U.S. Business in Cuba (Part 2 of 2)

I was interested to learn Cuba has a “surprisingly robust biotechnology industry that makes a number of vaccines not now available in the United States,” along with boasting one of the largest deposits of nickel in the world. Sounds like the potential for importing may be as interesting to explore as any new Cuban exporting opportunities.

One industry sure to get a boost from renewed U.S.-Cuban relations is tourism. Groups that run tours to Cuba under the old restrictions are reportedly being inundated with calls from eager U.S. travelers who want to be among the first to see the country only 90 miles from Florida. About three million people visit Cuba each year; many of them Canadians who are lured by appealing discount tour packages.

The Obama administration has announced plans to create a general travel license that tour operators are hoping will reduce bureaucracy and allow more Americans to visit. Others have begun pushing for complete abolition of all travel restrictions. Conservative estimates from the travel industry predict an increase of up to one million additional U.S. visitors to Cuba next year.

U.S. Business in Cuba (Part 1 of 2)

Nothing seems to incite a capitalistic feeding frenzy quite as fast as the scent of a potential new market. I’m referring to President Obama’s year-end announcement about restoring full diplomatic relations with Cuba. Since then, the media has been bursting with news about U.S. companies—from Iowa-based Caterpillar to global PepsiCo—that are developing strategies to introduce their products and services to the Cuban market.

While I’m the first to applaud entrepreneurial zeal, a bit of strategic reflection wouldn’t hurt either. I visited Cuba about 15 years ago, as part of a government-approved “cultural learning” group. It was fascinating to see the impeccably maintained mid-century jalopies, to learn about Cuban culture (those highly touted cigars, for example, truly deserve their stellar reputation!) and to see a part of the world so close to us and yet, for most, completely inaccessible.

While American companies are noticeably absent in Cuba, other countries appeared to have established a considerable business bulwark there.  U.S. company leaders who imagine a sleeping Cuban giant, just waiting for American consumer products and services to flood their country, may be in for a rude awakening.

Notes Kirby Jones, founder of Alamar Associates, which has advised companies on doing business in Cuba since 1974, “It’s just not going to be like other regions where you see a McDonald’s on every corner.”

Jones opined in a recent New York Times article on the topic that while there may be robust opportunities for some companies, especially those selling products or goods viewed as enhancing Cuba’s domestic production (good news for Caterpillar!), other companies could get the cold shoulder (Pepsi perhaps?).