Cuba and the U.S.: A Tale of Two Countries

Jul 21, 15 Cuba and the U.S.: A Tale of Two Countries

By George L. San Jose, president and chief operating officer of The San Jose Network.

For the first time in over 50 years, the United States and Cuba are formally reestablishing diplomatic ties, leaving implications for American businesses seeking to expand their markets. The Cuban embassy in Washington, D.C. opened its doors on July 20, but what does that mean for companies looking to reach those 11 million consumers?

The growing relationship between the U.S. and Cuba signals significant pending opportunities for American businesses. Beginning with the acceptance of American credit cards, cellular service, and now with embassies opening in both countries and the introduction of new travel regulations, we see only the first steps preempting the inevitable: the trade embargo will soon be lifted. The historical move could create 6,000 American jobs and add between $1.2 and $4.8 billion annually to the U.S. economy.

As with any new opportunity, market knowledge, speed to market, and infrastructural/distribution understanding will decide success or failure in the pursuit of market share growth. Brands that start planning now will get the first chance to reach 11 million consumers.

Before now, Cuba has never been targeted.

In December, President Obama and Cuban President Raul Castro announced that they were working together to lift the trade restrictions. Over the past eight months, The San Jose Network has utilized external and internal resources to explore the potential of the Cuban market, encouraged by the preliminary findings and developmental changes occurring weekly.

There is no doubt that Cuba poses a great opportunity across many industries, sectors and categories. Yet, we have to proceed with caution and move in parallel fashion with the legalization in commerce between our two countries.

Even with the economic embargo still in place, the U.S. and Cuba have found their way around some trade restrictions. In fact, after the U.S. exported food to Cuba after a 2001 hurricane, the U.S. continued to export some food supplies to the island, and now the U.S. is Cuba’s second-largest food supplier. In 2008, annual food sales to Cuba topped $710 million. This number could be much larger if the U.S. lifts the embargo and more players are able to enter the market.

The U.S. economy stands to gain positive momentum if Congress lifts the embargo. Not only will our exports reach new consumers who share a common demand for our products and services, but it will help lower costs for the goods and services we consume here as well.

Several U.S. industries will benefit from the new relationships between the U.S. and Cuba, particularly technology, medicine and food, among other sectors. This move will in essence create a new market nearly four times the size of Puerto Rico. And while it will take some time before product consumption surpasses their northwesterly neighbors at that rate, now is the prime time to begin developmental planning and strategy to address future consumer demand.

As a new middle class with significant buying power emerges across the Americas, many of the countries in Latin America are relishing from unparalleled growth as more stable governments arise and global competition increases. State-controlled economies are rapidly declining resulting in the emergence of new, open markets for U.S. brands to capitalize on new opportunities. Now with 296 million consumers in the labor force between the ages of 25-59, these collective Latin American markets triple the size of the United States labor force.

About The San Jose Network

For the last 25 years, The San Jose Network (SJN)—the largest independent MarCom network with over 25 years of experience servicing brands across the Americas—has specialized in the intricacies of introducing brands to emerging markets like Cuba, where local connections stand paramount. As a network of agencies that operates like a hemispheric trading block throughout Latin America, SJN has served a wide range of Fortune 1000 brands including Harley-Davidson motorcycles, American Airlines, Bulova watches, and ECHO power tools.

The San Jose Network’s InsightOut discovery programs for Latin America usually includes comprehensive research across consumer profiling, market sizing and sales potential, environmental and governmental factors, product and service distribution landscaping, and operational, logistical and marketing blueprints.

Cover Photo Source: Anna Jedynak / Shutterstock.com

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