Businesses on both sides of the Florida Straits get to know each other

Businesses on both sides of the Florida Straits get to know each other
BY MIMI WHITEFIELD
mwhitefield@MiamiHerald.com

Early on a recent Friday morning, four entrepreneurs visited the Greater
Miami Chamber of Commerce to give a briefing on their business journeys.
But the chamber breakfast in Miami, capital of Cuban exiles, was a bit
unusual: All four were from Cuba, members of the island's growing
private business class.

One entrepreneur — Vanessa Pino, whose family business is selling
brightly packaged sweets — even laid out a tray of her shortbread
cookies among the breakfast offerings.

The visit was a first for the Miami chamber, said Barry Johnson, chamber
president and chief executive.

Earlier that week, Guillermo Santa Cruz — a vice president with IMG, the
global sports, management and media company — told an audience of tech
entrepreneurs at the eMerge Americas conference in Miami Beach: "If
you're in business, you need a Cuba plan in the next six to 12 months.
It will move that fast."

President Barack Obama announced a rapprochement with Cuba just five
months ago, on Dec. 17. Diplomatic relations still haven't been
reestablished, and there are still no established rules on the Cuban
side for many of Obama's initiatives to increase trade with the island's
small private sector. But there's jockeying and movement on both sides
of the Florida Straits as everyone from Cuba's entrepreneurs to large
American corporations try to get to know each other and scope out
business opportunities.

Such activity would have been inconceivable a year ago when USAID
subcontractor Alan Gross was still in a Cuban prison and U.S.-Cuba
relations appeared solidly frozen. But "appeared" is the operative word:
Since mid-2013, the United States and Cuba were involved in secret
negotiations that led to the decision to renew diplomatic relations. Now
even Gross, who came to Miami Beach on May 4 for a fundraiser for the
New Cuba political action committee, has said he would like to return to
Cuba and play a constructive role in building the relationship between
the two countries.

At the recent Chamber breakfast, one goal was to develop a conversation
with the Cubans about future opportunities with Miami-based businesses.
Their trip was part of an entrepreneurial exchange organized by the Cuba
Study Group — an organization that favors increased engagement with Cuba
— and financed by the Knight Foundation. The Cubans had come to learn,
visiting local businesses that corresponded to their interests.

For Pino, who runs Dulces Detalles (Sweet Details) in Havana, that meant
visiting local bakeries. Victor Rodriguez, proprietor of Victor Bikinis,
another Havana business, met with swimsuit designers. One gave him a big
bag of materials, another coached him on how to get his suits into
stores in the United States, and another helped him polish up his
promotional materials with a photo shoot featuring professional models.
Caridad Limonta, whose Guanabacoa-based company PROCLE makes women's
apparel and home goods such as bedspreads, and Rubén Valladares,
proprietor of Adorgraf, a Havana firm that sells and prints promotional
materials, also met with their local counterparts.

Niuris Higueras, who joined the group for some of its activities, runs
Atelier, a popular Cuban fusion restaurant in Havana's Vedado section.
She has already felt the impact of the new U.S. opening: About 85
percent of her customers these days are Americans, she said. It just
feels different, she said, than before Dec. 17.

Meanwhile, post-Dec. 17 also feels different for Miami attorney Richard
Montes de Oca. Before, "an island only 90 miles away from Florida seemed
like it was a million miles away," he said. "But it's getting closer."
Montes de Oca, who chairs the chamber's international relations
committee, said a possible chamber trade mission to Cuba is under
discussion.

While many U.S. companies explore the niches they might occupy under the
Obama's administration limited opening toward Cuba, the big play for
business won't come for many others until the embargo is no longer in
place. "The embargo has to be lifted and when it is, everyone will be
there," said Carnival Corp. Chief Executive Arnold Donald. "We can move
pretty quickly."

Some Cuban ports will need work to accommodate cruise ships, and
Havana's port is shallow so only smaller vessels will be able to call,
Donald said. But he added, "There's a huge pent-up demand. The reality
is Cuba is an interesting place." Because Cuba will be considered a new
destination, he said, "it will bring in guests that might not choose the
Caribbean as their first destination."

