International Consulting & Representation Services (IcarusCuba) opened for business in October 2014, just in time to participate Havana’s International Business Fair (FIHAV 2014) in November.
The U.S. companies and delegations in attendance were isolated in a tiny corner of the fair, and their booths resembled tables set up at a junior high school science fair rather than any kind of serious commercial endeavor. Some booths remained empty the entire week. Visiting Americans were almost all in the agricultural sector, experienced at dealing with Alimport, but not in precisely the same way that other agricultural producers do business with Cuba. Their agricultural exports had been declining for years while the comparatively small country of Spain, still reeling from the world economic crisis, had two gorgeous pavilions practically next door, complete with their own expensively printed guide featuring all the Spanish companies within.
In the intervening years, not much has changed. The science fair booths continue, Spain no longer has two pavilions but four, and the smallest, most tender Cuban lobster tails marketed by Caribex are still being snapped up by the Chinese wedding market rather than the neighbor 90 miles to the north.
President Trump’s regulatory changes to Obama’s approach to Cuba have rolled out piecemeal since June, 2017. Curiously, their effect on the business sector is quite limited, for two reasons. One is that under Obama, enormous U.S. companies (Marriott – Starwood’s owner – and GE) began doing business in Cuba. The latest measures that suddenly prohibited U.S. cruises to Cuba were more punitive and unexpected but perhaps the political cost/benefit calculations for the 2020 US presidential election suggested that the price was acceptable.
Even the loudly publicized and previously unthinkable implementation of Helms Burton Title III allowing lawsuits in U.S. courts against Cuba by U.S. citizens and Cuban Americans over property nationalizations appears to have been designed primarily with those calculations in mind. The fact is that U.S. courts have no jurisdiction in Cuba and most foreign countries have antidote laws in place to prevent a judgment from being collected, revealing the political nature of the maneuver. The property claims issue is far more complex than most people realize, which is why we selected it as the object of a white paper some years ago.
No matter the direction of US/Cuba relations over the years to come, it is abundantly evident that there is no turning back. Maybe the normalization process will go slower or faster, but in no case will it end completely. The bottom line remains the same, no matter who occupies the White House. Congress must act before U.S. companies can trade as freely with Cuba as they do with any other country.
This “quiet period” is an ideal positioning opportunity for those with foresight. Companies who seize this moment to do a professional evaluation of the terrain and either seize existing opportunities as they are able (see John Deere’s 2017 agreement to certify its products in Cuba, gaining a headstart against future US competitors), or at least, plan their strategy for market entry, will have an obvious advantage over those who hesitate, waiting to investigate the market only after their better prepared competition has already launched.
Bridging the information divide
After more than half a century of practically non-existent contact with Cuba, many foreign companies (not just American ones) are approaching the country on the basis of limited or erroneous information. Even executives who come to visit Cuba hoping to gain firsthand information tend to be skeptical about the things they are told. The problem is that outside Cuba, available information is incomplete at best and manipulated at worst. Business executives are caught between two contradictory sources, neither of whom meet their needs.
Our business objective is to function as an independent, reliable third party source of information. We’re not part of Cuba’s foreign trade apparatus, nor are we part of the extensive network of Cuba advisers whose outlook on the country is colored by negativity.
For sure, Cuba’s business history and social system make business operations a unique challenge even compared to other Latin American countries. Viewing business opportunities in Cuba through the standard template for doing business elsewhere is a prescription for failure. And fifty years of economic warfare have left unique scars and a barricaded mentality that is sometimes difficult to break through in Cuba.
We want to help companies interested in Cuban business opportunities, and Cuban directors interested in working with US companies to see beyond the barricades and understand how to work together.
A very simple example: imports. In Cuba, sales work quite differently. Companies looking to interact with the state must pass through a complex approval process, complete with feasibility studies, product testing, and market evaluations.
Our consultants are experienced in producing the kinds of market studies Cuban decision makers demand. Our market research has the twin benefit of providing a roadmap for clients, while fulfilling a key requisite in the Cuban negotiation process. In a market where American businesses have long since lost the first-mover advantage to other countries, it’s an invaluable tool for moving ahead of the competition.