World City Guide

Business

Business Profile
Until the 1980s, all business was controlled centrally by the state, with everybody working for the government and with guaranteed employment for all. Throughout the 1980s, foreign companies were allowed to set up joint ventures with the government and, in 1995, international organisations were invited to establish 100% foreign-owned businesses in Cuba. However, due to many companies not wishing to upset their American trading partners, there have been few serious ventures – with the exception of the tourism industry. The collapse of the Soviet Union hit Cuba hard as it lost its biggest trading partner and austerity measures were brought in for five years from 1990 under the Periodo Especial. The state was forced to lay off workers to avoid financial collapse and had to allow its citizens to become self-employed. Fearful of encouraging Capitalism, the government imposed high taxes on these budding entrepreneurs and forbade them to take on employees. Recently, these restrictions have been relaxed and there is now a proliferation of paladares (family restaurants) and casas particulares (guest-houses). Since unemployment does not officially exist there are no figures available.

Cuba’s main exports are sugar, nickel, tobacco, shellfish, medical products and coffee. All industries are still state controlled but many now have foreign investment as well. Canadian mining companies have set up joint ventures to develop the potential of a country rich in mineral ores, in particular nickel. Sugar, one of Cuba’s largest exports, suffered severe problems in the early 1990s when production sharply declined because companies were unable to obtain fertiliser and herbicides or fuel to run their machinery. The industry has still not recovered to its former high production levels, although more areas have now been planted to try to increase the output of production and Cuba has invested heavily in organic farming.

Tourism has become Cuba’s biggest success story, bringing in millions of Dollars worth of hard currency each year. The tourist industry has seen a steady increase of about 10% a year over the last decade, with even greater increases predicted as more foreign companies and more airlines invest in the island. As with other industries, tourism is still state controlled but many hotels are run on a joint-venture basis. Facilities, services and prices tend to be higher in these properties. The worst year for Cuba in recent times was when the GDP declined to 0.7% in 1994 but successive years have seen a steady increase and there is now a real sense of optimism.

Business Etiquette
The international business community is beginning to realise the potential of the Cuban market and there have been several successful trade fairs over the last few years. Isolationist in the past, the Cuban government is now receptive to new opportunities. However, work practices can still be stuck in the Communist mind frame, where there is rarely anybody prepared to take the initiative or to make decisions. This is further aggravated by the Cuban attitude of leaving everything to mañana (tomorrow). Initial approaches from international businesses are usually met with great optimism and indications that anything is possible, but this is followed by total inactivity once the visitors have returned to their home country. Another problem is the notoriously lax timekeeping – Cubans can turn up hours late for a meeting without a hint of an apology. Dress is rarely formal and most Cuban businessmen wear the traditional guayabera shirt to meetings. On the other hand, businesswomen can be very smart. Visitors tend not to be invited to lunch or dinner but rum often flows at a meeting. Offices are generally open 0830-1230 and 1330-1630 with some Saturday opening.