American Companies Moving into Cuban Market
Things are changing very fast in Cuba these days, fast at least in comparison with what has otherwise happened in the last fifty years in Cuba.
There are certain American companies that one expects will flood the Cuban market once restrictions are reduced.
1. AirBnb
Airbnb’s move into the Cuban holiday and vacation rentals market is not at first all it seems because the rental options are actually only available to American travellers and then also only to specific individuals.
The big news stories about Airbnb move into the Cuban market is thus more of a marketing exercise (a successful one at that) rather than a genuine offering for world travellers.
Those of you based in the UK, Canada and Australia, for example, will not be able to book an Airbnb rental because the option will be void on the site.
The holiday and vacation rentals market though is a very significant one and a very commercially attractive one.
The likes of Booking.com, Rentalsunited.com and others in the rentals market have yet to target Cuba and stand to lose ground.
2. Netflix
The American move into Cuba has also been targeted by the video streaming and subscription giant, Netflix.
There is the ongoing problem that Internet coverage is very limited in Cuba and used by very few people so, to start with, this is likely to be a very limited market.
Much like Airbnb though, this is a part of a long-term strategy with the introduction of Netflix as a positioning strategy for now.
Netflix already has over six million subscribers in the Latin American market and an established business model for these markets.
In the coming years Netflix could prove to be extremely popular in Cuba, once the market opens up and the craving from Cubans to catch up with programs that the American public have had access to for many years, will likely prove very popular and make this a key service in the future in Cuba.
The problem with the Netflix service in Cuba, at the moment, is that the service is too expensive for the average Cuban, so this is as much of a positioning exercise for Netflix right now, rather than it being a big financial reward for them in the short term.
3. American Express
One of the already announced changes for American travellers to Cuba has been the collaboration and lifting of rules regards the use of American credit cards in Cuba.
Those travelling to the island can now use credit cards such as Mastercard and American Express, as they would when travelling to most countries worldwide.
An agreement is now in place which makes it much easier for American banks to process payments and purchases from Cuba.
Mastercard is also following AMEX into the Cuba market.
4. IDT Corp
Telecommunications is a very competitive field and one which will be much sought after from Cuba households looking to be connected to the world in the future, through telephone and high-speed internet connections.
The first American company to dip into the market is IDT, which have an agreement with the Cuban government to provide long-distance direct calls between the U.S. and Cuba, eliminating the need for calls to now be routed via a non-American provider.
The new agreement is between IDT and Empresa de Telecomunicaciones de Cuba (ETECSA).
ETECSA are the state-sponsored telecoms provider in Cuba and have complete control over the present network.
Exactly how IDP and ETECSA will work together over time is unclear, but this certainly puts IDT in a great position moving forward.
IDT already act as a provider for a large number of Latin American countries and Cuba remains one market that they clearly would love to have a market share in.
Getting Started
If you are looking to expand your own business into the Cuban market, you are advised to still do so with caution.
Trying to understand exactly what comes under Cuban law, American law, and where the two meet is still a minefield and one which might take time to become more transparent.
You need to accept that things are not going to change overnight in Cuba in terms of business and trade.
Herein though also lies the opportunity in that any company who is able to establish an early footing in Cuban business relations stand potentially to do very well.
All of the main opportunities at present are for very large multi-million deals, deals with the Cuban commerce department are actively seeking investment for.
Areas that include the manufacturing of transportation equipment and drugs and bio-chemicals are definite areas of opportunity already, but we are talking in excess of five million dollars for these types of investment opportunities.
