Tags: US | companies | business | Cuba

US Companies Might Want to Cool Their Enthusiasm for Business in Cuba

By    |   Friday, 03 April 2015 08:00 AM

The media has been full of optimistic forecasts for U.S. business opportunities in Cuba, following President Obama's decision in December to normalize relations with the island nation.

But many experts say some expectations are overdone.

"We are embarking on a process that is complicated," Stefan Selig, undersecretary for international trade at the Commerce Department, said at a conference this week, according to The Washington Post. "We should remember Cuba is a small country, and a poor country. I don't think we should be overly excited about the near-term economic prospects."

Cuba has a population of only 11.4 million, about the same as Ohio. And its citizens earn an average of just $20 a month, "severely limiting their potential as consumers," notes Post economics correspondent Michael Fletcher.

"The vast majority of the nation's economy is government-controlled. And with the exception of a few sectors, such as agriculture and telecommunications, U.S. firms are prohibited from selling to the Cuban government."

Leon Cooperman, CEO of Omega Advisors, shares that caution. He told CNBC he doesn't have "any particular interest" in investing in Cuba. "That's very far down on my list," Cooperman said.

Further up his list are opportunities in developed countries.

To be sure, both Cuba and the United States have "a lot to gain" from the resumption of
diplomatic relations, he said. "Hopefully we'll succeed in turning them [Cuba] around."

Cuba has long had a hankering for U.S. products, John Kavulich, a senior policy adviser at the U.S.-Cuba Trade and Economic Council, told Bloomberg.

"What's attracted U.S. companies from before the revolution, through the revolution to today is there's an incredibly high awareness for U.S. brand names," he said. That lowers the cost for U.S. companies to enter the market by reducing their marketing needs.

But Kavulich makes the same point as Fletcher does about consumer-spending power. "No one should be holding their breath for the Havana-Mac," he said.

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The media has been full of optimistic forecasts for U.S. business opportunities in Cuba, following President Obama's decision in December to normalize relations with the island nation.
US, companies, business, Cuba
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2015-00-03
Friday, 03 April 2015 08:00 AM
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