U.S. companies line up to do business in Cuba
Havana — Chris Rosander was touring a mango grove in Cuba last year with a group of U.S. agriculture leaders when he had a revelation: “Why don’t we import mangoes from Cuba?”
Sun-Maid Growers, the California dried-fruit company where he heads international market development, now gets its mangoes from Thailand. Cuba, he said, is “90 miles from the U.S. instead of halfway around the world.”
Rosander is among the American business leaders who see dollar signs in warming U.S.-Cuba relations.
As the U.S. eases its commerce and travel restrictions in Cuba — with President Barack Obama calling for an end to the embargo now in its sixth decade — hundreds of airlines, hotel chains, telecommunication firms and other companies are jostling for business.
Thirteen U.S. airlines have applied for permission from the Transportation Department to provide direct flights to Havana, and Connecticut-based Starwood Hotels and Resorts recently announced a contract to manage several hotels owned by the Cuban government. Carnival is already selling tickets for cruises that will dock in Cuban ports later this year, and Google is expected to announce plans to expand Internet access in Cuba.
Making the rounds in Havana last week were the chief executives of PayPal, which hopes to launch an online remittance service in Cuba, and Airbnb, which already offers 4,000 rental properties on the island.
Singer and businessman Jimmy Buffett rubbed elbows at a cocktail reception with top White House advisers. He is said to be exploring the possibility of bringing his Margaritaville restaurant chain here.
“Cuba is a very romantic and sexy market right now,” said Alana Tummino, director of policy at Council of the Americas, a U.S. business organization that promotes open markets in Latin America.
But for all the excitement about American investment in Cuba and the flood of new Cuban businesses that have opened after the government relaxed its rules, significant hurdles remain.
The biggest is the U.S. trade embargo.
While the U.S. Treasury and the Commerce Department have made regulatory changes — eliminating certain restrictions on remittances, facilitating trade in the telecommunication and agriculture sectors and allowing some U.S. companies to establish a physical presence on the island — most U.S. companies are still not allowed to invest in Cuba.
If the embargo is lifted, U.S. companies will have to play catch-up with investors from Europe and Latin America, who have been operating in Cuba for decades and supply food, electronics, appliances and other basic goods sold in government stores.
Most Cubans live off government salaries of around $25 a month and are accustomed to limits on what they can buy, whether it’s fish or potatoes.
Rosander, who says his mango export dreams are not feasible under current U.S. regulations, is part of a U.S. agricultural group that is pushing Congress to end the trade embargo. “Real trade is only going to happen when Congress drops the embargo,” he said.
In the meantime, he is trying to lay the groundwork. He plans to meet with Cuban mango farmers this year to figure out whether they would have to change their growing process in order to meet U.S. sanitation standards.
That long-view approach is what many consultants recommend to their clients.
“You have to be ready to be in this for 10 years,” said Michael Laverty, who runs a consulting company with his brother, Colin, that has more than a dozen clients exploring business opportunities in Cuba.
Their company advises companies to focus on building brand awareness and donating to local causes to build goodwill. If it’s a sporting goods company, why not support a local baseball team?
“It might not be legal for you to do business here for a couple of years, but you’ll need a head start,” Laverty said.
The Cuban government appears to be moving cautiously toward increased trade and private enterprise.
In recent years, the socialist government has been allowing more investment from non-U.S. companies. Cubans have opened hundreds of thousands of small businesses in their homes, like restaurants and hair salons — since the government loosened restrictions on private enterprise.
While there is a class of Cubans excited about increased foreign investment, many express skepticism about whether an infusion of outside capital will improve the lives of Cubans. That is especially true outside Havana, in places where fewer tourist dollars flow.
On the highway to the port city of Mariel, about an hour outside Havana, a government sign promotes the town as “socialist, prosperous and efficient.” It’s a message slightly at odds with a newly created free-trade zone at the port, where international businesses operate with generous tax breaks.
Cranes lift huge containers onto large ships heading for Brazil and other countries, and an American-owned tractor factory is expected to open soon. All the activity can be seen from the town of Boca, across the bay.
On a recent evening, Leonardo Valdez Diaz, 30, was preparing to head out on a small boat for a night of tuna fishing.
He said the Cuban government needs to make more changes so everyone can benefit from the new economy. For example, he would like to be able to cook and sell the fish he catches at whatever the market will bear, instead of being forced to sell it to the state at a price set by the government.
“For the capitalist foreigner, it’s a good thing,” said another man, Ricardo Gonzales Sani Esteban, 73. “But most people don’t see a thing.”