How (Not) to Do Business in Cuba

Peter Macfarlane on Investing in Cuba

We’ve been writing so much about asset protection, the decline of the dollar and the importance of multi-currency banking recently that we thought it was time for something a little different!

As a fan of alternative investing in Latin America, Doing Business in Cuba has always been one of my interests though it’s slightly outside of the scope of Q Wealth. Americans, in particular, are often interested in getting the ‘first mover’ advantage when it comes to doing business with the island. The question is, how can you do business in Cuba?

I’ve been visiting Cuba for the last ten years or so and have seen it go through many changes. I’m currently helping Alternative Latin Investor magazine prepare a brand new report on Cuba. Whilst if you are interested I would encourage you to visit and see for yourself, I think now would be a terrible time to attempt any business with Cuba.

I came across the following on the Havana Journal blog that was obviously written by someone who has been there and done that… and offers consulting services on the matter. I don’t know these guys at all but the following is 100% accurate based on my ten years of experience:

I don’t understand how any company can operate in Cuba since there is so much regulation, restrictions, risks, deterrents to successful business, hidden government accounting and sub-standard accounting practices. VERY few businesses are successful in Cuba. In my opinion most foreign businesses operating in Cuba today are there for the future, not for the present.

We get calls here at the Havana Journal many times a month from businesses looking to be the “first one in” or looking to “explore the Cuban market”. I always tell them how it works… if they are a US based business first they have to go through the lengthy process of getting permission from the US government. Then after maybe three to six months and thousands of dollars in legal fees THEN they can look towards breaking into the Cuban market. This requires many visits to Cuba to meet the right people. THEN, MAYBE they will get a purchase order. If they are a foreign company looking to build anything, they will have to learn about the process of joint ventures. All of this costing many many thousands of dollars, hundreds of man hours with the chance of doing business in Cuba.

Then I tell them the result: you will loose money. The Cuban government will let you operate your business until they figure out how to take it over. Then they will make life difficult for you until you pack up and leave… leave the island, leave your expertise and of course, leave your money.

That’s how you do business in Cuba. Hey, I didn’t say you’d make money doing business in Cuba but if you want to be the “first one in”, good luck. By the way, you are not the first one in and you won’t be the last one out. Just like Meyer Lansky said shortly after Fidel took over… “I crapped out”. Foreigners have been leaving money in Cuba for decades.