Utah Business – July 15,2016
With recent executive efforts to re-establish ties with Cuba, the curtain between the U.S. and the island nation is lifting—and businesses are seeing potential in the country’s estranged neighbor. But doing business in Cuba requires an intricate process almost as delicate as diplomacy itself—still, it is possible, said the founders of IcarusCuba LLC Thursday.
“This seminar does not have the purpose of telling you all the business opportunities available in Cuba. The purpose of this is to start a process,” said David Urra Arias, co-founder and chief analyst for IcarusCuba, who is also a native of Cuba.
Speaking at an event hosted by the World Trade Center Utah, Arias and Sue Ashdown, president of IcarusCuba LLC, said the California-sized island is ripe with opportunities—if businesses know where to look and how to go about getting them. To that end, she said, she and Arias started their business in 2014, before there were even rumbles that the two countries would actually mend fences.
“We thought U.S. executives might be interested in doing business but no idea how to go about doing that,” she said.
In order to do business with Cuban companies, U.S. businesses need to understand a number of things about Cuba. Among those is that the country has been more or less shut off from North America for 55 years, and that its significantly different social system also means its financial system is somewhat different from the U.S.’
Although the island has been somewhat isolated, at least from the bulk of its neighbors, for the last half century, Cuba excels in several areas, including education. Forty-four percent of adults have a master’s degree equivalent in education, and almost 10 percent have a doctorate-level education, Ashdown said, even if many of those advanced degree-holders are making their livings as taxi drivers or other jobs typically thought of as being less prestigious than those typically obtained with such education.
“[Cuba] saw spending on education as an investment, not an expenditure,” she said.
In overall quality of life, Cuba ranks 67th out of 187 nations, according to metrics from the United Nations, and its economy has been steadily growing since 2000, when it started opening itself up to accepting foreign capital. While there is still an embargo on many aspects of Cuban trade, thereby preventing companies from making major investments into any Cuban companies, small investments with private companies are still possible, and a smart move for companies interested in forming ties with the country.
In fact, Arias said, U.S. companies should look to invest sooner rather than later—other countries, including China, Russia and the Netherlands, have already been trading with Cuba. As is true with other facets of marketing, being first is often better than being best, he says, but the U.S.’ proximity to Cuba is a big advantage those other countries don’t have.
Arias said it is crucial, both in terms of profit and getting approved for trade by the Cuban government, that any agreement be for a mutually advantageous arrangement.
“Any project has to hold advantages for the company as well as for the country,” he said.
Each November, he said, the Cuban government announces specific sectors of the economy it deems are most necessary—and, consequently, would likely approve projects for far faster than in sectors that area already being adequately served. Those sectors often include glass processing (Cuba’s heat means a lot of glass-bottled beverages are consumed), household weather-predicting equipment, cars, tractors and disposable medical supplies such as needles, he said. Food is also a perennial need, he said, especially for items that can’t be easily grown or produced on the island.
Companies should also keep in mind that for Cuba to be a good market for exporting to, Cuba needs to have exporting opportunities of its own so it can have the money to pay for foreign goods, he said.
All in all, there’s still a long, rocky path to free relations between the U.S. and Cuba, but the future is bright, Ashdown said.
“It’s a long process, but not an impossible one,” she said.