As the U.S. likely lifts its decades long economic embargo, consider how your small business could profit by doing business with Cuba.
MARCH 22, 2016
On a historic visit to Cuba this week, President Obama met with the nation’s leaders and talked with Cuban businesspeople about welcoming U.S. business into the Caribbean island nation. This push for stabilizing the trade relationship between the two countries after 56 years of an economic embargo heralds what Obama and businesses hope becomes a lucrative endeavor for everyone.
While Congress has yet to fully remove the embargo between the U.S. and Cuba, that step seems imminent, and Obama’s visit is expected to encourage commerce between the two nations. Even before he made the three-day trip, the president initiated what many see as a big boost to commerce by making it possible for Cuba to use the U.S. dollar in international transactions.
Given the ever increasing open door policy between the two nations, many U.S. small-business owners may be wondering about the viability of doing business with Cuba.
Good Reasons for Doing Business With Cuba
There may be potentially big opportunities for doing business in Cuba, believes Mauro Guillén, a specialist in international relations, contributor to Knowledge@Wharton’s The Road to Cuba: The Opportunities and Risks for US Business and director of the Joseph H. Lauder Institute at the University of Pennsylvania. “Most Americans are mesmerized by Cuba and its culture, and there are strong historical ties between the two nations,” he says. “With a potential transition/emerging economy and a population of more than 10 million people located in a country right next to the U.S., doing business is likely.”
Small-business possibilities could abound, advises Guillén, who notes that there are potential opportunities in a variety of areas. For immediate business, there may be opportunities in travel and tourism, food service, financial services and telecommunications. For instance, Carnival Corporation is sending its first cruise ship to Cuba this May.
As for longer-term business proposals, these will likely include biotechnology and pharmaceuticals, healthcare, agriculture, export, real estate and construction, manufacturing and retail, mining and energy production and business consulting.
Possible Pitfalls of Commerce With Cuba
Cuba operates under an entirely different governmental system than the U.S., which means the experience doing business with the country is not likely to be seamless.
“The risks of doing business with Cuba are straightforward,” says Guillén. “Something could turn the current seemingly good relationship between the countries into a nightmare and a misunderstanding could easily cause a setback in commerce.”
Even in the event that relations remain positive between the countries, there are a number of fundamental differences between how Cuba and the U.S. do business that could make circumstances challenging for American small-business owners. These include a business climate that can feature a great deal of governmental control and consumers with limited purchasing power.
Though great strides have been made to open up commerce with Cuba, many small-business owners may have a wait-and-see attitude—especially when it comes to the political status of both countries. “The outcome of the U.S. presidential election and the transition in Cuba from Raul Castro to another leader are sources of uncertainty likely to create caution among small-business owners,” says Guillén, who notes that only time will tell.
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