting its manufacturing, citing ongoing changes in rules for manufacturing and taxation on e-commerce sales.