Seminar: Business & trade are driving forces in Cuba relations

It’s Cuba, and a recent seminar about doing business there attempted to take the mystery out of the Caribbean island nation that has re-established diplomatic relations with the United States.

Exotic. Enigmatic. Puzzling. Potentially lucrative.

It’s what Derek Miller, president and CEO of the World Trade Center Utah, describes as “one of the last great frontiers.”

It’s Cuba, and a recent seminar about doing business there attempted to take the mystery out of the Caribbean island nation that has re-established diplomatic relations with the United States.

“Between Cuba and the United States, there are a lot of obstacles right now, but I think this is a process that there is no way that we can go back,” David Urra Arias, chief analyst for IcarusCuba LLC, told the crowd about advancements in business dealings between the two countries.

“There will be times where it will be going faster or it will be going slower, but it will be going forward. … It is full of obstacles, but we are overcoming and eliminating those obstacles.”

Arias’ company provides consulting services for companies looking for business and investment opportunities in Cuba. He spoke of difficulties inherent in the connection between the two countries, including 55 years of no relations and each having different social systems and economic systems. “There are potential and great opportunities and elements that would allow us to take advantage of this opportunity that is opening up,” he said.

One main obstacle to advancement is a lack of information, according to Sue Ashdown, Arias’ wife and the company’s president. They started the firm in 2014 “because there was such a disconnect in terms of U.S. executives’ knowledge about Cuba and there was non-existent relations between the two countries and the fact that we were dealing with a socialist system and a capitalist system. U.S. executives might be very interested in doing business in Cuba but might have no idea how that’s done. While the embargo still exists and probably will until Congress makes a move to dismantle that, there is a real need for information, and we are trying to fill that need.”

Ashdown said Cuba has a well-developed banking structure and is “reordering” its economy. It has 10,246 entities organized as companies, trading companies and cooperatives and subsidized units, she said. It has a highly educated population, with 4,000 people with doctorate degrees and 20,000 with master’s degrees, and it boasts an “incredibly vibrant” arts and cultural sector.

Cuba’s nominal GDP ranks 68th among nations and the country was 6tth in the United Nations’ Human Development Index among 187 countries, “which is impressive for a developing country,” Ashdown said.

Arias said Cuba has many opportunities for foreign investment, both inside the country and in its free trade zone. Cuba has a great need for weatherization equipment for use in homes and industrial settings to help people cope with heat. Cuba currently has two factories that produce glass containers but they cannot keep up with demand, he said.

“As you can imagine, to think that most of these glass containers are being imported, it’s like importing air because these containers come empty,” he said.

Cuba also has opportunities in pharmaceuticals and biotechnical products and products related to agriculture, much of which is imported. Ashdown said Cuba imports about $2 billion in food annually. Arias said Cuba is importing powdered milk, fruit pulp, turkey and other types of meat, grains and cheeses, among other items.

“We can say that about 80 percent of the products that are used for family consumption are imported,” Arias said. “That’s why one of the main priorities for the Cuban government is to increase production within the country, and any project that may be related to that, even if it’s on the [Cuban priority] list or not on the list of priorities, will be given great attention.”

Ashdown noted that Unilever, a Dutch company, is in a joint venture to produce personal care products at the port of Mariel, a free trade zone. It’s part of Cuba’s desire to have a diverse economy, she said. Arias said opportunities also lie in construction, transportation, and communications and information technology.

“They want to see everything,” Ashdown said. “They’re really interested in renewable energy. They’re interested in the agribusiness industry,” she said, noting that Cuba was dependent on sugar production before the revolution and depended on trade with Soviet bloc after that. “They don’t want to be dependent on any one thing. They really want to be diversified.”

And Cuba also wants trade to be “a two-way road,” Arias said. “Any project has to bring advantages for the foreign companies that are coming in as well as for the country,” he said.

Among the first steps to doing business in Cuba is a market study to help determine the potential of the market, he said.

“There is a great lack of information here in the United States about what is happening, and there is not only a lack of information but there is a lot of misinformation. The reason it is important to know this is because in Cuba there are already foreign companies, there is great competition. You need to know who you are going to be competing with, how you’re going to do it and who you have to remove from the middle in order to get ahead,” he said.

“Between Cuba and the United States, it’s like a minefield, and not only that, covered with fog and smoke. You can’t even see where you’re stepping. Now we’re in the process of trying to clear off the field so that we can discover where the mines are, but it’s not easy. There are really powerful forces that are very resistant to this whole process.”

As an example, he said, was a recent move in Congress to repeal having direct airline flights between the two countries. But all that Cubans want is normal relations with the U.S., which has relationships with many countries “but despite these differences of opinion, they have good relationships,” he said. “There are always going to be contradictions between Cuba and the United States, but I think that in spite of those differences, we can have normal relations.”

He emphasized that despite roadblocks that might lie ahead, the process of normalizing relationships between Cuba and the U.S. must advance.

“It’s evident to us that Cuba is putting all its powder into the cannon to make sure that relations improve between Cuba and the United States, and as long as that continues to be stimulated, as long as business activities go forward, everything else will follow,” Arias said.

“We are the very most important piece in the improvement of relationships between Cuba and the United States. The driving force is trade, is business.”

The “Doing Business in Cuba” seminar was presented by World Trade Center Utah and the Salt Lake Chamber.