U.S. President Barack Obama arrived in Cuba on March 20 to start a two-day visit on March 21 and 22, in which he became the first U.S. president in nearly 90 years to visit the country. While is Obama trying to redefine Cuba-U.S. relations, experts believe that the Caribbean island country will become more open, not only in terms of politics but also economy, due to the prospect of the end of the U.S. embargo against Cuba. As more foreign investors enter the country, Chinese companies are likely to face growing competition from firms looking to grab a share of newly opened markets.
Zheng Dawei, a film producer who flies between China and Cuba twice a year, said he arrived in Havana in January to lay the groundwork for his new film, a love story set at Havana University.
"We are staying in an apartment that belongs to local residents. The rental business here has grown in popularity in recent years," Zheng told the Global Times on Wednesday night in a phone interview.
For the past few days, almost everyone in Cuba's capital city has been talking about U.S. President Barack Obama's visit, he said. The visit marks a milestone in the normalization process between the U.S. and Cuba, which also indicates there will be further openness in Cuba's politics and its economy, according to the Washington DC-based think tank Brookings Institution.
Obama and Cuban leader Raúl Castro share the same goal, wrote Richard Feinberg, a nonresident senior fellow in the Latin America Initiative at Brookings, in a post published on the institution's website on Monday. Both wish for a peaceful transition to a more prosperous Cuba, more open to the world and to global commerce, he said.
Obama arrived at Havana on March 20, becoming the first sitting U.S. president to visit Cuba in nearly 90 years. The president also called on the U.S. Congress to end decades-old Cuban trade embargo.
Some restrictions have already been lifted. For example, U.S. companies are no longer prohibited from investing in Internet and broadband infrastructure inside Cuba, according to media reports. The Cuban government is also likely to soon lift the 10 percent tax on U.S. dollars exchanged for local currency.
"Those are positive gestures, showing that it will be much easier for foreign companies to do business in Cuba," said Yang Jianmin, vice director of the Institute of Latin America at the China Academy of Social Sciences.
A changing society
Inspired by the long-time bond between China and Cuba, Zheng said he has always been attracted to Cuban culture, which is why he decided to get involved in cultural exchanges between the two countries, such as photo exhibitions and film festivals.
"China and Cuba has a lot in common. For example, both countries have been through colonization," Zheng said, noting that he had been working in this area for about 15 years.
"Cuban society has been changing over the past decade, and Chinese investors have been playing a more important role in it," he told the Global Times on Wednesday night.
Not only have Chinese State-owned enterprises (SOEs) such as China National Petroleum Corp and China Petroleum & Chemical Corp entered the Cuban market, Chinese technology firms and automakers such as Huawei Technologies Co and Zhengzhou Yutong Group Co have been tapping it as well, Zheng said.
"You can see Yutong buses and its high-end coaches almost everywhere in Havana today," he said.
Although the non-State sector has played a larger role in Cuba's economy since the end of the Soviet era, the Cuban government, both directly and through SOEs, was still the source of more than three-quarters of the country's economic activity, according to an article published by the Pew Research Center in May 2015.
Some private entrepreneurs have started their own businesses, especially in tourism and retail, which have grown rapidly in recent years.
However, foreign companies have to wait for the Cuban government to lift restrictions on investment in those areas, Yang told the Global Times on Thursday.
"Once the nation opens up to a greater extent, foreign firms will gain access to more 'non-State' sectors, but it will take time," he said.
After Obama's visit, the expected change in exchange currency tax policy is likely to encourage the use of dollars in trade settlements, which will lower costs for foreign companies, Yang noted.
Challenges remain
A 30-year-old employee at a Chinese SOE, who has been working for machinery and chemical suppliers in Havana for five years, said the investment environment there is not always favorable.
For example, because of the lack of payment methods in Cuba, it often takes more than a year for exporters to get paid for the goods they ship to Cuba, said the employee, who refused to be named.
Also, some authorities are not particularly efficient. "For one of our projects here, we've been working on it for seven years, but there hasn't been any progress," he told the Global Times on Wednesday night in a phone interview.
In his first speech to the Cuban National Assembly, Raúl Castro, president of the Council of State of Cuba, promised "structural changes" and "big decisions" in the near future, adding "we have to make our government's management more efficient," according to media reports in 2008.
However, with Castro at the helm, many expect Cuba to follow the Chinese model of reform, in which a one-party State gradually establishes free-market incentives through partial economic liberalization, according to the Brookings' policies briefing.
More of the market
Zhang Jiang, member of the board of directors of Empresa Mista Bellomonte SA, a joint venture of Beijing Enterprises Group, said he has been working in Havana since 2011. The company has invested in a $560 million real estate complex in the seaside tourist town of Guanabo.
"More and more foreign investors, including French and Russian companies, are rushing into the country, but U.S. companies will be our major competitors," Zhang said.
As part of the Obama administration's efforts to improve relations with Cuba and open doors to licensed U.S.-travelers only, California-based community-driven hospitality company Airbnb announced on March 20 that it would start offering accommodations in Cuba to travelers from all over the world, rather than just from the U.S., according to an e-mail the company sent to the Global Times on Friday.
With the normalization of the U.S.-Cuba relations, more U.S. firms will come to Cuba, noted Dong Jingsheng, professor of Latin American history at Peking University.
"For U.S. firms, the close proximity and historical connections will make it convenient to invest in Cuba. However, Chinese enterprises could seek out more opportunities to work with their U.S. counterparts," Dong told the Global Times on Thursday.
