Stop hoping for change in Castro's Cuba

Before you decide to check out Cuba, you may want to consider some reality about doing business in the communist island. The bottom line is that the island is still the same one-party state that we've been talking about for years.   

Unlike Mexico, where you open a hotel in a joint venture with a private Mexican firm, this is Cuba and you do business with Castro Inc.

How do you think that Castro Inc became an international multinational company?    
 
First, they stole everything, currently estimated at $7 billion.  

Second, they borrowed money and not paid it back. Do you think that Putin wrote off $32 billion of Cuban debt because he is a nice guy? Or could it be that he sees the island as a strategic location next to the U.S.?

Finally, they're about to be bailed out by President Obama's "one-way street negotiations style".

Keep your eyes open and understand that you are doing business in a communist island, as these rules confirm (via Capitol Hill Cubans)

"Before you go rushing into a business venture on the island that was the communist outpost in the Cold War, you might want to have a talk with Ross Thompson at Classified Worldwide Consulting, which has an office in West Palm Beach. Thompson, the firm’s managing director, has a few caveats to share.

In particular, Thompson cautions that Cuba’s foreign investment and business laws present six key challenges that Americans need to think through ahead of time. They are:

1. The Cuban government will own a majority stake in the company.   A 49-51 percent split is common, but Havana has required a larger share in some sectors.

2. Your local workforce will be selected by the Cuban government.  This selection may not be based on skill or merit but by seniority or cronyism.

3. Cuban managers will be appointed to mirror your handpicked managers, especially if your senior leadership includes Cuban exiles.  The Cuban managers will ultimately control many decisions, or influence them, when dealing with your majority partner, the Cuban government.

4. Everything in Cuba is heavily influenced by Cuba’s intelligence service, the DGI.  You must be very careful to guard your own corporate proprietary information.

5. Vendors you may work with may be fronts, or “cutouts,” for other foreign intelligence services such as those from China, Russia, Iran or North Korea.  The capture and exchange of corporate confidential information is a lucrative business, so guard your files.

6. The Cuban government’s payment records and credit are poor.  This means your majority business partner essentially has bad credit, and could present challenges for you when raising capital or seeking contracts. However, it could also move you to the front of the line when dealing with countries that have been historically friendly to Cuba.

Furthermore, you may be investing in "stolen property", or assets that the regime expropriated from Cubans and U.S. citizens. Cuba has not respected foreign investment or property laws for years. What makes you think that they are going to respect your investment?

Listen to what the dissidents in Cuba are saying. They want you to wait for real change to come to Cuba. They are not attending the U.S. Embassy ceremony in Havana.

Or listen to liberal Richard Cohen: Why boycotting Cuba makes sense.  Mr. Cohen is right. Wait for real change to come and then help us rebuild the island!

P.S. You can listen to my show (Canto Talk) and follow me on Twitter.

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