The Road to Trade With Cuba is Rough, but Not Impossible

The Road to Trade With Cuba is Rough, but Not Impossible
Lisa Christensen Jul 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.

Source: The Road to Trade with Cuba Rough, but Not Impossible -
http://www.utahbusiness.com/7136-2/