Meanwhile, ferry companies champ at the bit to begin service between
Florida and Cuba. Treasury's Office of Foreign Assets Control recently
gave out at least six licenses to companies that want to begin offering
ferry service to Cuba. Now it's up to the companies to negotiate port
access with the Cubans. The U.S. Coast Guard also needs to inspect any
port that will be used by ferries coming from the United States.

José Ramón Cabañas, chief of the Cuban Interests Section in Washington,
suggested earlier this month that cruise ships home-ported in the United
States might come to Cuba sooner rather than later. He noted that the
OFAC license received by the potential ferry operators contained wording
that might be interpreted to include other types of vessels. The
licenses give permission "to provide carrier services by vessel to,
from, or within Cuba in connection with travel or transportation between
the United States and Cuba of persons, baggage, or cargo authorized
pursuant to the Cuban Assets Control Regulations."

To date, the opening is most evident in the hospitality industry as
American visitors crowd the streets of Havana.

A recent poll released by San Francisco-based Airbnb, which added Cuba
to its destinations last month and is the most visible U.S. player in
the market since the opening, and YouGov found that 30 percent of U.S.
adults are planning or would consider a trip to Cuba in the next two
years and the percentage was even higher among Hispanics (40 percent).

When Airbnb launched in Cuba, it listed some 1,000 Cuban homes that
would host travelers. Now that number has doubled, and Cuba has become
Airbnb's most searched site in Latin America: More travelers are
searching for Cuba accommodations than for Airbnb lodging in Rio de
Janeiro, Buenos Aires or Mexico City, said Kay Kühne, Airbnb's regional
director for Latin America.

"They are creating value for Cubans and their company," said Secretary
of Commerce Penny Pritzker during a visit to Miami earlier this month.
She also praised Airbnb President Brian Chesky for helping Cuba's
"entrepreneurial ecosystem."

Airbnb wasn't even founded when Caterpillar, the Peoria-based
manufacturer of mining, construction and other industrial equipment,
first began calling for a new policy toward Cuba in 1998 after Pope John
Paul II's visit to the island seemed to indicate change might be afoot.
"We were wrong," said Bill Lane, Caterpillar's director of global
government affairs.

But Caterpillar persevered, and it is now among the U.S. manufacturing
companies testing the waters in Cuba. During a recent trip to the
island, "we found there was a lot more demand for American products than
we expected," Lane said.

New U.S. rules allow the export of U.S. telecom equipment, construction
materials to build private structures and the export of products
destined for private entrepreneurs as well as U.S. importation of a
limited number of products produced by Cuba's cuentapropista or
self-employed sector. But it will be up to the Cuban government to
decide how fast the opening will go and whether it wants to facilitate
such commerce.

Because the state controls the economy, Cuba's commercial and financial
system isn't really set up for U.S. trade with private individuals or
cooperatives. "Cuba will become a much more robust market if they make
changes. Now that we're trying engagement, let's see what happens," Lane
said.

"You actually need the Cubans to want you to come in and do business,"
said Yosbel Ibarra, co-chairman of Greenberg Traurig's Latin American
and Iberian practice. He said it appears Cuba does want to engage with
U.S. companies — even though it is moving at "an incredibly slow,
measured pace."

Some Cuban watchers say part of the problem is that Cuba is overwhelmed
by all the delegations that want to visit and lacks capacity to deal
with all the changes necessary to mesh with the business opportunities
opened up by a new relationship with the United States. "The physical
and legal infrastructure doesn't exist yet in Cuba," said Peter Quinter,
a lawyer with GrayRobinson.

The embargo also puts a brake on U.S. investment and most major business
opportunities. Companies in industries still blocked from entering Cuba
might want to engage in philanthropic work in Cuba to build brand
recognition for the future, Lane said.

That seems to be the path taken by some business executives in Miami who
support an 80-hour training program, called Cuba Emprende, that's run by
the Catholic Church in Cuba. The program teaches management skills, the
entrepreneurial spirit and best business practices. Among its graduates
are the Cubans who visited Greater Miami Chamber of Commerce as part of
the entrepreneurial exchange.

Limonta, for example, learned how to develop a business plan and has
registered her PROCLE name and trademark. Now the women's apparel, beach
bags and household goods she makes are sold in state dollar stores,
local markets and a few hotels.

Source: Businesses on both sides of the Florida Straits get to know each
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