The 3 Things to Know Before Doing Business Online in Cuba

The 3 Things to Know Before Doing Business Online in Cuba
KYLE YORK
CONTRIBUTOR
Chief Marketing Officer for Dyn

For the past 53 years, Cuba has been closed for business to much of the
international market. Following the Castro-Krushchev missile crisis,
Cuba was even barred from trading with many Western countries and
excluded from the kinds of modernization deals and investments that its
Latin American neighbors take for granted. For the past 20 years, it has
also been Internet dark.

Related: No, McDonald's Won't 'Ruin' Cuba

But, as tensions with the West have cooled, Cuba has turned on the
Internet, opening the floodgates (albeit, slowly) to its 11 million
citizens and giving the green light for businesses to enter the market
in earnest. While not without its risks, Cuba is a market that holds
deep potential, especially given its proximity to the United States, its
educated population and its wide-open commercial potential.

Following are the three most important things to know for businesses
hoping to enter and succeed in Cuba:

1. Internet access is limited but growing.
The Cuban market has been virtually closed to the Internet for years.
The only access points have been at tourist-only hotels and among those
citizens -- a small percentage of the population -- possessing the
connections and deep pockets to secure dial-up-speed access. Most
estimates put total access on the island at 5 percent, but recent
additions of Wi-Fi capacity to dozens of state-run Internet centers has
put the ball in motion for broader future access.

Though expensive, at $6 to $10 per hour (a significant investment in a
nation where the average weekly salary is $20), the introduction of
Wi-Fi signals a move to greater availability moving ahead.

Another sign that access could soon become more widespread is the fact
that the infrastructure is already in place for a larger network to be
built. In 2011, Dyn Research broke a story indicating that there was
fiber optic access to Cuba via Venezuela; and in 2013, Spanish telecom
Telefonica began service to Empresa de Telecomunicaciones de Cuba S.A.
(ETECSA), the state telecom of Cuba.

The capabilities are in place, then, for Cuba to have more extensive
Internet access; and if political conditions continue to soften, we'll
likely see services and use become much more prevalent.

Indeed, if the Internet is opened up for greater consumer -- and
business -- access, cloud access will be available, but at
less-than-perfect performance speeds. Through our research, we've
examined connection speeds to Havana and found that they are between 100
and 249 milliseconds -- which is relatively poor performance.

By comparison, the same cloud providers connect with San Juan, Puerto
Rico, at 50- to 99-millisecond connection speeds, which means that
residents in San Juan are much more able to quickly load and access
websites for shopping, social media connections, news sites and more.

2. Mobile will eventually dominate.
According to ComScore, mobile-only Internet access in the United States
now exceeds desktop-only access, and we've seen this same shift to
mobile play out in India and China, as well. In fact, in China, a
shocking 89 percent of Internet users access the Internet by mobile first.

However, the landscape is quite different in Cuba, where residents can
find Internet-ready phones, but where actual Internet access is
expensive and hard to find. However, as this changes and Internet speeds
and infrastructural investments improve, the mobile market will likely
explode.

Much like their counterparts in India and China, Cuban consumers will
skip over desktops or laptops for Internet use and transition straight
to mobile-first platform use. Soon, they will be catching up to the
Internet-browsing behaviors in other developing countries.

Related: Headed to Cuba for Business? ¡Cuidado!

3. The long view is the only view.
Doing business in developing markets is invariably a tricky business.
Cuba is particularly difficult to assess, not only because the market
has been closed for so long, but also because it has been open only to a
small handful of countries that have had time to gain a strong foothold
(primarily, China, Russia and Venezuela). Combine that scenario with the
fact that international business and politics go hand in hand, and the
word "complex" only begins to describe Cuba's entry-level environment
for foreign business.

Companies that want to do business in Cuba also need to be aware that
the buying power of the Cuban market is quite small compared to that of
larger markets. Economically, Cuba is better off than neighbors like
Haiti, Dominican Republic and Jamaica, but it still lacks the free
market economy that can support consumers who have buying power.

It will take some time for higher-paying travel and hospitality jobs and
other, more diverse industries to drive job and wage growth in the
country. The long-term approach to building a presence and brand
reputation in Cuba is the only way to enter this developing market and
experience success.

This level of diligence should include a thorough vetting of potential
partners. It's crucial to understand their ability to help you with
market penetration and growth, help you navigate the political and
regulatory waters and become long-term allies committed to your
business. It's crucial not to be "at the dance" with multiple suitors.

Conclusion
Cuba is influenced heavily by U.S. culture, and the many expats who fled
the island decades ago could be highly influential in a Cuban
renaissance. As Internet access and a greater openness to foreign
investment begin to snowball in the coming decade, early entry in the
Cuban market will prove a smart investment for companies that go in with
both eyes open.

This will not be a quick pay-off, but rather a long game. The path to
full Westernization will be a bumpy one.

It takes time for a country to invest in infrastructure, for the
population to gain enough access to the technology that enables Internet
connection and for brands to gain a toehold in a market with incumbent
names. But playing the long game will be the key to success -- and
companies that invest early will gain the upper edge as this nascent
Internet-connected market comes online.

Source: The 3 Things to Know Before Doing Business Online in Cuba -
http://www.entrepreneur.com/article/253071