Progress on the creation of a new relationship between the United States and Cuba has been remarkably brisk over the past eight months, but, at the same time, American companies are, with some specific exceptions, still not able to do actual business in Cuba or invest. The trade and investment embargo against Cuba remains effectively in place even as it is being dismantled in nibbles by President Obama and bipartisan noises are louder in Congress.
U.S. business needs to be aware of the realities of Cuba in 2015 to prepare properly to participate in the Cuban economy as that becomes more broadly possible.
Cuba is not at all an isolated country, or an empty vessel to be filled by American commerce. It is marked rather by the hustle-bustle of 11.5 million people in a country poised for economic growth, where foreign businesses from multiple countries are already present and many have been active for decades – Canadians, Spaniards, French and other assorted Europeans, Mexicans, Israelis, increasingly again Chinese, some Russians, and so on.
There are several corollaries to this core observation.
First, the Cubans have options, and, expectedly, will always be looking for the proposal that offers the best terms and conditions for them. In many trading sectors, U.S. suppliers have a competitive commercial advantage based on geography, lower transport costs, easier servicing and strong residual brand recognition. But the Cubans will not wait for the embargo to end to reach agreements because they need to move forward now in building their economy. As powerful as historic brand attraction can be, Cuban companies will not pay a premium for U.S. goods and services. American business will need to compete on price and quality in the Cuba market as they do anywhere in the world, and take nothing for granted. The reality is that some U.S. business will do very well in Cuba over time, and some simply will not because the goods or services they offer will not be priorities or will be acquired elsewhere; exactly the same experience as companies and investors from other countries.
Cuba in 2015 is very different from the Cuba of the late 1950s in many fundamental ways, and there will be a significant place for American commercial interests; but U.S. business will need to earn its place, rather than inherit it from the past.
Second, U.S. business will need to take the time to learn about Cuba and understand what makes the country tick. The Cubans have their own set of sovereign economic development priorities, defined and determined by the nature of the Cuban governance system and how Cuban society has evolved. It makes little difference whether a U.S. company believes that its business proposal is brilliant if it is disconnected from Cuban priorities. American business will need to spend less time pitching, and more time listening and learning.
Lastly, American business will be better served by accepting Cuba for what it is, deciding to follow and participate in its evolution toward the future, rather than wasting energy in wishful thinking about how they think the country should be something else. There is much to learn about how things work in Cuba in order to be effective.
