When IcarusCuba first opened its doors in October 2014, we incorporated with a partner in Ecuador under the title International Consulting and Representation Services (hence, I.C.A.R…S) and set off for Havana’s International Fair (FIHAV) in November.
It was an eye-opening experience. 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. The Americans we met with were almost all in the agricultural sector, with little understanding or experience with the real Cuban business world outside the Cuban entity Alimport, which they’d been working with exclusively. Some were puzzled as to why their agricultural exports were on a steady decline (we tried to explain this to them but that’s a whole different story). Meanwhile 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. The difference was like night and day.
We introduced ourselves to the Cuban companies who naturally were better represented at the fair than anyone. The reception was mixed. Young executives at Caribex, Cuba’s largest seafood processor/vendor were openly hungry and eager for the chance to sell to the enormous market just to the north and pointed out that all their lobster tails, particularly the smallest, most tender ones, were currently being snapped up by China for its wedding trade.
Other managers received us quite differently – fifty years of economic warfare have left unique scars and a barricaded mentality that is sometimes difficult to break through. But more than anything, IcarusCuba was received as a curiosity, an interesting hobby perhaps, but with limited prospects.
The following month, all that would begin to change. The announcement about a beginning of a normalization process between the US and Cuba suddenly made people think differently. As the US regulations became more flexible, we left Ecuador and incorporated in the United States, always focused on the fact that our unique advantage is our ability to do in-depth, on-the-ground consulting for any business around the world, including U.S. businesses, and our concrete track record with non-US clients.
President Trump’s regulatory changes to Obama’s Cuba tactics rolled out over roughly six months in 2017. Curiously, they do not really touch the business sector, for two reasons. One is that enormous U.S. companies (Marriott – Starwood’s owner – and GE) are already doing business in Cuba. The second is that the US embargo prevents US companies from freely negotiating with Cuba. Even the new prohibition on doing business with Cuban companies affiliated with GAESA scarcely changes the scenario – currently an OFAC license to negotiate is still required, just as it was under Obama. OFAC has promised to freeze future licenses for the time being, but exploratory visits to Cuba are still completely legal.
The way we see it, the horse is out of the barn (genie out of the bottle, toothpaste out of the tube). Maybe it will go slower or faster, but in no case will it go back in. 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 hang back, investigating 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, but neither do we have an axe to grind. We simply want to help companies interested in Cuban business opportunities understand exactly how the process works, where their competition is already engaged, and which approaches are most likely to succeed in the Cuban environment.
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.
A very simple example: imports. In Cuba, it’s not simply a matter of finding a willing buyer and convincing them to take a risk to become your business partner. In Cuba (aside from the insignificant market sliver euphemistically called “suitcase commerce”) the state is the sole importer – even when cooperatives are the buyer – and 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.
And Havana’s International Fair (FIHAV)? It’s the greatest thing for a crash course in Cuban business and anyone with a serious interest in Cuban investment should make it a permanent part of their calendar. (First week of November, every year.)
By the way, by 2017 Spain had four pavilions, not two.