Cuba Market Entry

Cuba Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

According to cheeroutdoor.com, Cuba is a territory with a state monopoly of foreign trade companies overseeing all international trade and with a financing condition of 360, more recently 720 days. For larger or strategic contracts, it is common to require a maturity of 7, 15 or more years. In addition, the Cuban authorities will not issue an import permit for goods whose equivalent is already on the Cuban market – either from domestic production or through already authorized imports. If you are interested in exporting, first of all it is necessary to register in the register of suppliers of the relevant foreign trade enterprise (each such state-owned enterprise maintains its own separate register). Registration requires the delivery of a number of documents, and the whole process can take months or years. The ability to communicate in Spanish is important.http://www.camaracuba.cu/en/home/ ) or through the new online platform for those interested in trade and investment in Cuba VUINEX ( https://vuinex.mincex.gob.cu ).

the Ministry of Labor and Social Security, the Ministry of Communications, the Mariel Container Terminal, the Ministry of the Interior, the Center for State Drug Control and others. Thanks to institutional cooperation, exporters and importers should have a reliable source of information on all necessary procedures. More information on business cooperation with Cuba can be found on the ProCuba website (https://www.procuba.cu/ ).

Forms and conditions of operation on the market

Establishing a local representation in Cuba is a very long-term matter. The procedure for presenting applications, administrative and factual requirements and the approval process are governed by Government Decree No. 325/2014. In order to establish an office, it is necessary to document, among other things, a minimum annual turnover with Cuban state enterprises of at least USD 500,000 per year for the last 3 years, and above all the reasons for the request (the establishment of the office must be evaluated by the Cuban side as beneficial for Cuba), general information about the activities company, articles of association, articles of association, extract from the commercial register, credentials and authorization of the representative and his biography, a bank report from one of the banks of the Cuban banking system and an independent audit of the most recent financial statements. The license is usually issued for 5 years with the possibility of extension. The property can be rented exclusively from the Cuban state, purchase of real estate is not possible. Labor can only be hired through a Cuban state agency.

Foreign investments are governed by Act No. 118/2014. Specific investment opportunities are presented annually at the general FIHAV trade fair in Havana. Their overview can be found on the ProCuba website ( https://www.procuba.cu/cartera-de-oportunidades/). Regarding the joint venture (the so-called empresa mixta), the basic legal framework for foreign investments in Cuba is determined by Law No. 118/2014 on foreign investments, which distinguishes between 3 forms: a) mixed enterprise, b) international economic association agreement, or c) an enterprise with exclusively foreign capital. The new regulation allows (compared to the previous ratio of 49:51 in favor of Cuba) a company with up to 100% foreign participation (but at the cost of losing tax benefits). Cuban agricultural and non-agricultural cooperatives can also participate in it. In the issue of hiring labor (domestic and foreign) in general, the state agency that receives salaries from the employer in foreign currency and pays the worker in the national currency remains.

From 2020, the government also allowed private entrepreneurs (so-called cuentapropistas) and from 2021 also newly authorized private small and medium-sized enterprises (so-called MIPYMES) to import raw materials and equipment for their needs, as well as to export their products abroad. However, all contact with foreign partners must be carried out through foreign trade companies, which charge a trade margin.

Marketing and communication

Due to the state monopoly on newspapers, television and radio broadcasting, advertising is very limited. It is advisable to contact the press (the main economic publication is the Opciones weekly) or ordinary advertising agencies, some of which work with foreign participation. Recently, advertising in radio stations is starting to appear more often. During product presentations, etc., it is not recommended to discuss political topics or evaluate the country’s economic situation in any other way.

Issues of intellectual property protection

Cuba is a member of the WIPO (World Intellectual Property Organization) and a signatory to the TRIPS Agreement within the WTO. However, it does not really deal with the issue of intellectual property rights protection. Pirated copies of DVDs or music CDs are usually available, and it is not customary for the Cuban side to address the issue of screening rights in any way, even at official screenings. On the other hand, Cuba’s international lawsuits over the use of the trademarks Bacardi, Havana Club or Cohiba are well-known in the media.

Public procurement market

In Cuba, there is no law on public contracts, orders are placed directly to selected companies in a closed procedure based on a political decision. Every year, Cuba publishes a demand for investments, the so-called Cartera de Oportunidades, in which it specifies priority areas of interest. It is always published as part of the FIHAV fair (beginning of November), then it is available on the website: https://www.procuba.cu/cartera-de-oportunidades/

Payment terms, payment ethics and resolution of commercial disputes

The effort of the Cuban partner is usually to conclude contracts with Cuban commercial law as the applicable law. The regime for resolving disputes between joint venture partners is set out in ch. XVII Act No. 118/2014 on foreign investments. In the Cuban wholesale trade, there is no provision applicable to the amount of the margin, even for suppliers. In the Cuban retail trade, the price of goods varies between 200-300%. Larger companies such as CIMEX and ABATUR mainly practice higher price increases, which thus solve their own problems: idle time at the port, poor distribution, etc. At the same time, these are companies that face a number of unpaid debts from the past. When exporting to Cuba, the risk of chronically bad payment morale caused by extremely low liquidity in the long term must be taken into account. By default, the Cuban side requires deferred maturity at 360, 720, and sometimes even more days, and unfortunately, even after such long periods, there are further delays in payments, to partners from all over the world. In the current situation, when the tourism industry, Cuba’s main source of foreign exchange earnings, cannot be revitalized due to the coronavirus crisis, Cuba’s payment morale and import options are even more limited. Cuban businesses often offer no warranty. Banks provide guarantees mainly for strategic goods (oil, some foodstuffs, energy).

