Cuba, the next frontier market for US? Sorry, the Chinese have already been there

“Sorry, beat you to it in Cuba”. Xi Jinping and Barack Obama, seen together in 2015. The White House

The images of US President Barack Obama on his momentous visit to Cuba last week have dominated the international media. President Obama said he had come to “bury the last remnant of the Cold War in the Americas”.

In his two days of walkabouts and meetings with Cubans of all stripes, President Obama did seem very welcomed and warmly received indeed, despite all the anti-American slogans that have been de rigueur since the 1959 revolution that installed a one-party Communist government.

He was the first sitting US president to visit the country since President Calvin Coolidge did, 88 years ago. Since then, Cuba had been closely tied to American businesses, not least in being a favourite tourist destination. The US also backed the dictatorial regime of Fulgencio Batista, who took power in a military coup in 1952.

All this stopped with the 1959 revolution. What ensued was one of the longest trade embargoes between any two nations, which previously enjoyed rather close ties otherwise – even though it was linked to organised crime and corruption.

With the thaw set in motion by President Obama in 2014 and actualised further with his landmark visit to Cuba, the US hotel industry has wasted no time in plotting their return to the island.

Starwood Hotels and Resorts will begin managing two hotels in Havana by the end of this year. Marriott International is said to be in talks with the Cuban authorities for a slice of the hotel industry there too.

China’s Xi Jinping: visited Cuba in 2014

But the Americans are certainly not the first to reap any benefits from Cuba’s opening up, which was set in motion when Raul Castro, the current President of Cuba, took over power from his brother, the revolutionary leader Fidel Castro, in 2008.

China’s President Xi Jinping visited Cuba back in July 2014, taking with him a delegation of 50 Chinese entrepreneurs.

“We want Chinese businessmen to invest in Cuba and partner with Cuban companies,” said Cuba’s director general for foreign investment, Deborah Rivas, at that time.

Besides the natural affinity China would feel with a fellow one-party, Communist nation, China is perhaps the only country in Asia with the volume of capital for investing in an island so far outside of its neighbourhood.

Later that year, the Cuban government made a call to international companies to invest over $8 billion in 246 specified development projects, from tourism management contracts to golf-condo developments.

One key development was the establishment of the Mariel free trade zone (FTZ) west of Havana, facing the Florida Straits, set up with the help of a major Brazilian construction firm.

But as with such transitional economies, there are the expected requirements for foreign firms interested in investing in Cuba to “guarantee foreign markets”, as well as strict rules as to what kinds of local enterprises they have to partner with.