A waiting game for companies hoping to do business in Cuba

A waiting game for companies hoping to do business in Cuba
Published 2:28 pm, Wednesday, May 4, 2016

The thaw in U.S.-Cuba relations has many small and medium-sized
companies thinking about doing business with the nation that has largely
been off-limits for more than half a century. Most companies, however,
will have to wait.
The Obama administration has taken steps that allow companies in the
travel and telecommunications industries to work with Cuba, but most
exports and other business contacts remain prohibited under an embargo
Congress passed in 1960 in response to Communist rule in Cuba. Because
of the embargo, the U.S. exported only $180 million in goods to Cuba
last year, most of it agricultural products and medicine. By comparison,
exports to nearby El Salvador totaled nearly $3.3 billion. Only Congress
can lift the embargo, and it's not known when that might happen — some
lawmakers are against ending it because of charges of human rights
violations by the Castro government.
Greg Geronemus' travel company, smarTours, expects to run 45 tours to
Cuba this year, most of them leaving from Miami. He began planning to
increase his Cuba business two years ago, when he ran 15; Geronemus
anticipated that the administration was moving toward a normalization of
U.S.-Cuba relations.
"There is an unbelievable appetite for travel," says Geronemus, whose
company is based in New York.
Because of the embargo, Geronemus works with a Cuba-based company,
HavanaTur, and an intermediary company in Europe to handle reservations,
itineraries and payments. Trips to Cuba must be highly structured under
U.S. government regulations, with itineraries that show substantial
interactions with Cubans. For example: a visit with an artist or a tour
of a community revitalization project.
"It is still so cumbersome and it will be for a while," Geronemus says.
Another unknown is what requirements the Cuban government, which
controls most of the businesses in the country, might impose on U.S.
companies that want to sell goods and services. Maria Contreras-Sweet,
head of the U.S. Small Business Administration, found during a recent
visit to Cuba that officials and business leaders are interested in
building a relationship with U.S. companies, but they also want
Americans to understand that Cuba, which doesn't have a free market, has
a different culture and a different way of doing business.
"There's this great desire but also some apprehension. And to some
extent, they're overwhelmed by the U.S.," Contreras-Sweet says.

Small and medium-sized businesses will be competing with big U.S.
companies that want to trade with Cuba, but Contreras-Sweet expects
smaller players will find opportunities with Cuban counterparts. In
recent years, Cuba has started allowing people like small restaurant
owners, real estate agents, house painters and home builders to work
independently of the government.
As relations between the U.S. and the Castro government expand, the
Cuban people are expected to demand a better standard of living, and
that can create opportunities for American businesses, says Ronald
Recardo, managing partner with Catalyst Consulting Group in Shelton,
Connecticut. His company hopes to do business with Cuban companies.
"There's a lot of people clamoring for something beyond a subsistence
level for their families," Recardo says.
Companies that the U.S. government already allows to sell to Cuba
include technology and telecom businesses whose products can improve
communications to, from and inside the country. Revel Systems, the maker
of software for retailers and restaurants, has started selling its
products to small Cuban customers.
"They're dying for technology," says Chris Ciabarra, a co-founder of the
San Francisco-based company.
Revel makes software that allows tablet computers to be used as cash
registers. The company has sold its products to a dozen Cuban customers
who found Revel by searching the Internet. Revel delivered the software
to them using an app.
Ciabarra expects Revel's Cuban business to grow because the company
tends to get new customers through referrals from existing clients.
"It is going to be an up-and-coming market," he says.
Cuba already has a tech-savvy workforce that wants to work with U.S.
companies, says Faquiry Diaz Cala, the CEO of Tres Mares Group, a
private equity firm based in Miami. These workers are well-educated in
areas like web development and programming, Diaz says.
Lori Hirons believes that when the U.S. embargo is lifted she'll find
strong demand for her resort clothing among Cuban women. Ninety percent
of sales for her company, Island Contessa, come from other Caribbean
markets, including St. Croix in the U.S. Virgin islands, where she is
located.
"As I read about Cuba, the people have interest in all things American,"
Hirons says.
While she waits to see what Congress does, she's learning everything she
can about Cuba. One unknown that concerns her is regulations Cuba might
impose that could make trade difficult, and perhaps impossible for her.
"It's going to depend on how many hurdles there are," she says.
One company already dealing with Cuban government restrictions is Global
Rescue, a medical evacuation company that helps people who become ill
during overseas trips. The medevac planes the company uses must get
clearance from Cuba officials to fly over the country for rescues in a
nearby country, says Dan Richards, CEO of the Boston-based company.
"We often have to avoid Cuban airspace entirely," Richards says. "We're
certainly hoping that the Cuban government changes its stand."

Source: A waiting game for companies hoping to do business in Cuba -
Connecticut Post -
http://www.ctpost.com/business/article/A-waiting-game-for-companies-hoping-to-do-7393144.php