Publications
Partners
Miami - Starbucks can move to Cuba, but it still cannot sell lattes there.
The Obama administration on Friday tore down barriers to US companies doing business on the Communist-ruled island just south of Miami, but plenty of regulatory and legal roadblocks remain on both sides of the Florida Straits.
Airlines and cruise ships will see less meddling with their schedules, although the new rules approved by President Barack Obama will not lead to a significant boost in visitors, as US law still prohibits most Americans from traveling there.
But Starbucks can still not sell prepared drinks like a latte or a cappuccino, only packaged coffee, said John Kavulich, president of the US-Cuba Trade and Economic Council.
The new rules of engagement have opened the door for Internet companies, but a Cuba government-owned company has the local monopoly on web services. The prospects for retailers and restaurants are murky. Cuba's mostly poor population of 11 million has limited spending power and remaining US law tightly restricts what can be sold to the former Cold War foe.
And then there is the biggest wild card of all: the Cuban government, which will have the final say on who is licensed to do what.
"You don't just go down to Cuba and hang up your shingles. That's not how it operates," said Kirby Jones, head of Alamar Associates, which has advised companies on business in Cuba since the 1970s. Starbucks, for one, said it had no plans to enter Cuba.
To be sure, executives described the relaxing of US rules as an important step toward opening up the Cuban economy to US investment in a wide range of industries.
United Parcel Service said it "welcomes the opportunity to provide logistics services in and out of Cuba as regulations are changed". A spokesperson for Archer Daniels Midland, which has exported goods to Cuba under existing regulations, said the agribusiness group "will be ready to adapt to new opportunities as they arise".
US telecoms Verizon Communications and Sprint on Thursday and Friday said they planned to offer cell phone roaming in Cuba.
But other companies showed a more cautious tone. Both Wal-Mart and home improvement chain Home Depot, said they were focused on growing in their existing markets. Kurt Jetta, head of the TABS Group, which provides consulting for some of the top consumer and retail firms, said: "we have over 50 clients, and no one is talking about Cuba."
While the new regulations would allow US companies to open retail outlets, there are limits on what can be sold based on US trade law enacted in 2000.
It is these restrictions, along with uncertainty over what the Cuba government will allow, that should keep US executives cautious about the potential for business in Cuba. The new rules started a process that would take time, he added.
"Obama took a sledgehammer to US regulations today, but he's 50% of the equation," said Kavulich of the US-Cuba Trade and Economic Council. "No one should be fuelling up their corporate jet and filing a flight plan for Havana today."
Credit concerns
The new rules do not allow US companies to extend credit to Cuba, nor do they permit Cuba to use dollars in international transactions.
Even if such rules were eased, non-US companies that do business in Cuba right now are working with credit terms of anywhere from nine months to two years, said Gary Heathcott, a special consultant to CJRW, an advertising and public relations firm in Arkansas, who soon will be traveling to Cuba with Arkansas Governor Asa Hutchinson and representatives from businesses such as farmer-owned cooperative Riceland Foods.
"They are a cash-poor country," Heathcott said.
Just getting there remains a hurdle, with a prohibition on regular scheduled flights still in place. The new regulations allow US airlines to set up local offices, and to hire Cuban nationals as gate agents, airline sources said.
Some former Cuban companies want a lot more.
On the heels of the 1959 revolution, communist leader Fidel Castro's government seized privately-owned homes and businesses and nationalised all foreign businesses with little in the way of compensation or restitution for Americans.
Bacardi, the largest privately held spirits maker in the world, was among the most successful companies in Cuba before its Cuban assets were seized by the government and its founders exiled in the 1960s. In a statement, the company said it was too early to comment about a possible return to the island nation.
"We believe that the issue of properties expropriated from US citizens and Cuban Americans will need to addressed," a Bacardi spokesperson said in a emailed statement.
