CubaTrade-April2017-FLIPBOOK

How do you conduct business in Cuba? With patience and an
understanding of the state-driven Cuban economy. These are the
insights of a veteran who has guided multinationals through the
maze of the island’s intricate business culture for 25 years. His
most important advice: Don’t wait.
Making The Deal...
Cuban Style
By Doreen Hemlock
As the only Havana-based foreign lawyer representing an international law firm, Gregory
Biniowsky offers a unique perspective on doing business in Cuba. The 48-year-old from western
Canada began living in Havana in 1992, and has worked as a consultant on the island for a
variety of clients including the Canadian government, the United Nations, nonprofits, foreign
companies and now, law firm Gowling WLG.
Bioniowsky sees Cuba as a promising market, but warns foreign executives not to confuse
its moves toward a state-driven, mixed economy as a rush toward capitalism. He suggests that
entrepreneurs embed their projects within Cuba’s social and political priorities, while staying
polite and patient. The potential payoff: In Biniowosky’s view, “Within five years, I think
Cuba will be a booming place.”
Within five years, I
think Cuba will be
a booming place
Gregory Biniowsky,
Gowling WLG
CT: How did you get started with Gowling WLG, the merged
Canadian-British law and consulting firm?
Gowling is a very entrepreneurial firm. In fact, they opened up
an office in Moscow in 1988. They heard about me, reached out
and said they wanted to be the first international law firm with a
presence in Cuba. I’ve been with them exclusively for two years as
their representative on the island.
To be very clear, I’m not a Cuban lawyer, although I did a
year of law school at the University of Havana. And Gowling
WLG does not have a formal office in Cuba. What I offer is
strategic advice, on-the-ground problem-solving and accompaniment
to Gowling WLG clients who decide to explore or enter
the Cuban market.
CT: What kind of clients do you work with?
It’s very diverse, from clients who want to get involved in tourism,
hotel development, rum production, manufacturing, health
tourism, airlines, pharmaceuticals, biotech, airports, construction,
infrastructure, and selling Cuba food and beverages.
CT: Are your clients diverse in size, from multinationals to small
entrepreneurs?
Unless small entrepreneurs have a really unique product or service
to offer, I’d say they’re going to have great difficulty entering
the Cuban market. The Cuban government is more interested in
medium and especially large companies. The business you’re doing
is invariably with the Cuban state. So if you do cut a deal, it’s
going to be a very large project or large purchase order, and often
small entrepreneurs can’t handle those volumes.
CT: What mistakes do foreign companies tend to make in
Cuba?
One is to think that Cuba is launching itself head over heels into
some sort of capitalism. It’s not. Is Cuba making economic reforms
that try to be more market-oriented, to give a greater level
of autonomy to state enterprises, to raise productivity and efficiency?
Yes. But this is still going to be, at least for the foreseeable
future, a state-driven economy. Related to that, clients may think
that with Cuba “opening up,” they have to go in quick, make
money quickly, and cut quick deals. There’s no such thing as a
quick deal in Cuba. The mistake is clients having high short-term
expectations. I try to lower my clients’ short-term expectations
and raise their medium- to long-term expectations.
Another mistake is to think that because Cuba might have
economic difficulties it will be easy to negotiate one-sided deals,
because the Cubans need the investor’s capital, know-how,
market or technology. The reality is it doesn’t matter how difficult
things are, Cubans are very nationalistic and proud. They don’t act
desperately. They’re willing to close the door on a lot of money if
it doesn’t fit with the state’s political and social priorities, or if the
investor has not earned their trust.
And that comes to another mistake: to think “business is
business,” and you don’t need to understand the Cuban government’s
priorities and the political context in which the economy
operates. I say to those people: “Maybe Cuba is not the right
market for you, because this is a country in which politics and
social priorities are inextricably linked with business.” Sometimes,
my challenge is assisting the client to embed their business
proposal within what I see as the Cuban government’s priorities.
If you’re sensitive to those priorities, you have a greater chance of
actually being successful.
CT: How do you align client projects with Cuban priorities?
It’s understanding that 1) the Cuban government needs hard
currency coming into the country; you have to show that. And
2) the Cuban government is very cautious about giving up control.
They feel threatened, I think, for justifiable reasons. So, for
most ventures, they want 51 percent control, so they can make
sure the business is managed in a way that meets whatever their
priorities are—whether it’s buying inputs for that business from
one country over another or when payments are made.
For instance, take hotels and where Cuba wants them. Right
now, they’re really saying to foreigners with equity, “No, it’s not
Havana. It’s not Varadero. We’re going to start building hotels
in Las Tunas or these outlying provinces that are not benefitting
as much from the influx of tourism.” So, their social priority is
to start spreading around the wealth, and where a hotel is being
built is more important than the size.
Where politics also trumps business is in decision-making.
Foreign executives sometimes expect that the government official
sitting across the table in Cuba is the actual person who makes
the decision, and they’re not. These big decisions are made higher
up, so it makes the negotiating process more complex. Why? Because
the Cuban government wants to vet, control, approve and
analyze all ventures signed.
CT: What time horizon do you tell clients to expect on Cuban
projects?
For a simple trade agreement, to sell the Cubans something, it’s
shorter—maybe several months, not days or weeks.
But if you’re looking at a project where there is an investment
or a long-term contract for some kind of service, you’re
looking at a year at least. It’s slow partly because the Cubans are
cautious, and partly because the bureaucracy is slow, a bit overwhelmed,
and doesn’t have a lot of the resources it would like.
My advice is, be patient and take the time to understand the
Cuban government’s priorities. Read some of the key documents
that encapsulate those priorities, like the Lineamientos and the
Portfolio of Opportunities for Foreign Investment, to get an idea
of where their heads are at.
CT: What other recommendations do you have for negotiating
business in Cuba?
I suggest five Ps. First, be polite. Don’t come in here with the arrogance
and hubris of a cowboy, saying “I know what the Cubans
need, and I’m going to tell them what they need.” I tell my clients,
“Your first meeting with the Cubans, shut up and listen. Don’t go
right into your sales pitch. Listen. Ask questions. Then, when you
finally make your pitch, you say something like, “On the basis of
what I understand to be Cuba’s priorities—social, political and
economic—I think this business idea might find alignment with
your government’s long-term development strategy.”
So, come in with humility. Understand that these guys have
stood up to the United States for 50 years, and they don’t take
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