Visas, fees, specific conditions for traveling to the territory

For information on the current requirements for entering and staying in Cuban territory, the relevant consular department of the Embassy of Cuba in the Czech Republic is:

Embassy of the Republic of Cuba Jinonicka 14, 150 00 Prague 5 – Košíře Phone: (420) 233 322 175 Fax: (420) 233 341 029 E-mail: [email protected]

Tourist visa: Citizens of the Czech Republic, holders of all types of passports, need a visa to enter Cuba. If it is a tourist stay, the visa is issued by the consular department of the Embassy of Cuba in Prague in the form of a tourist card. This card can be arranged through a travel agency. In some countries, it is possible to obtain tourist visas for Cuba at the airport before departure. The tourist card entitles you to one entry, stay for 30 days and can be extended for another 30 days in Cuba at the foreigner’s police for a fee. The tourist remains with the other half of the tourist card during the stay, which is handed in upon departure. The tourist card cannot be used for business purposes.

Business visa: A business visa is required for any business transaction. Without it, representatives of Cuban state enterprises (which are the only ones with import/export authorization in the centrally planned socialist economy) completely refuse to meet with the foreign partner. Types of business visas: A7 – search for opportunities, issued to explore business opportunities, usually only for 7 days, D7 – business visa, issued at the request of the Cuban partner, for up to 30 days, with the possibility of extension (which must again be handled by the Cuban partner ). It is not possible to arrive on a tourist visa and then change to a business visa, it is necessary to apply for a business visa at the Cuban embassy from the beginning.

Documents required for citizens of the Czech Republic to enter Cuba: valid passport (valid for at least until leaving Cuba, preferably six months after leaving the country), valid visa, travel insurance, completed arrival form ( https://dviajeros.mitrans.gob.cu /initio ).

We recommend following the current conditions for entering the country on the website of the embassy: https://www.mzv.cz/havana/cz/venezuela/covid_19_aktualni_informace_k_cestovani_1/kuba.html

Public transport in Cuba operates very sporadically. It is recommended to use taxi services or rent a motor vehicle. To rent a vehicle, a Czech driver’s license is sufficient (valid for 180 days of stay in Cuba, after which it is necessary to apply for a local driver’s license – only a formality, no road traffic test is required). It is highly recommended to check the technical condition of the vehicle carefully. Due to the poor lighting and the condition of the roads, we do not recommend traveling by vehicle after dark.

There are plenty of hotel facilities in Cuba. It is recommended to book a hotel of a higher category, so that the services correspond at least partially to the European level. There is the option of private accommodation (so-called casas particulares), which usually also offer the option of breakfast and have contacts for a taxi service.

It is recommended to have enough cash (EUR), as ATMs in Cuba do not always accept foreign cards and often do not have enough cash. Since 2021, when the currency was unified, the only official currency is the Cuban national peso (CUP), which can be used to pay in restaurants and shops. In selected shops and hotels, cash is not accepted and it is only possible to pay cashless with a payment card linked to an account in a foreign currency.

Cuba is a relatively safe country compared to other Latin American countries, but theft and petty crime have been on the rise recently. Be careful, especially in the center of the capital, on the beaches and after dark.

It is recommended to use the services of a local taxi service for the connection between the airport and the city center, or the Representative Office. Vehicles are parked at the airport, or they can be ordered by phone at 7555555.

Employment of citizens from the Czech Republic

Private enterprises with foreign capital may not employ employees freely, but through a state employment mediation agency. Thus, the Cuban state has complete control over the decision-making of which employees companies employ and at what wages. In the event that the applicant wants a certain worker who was not offered to him through an intermediary, he submits his own application to this institution and it decides on his acceptance or rejection. The employee is also paid through a state agency, which keeps most of the salary as a commission for mediation – the company pays the employee in convertible currency, the state agency pays the employee the same amount in the national currency CUP (equivalent to approximately CZK). The main intermediary companies include spol. ACOREC, the diplomatic mission then the state company PALCO, which also largely controls the real estate market (also for foreign companies). The new Investment Act, effective from June 2014, now allows the possibility of employing one’s own workforce on the basis of an authorized exemption. Foreigners living in Cuba for a short time must also obtain a work permit. A Cuban citizen may not be put in charge of a branch of a foreign company.

Fairs and events

FERIA INTERNACIONAL DE LA HABANA (FIHAV) general focus, held in Havana in October/November

FERIA INTERNACIONAL DEARTESANÍA (FIART) handicrafts, visual arts, held in Havana in December

FERIA INTERNACIONAL DEL LIBRO (FIL) A book fair held in Havana in February

FERIA INTERNACIONAL AGROPECUARIA (FIAGROP) Focused on agriculture and food, held in Havana in March

FERIA INTERNACIONAL DE TURISMO (FITCUBA) Tourism trade fair with various venues in May

HAVANA INTERNATIONAL JAZZ FESTIVAL the biggest jazz event of the year with the presence of foreign artists usually held in January

The portal of the Cuban Chamber of Commerce provides an overview of fairs, exhibitions and congresses in the country: http://www.camaracuba.cu/en/home/

Cuba Market Entry