As part of our preparation for the FIHAV 2015 Havana International Fair, Opportunities NB (ONB) recently worked with David Verbiwski, Senior Trade Commissioner at the Canadian Embassy in Cuba, to present an informative session on doing business in Cuba, and the overall state of Canada-Cuba relations.
The FIHAV fair begins on November 2, 2015 and will run until November 7. New Brunswick companies looking to be involved in the event can still sign up by contacting ONB’s Director of Export Development, Suzanne Turmel, at this email address.
Let’s take a look at some of the insights Mr. Verbiwski had to offer.
Canada Matters to Cuba
Canada has enjoyed 70 years of uninterrupted relations with the island nation of Cuba; it’s one of only two countries in the world that can make that claim (Mexico being the other). This makes Canada the third largest export market for Cuba (Note: that is entirely from nickel ore), and the fifth-largest source of imports. The country is not home to a wealth of food processors or manufacturing companies, so having reliable import partners is of the utmost importance. Additionally, Canadian travellers make up almost half of all Cuban tourism (47% last year).
So is Canada important to Cuba? Yes. We are not the only ones, however, and with US-Cuban relations thawing, the United States will soon enough—in the next two to five years—play a bigger role in Cuba’s economy. The time is now to start making inroads into Cuba.
Canadian Exports to Cuba
Below is a quick look at Canada’s current exports to the Cuban market.
Cuba’s Economic Priorities
Mr. Verbiwski notes that Cuba has made a priority of becoming a more reliable business partner, and are focused on ensuring all of their debts are paid and relationships with importers are strengthened.
Cuban leadership is currently looking to:
- Increase foreign investment
- Reduce inefficiencies and waste
- Increase GDP
- Fight corruption at all levels; and
- Resolve the nation’s liquidity crisis
Cuba is still a centrally-planned state economy. It’s the many state-owned enterprises in Cuba that will be the audience for New Brunswick exporters. Verbiwski notes that Cuban bureaucracy is still very much in place, and that decision making may still be slow, and not highly-transparent. It’s not yet a market where one can make a quick sale.
The Cuban government has strongly encouraged all state-owned enterprises to attend the FIHAV Trade Mission. This is considered the premier market reconnaissance event for Cuba and a high priority has been placed on creating real opportunities and following up on leads.
He cautions to be prepared to wait at least a year before one can expect to receive a contract in hand. Patience is a virtue, and having the right people within your team to see deals through to a conclusion is paramount. Gaining this initial experience in Cuba will confirm your interest in the Cuban market, strengthen any existing contacts you may have, and establish new ones.
The Emerging Private Sector
Cuba is allowing for an emerging private sector. The government now allows for 276 different occupations to be privatized via self-employment. These small businesses, however, are not yet authorized to import from Canada.
The country has also taken steps to shift its economy from state-controlled enterprise to citizen-controlled cooperatives. These cooperatives are legally allowed to look at imports. Verbiwski notes that as of yet, none are doing so. As these cooperatives grow, and the market liberalizes, they do represent potential buyers for Canada.
The United States and Cuba
Verbiwski notes that despite the seemingly game-changing status of US-Cuban relations, not much has yet changed. The United States Government has made it easier for its citizens to visit Cuba, with 12 conditions now cited as valid reasons for travel. Crucially, aside from some pharmaceutical and agricultural exceptions, US companies are still not legally allowed to sell to or invest in Cuba; Canadian business does not have the same restrictions.
The Window of Opportunity
Cuba is growing, taking steps to liberalize their markets, and focusing more on foreign investment. Canada’s largest competitor is still not able to conduct business there. An act of congress is required to lift the trade embargo with Cuba and that will likely only occur after 2016’s presidential election. In fact, Virbiwski estimates it could be between two to five years before that actually happens.
Areas of interest for New Brunswick
Verbiwski notes the following areas as real opportunities for New Brunswick businesses.
- Food production and import substitution
- Higher quality food for the eventual increase in tourism
- Modern farming equipment
- Renewable energy and grid improvement
- Building materials
- Plans to increase hotel room capacity by 20% over the next five years
- Refurbishment of highways/roads
- Port upgrades in secondary cities
- Equipment needed to support increases in oil and gas exploration
- Equipment to support increased mining activities
- Equipment to support prospection of lead, zinc, and copper
- Joint ventures focused on production, marketing, and licensing of Cuba’s broad range of medical products
Join us in Havana
Window image via Flickr.