Learnings From Cuba

IMG_0038Our class’ 2018 global immersion trip to Cuba was a rare opportunity for a group of 28 US business school students to experience “the real Cuba”.

Though we studied Cuba for 6 weeks in the A term, there was no way we could have gained the perspective and understanding we did without visiting the country.

I’d like to share three key themes of our trip in the hopes you are inspired to learn more about Cuba too.

1. Cubans are proud of their history, and generally approve of socialist education and healthcare. We spoke with many Cubans – a real estate lawyer, a former ambassador, a journalist, an Airbnb host and more – and all of them have extensive knowledge and opinions on the last century of history in Cuba. Given the country has free education, it was no surprise how eloquently each speaker could describe the events leading up to the Cuban Revolution, through the Special Period (when the Soviet collapsed and Cubans lost their support) and up until the Trump administration. Not one person spoke out against the socialist system of free education and healthcare. In fact, most Cubans appreciate what Fidel Castro did for their country. However, a Northern European version of socialism mixed with free market sounded amenable to most speakers over Castro’s fully socialist agenda. Even the urban planner believed in a more European model of planning that will preserve the city’s history (versus Shanghai-type development, riddled with pollution and disregard for historical sites). Ultimately, Cubans were extremely happy when the Soviet Union funded more social programs, but with their collapse came a drop in GDP of 35% and 16 hour power blackouts. Today they are happy with some social programs, but recognize a need to grow GDP to progress as a country.

2. 80% of Cubans have either remittances, a private enterprise or a second job to supplement their $25 monthly average salary – and the US is a big part of how they do this. The US Cuban embargo prevents any business with Cuba (other than tourism). However, some say Miami – which has the largest population of Cubans in the world after Havana – keep Cuba afloat with the estimated $3B+ in remittances sent each year from friends and family in the states. This creates disparity, because the 20% of Cubans who truly live on $25 a month may not, for example, have family who can send $100 each month, effectively increasing income by 500%. A Cuban real estate lawyer shared an example of how this plays out: Cubans used to only be able to swap their houses given the socialist model. They can now sell their houses, but the actual prices paid for apartments can exceed $100-200k+, without loans, mortgages or credit of any kind available to do so. You can take a guess where they are getting the disposable income to do so! Some people are effectively “investing” in Cubans if they float housing costs, because Cubans can either re-sell their houses after making improvements, or turn the house into an Airbnb or “casa particulares”, where they can earn money renting out their homes to tourists.

IMG_0030

3. Icy relations with Cuba simply make it easier for Cuban insularity and for the hardliners in the country to push their agenda. We spoke with the head of our tour group company, Collin Laverty, who also had extensive experience working in Cuban American policy. He believes in relations that are best for the US – not relations that are what the US has had in mind. He spoke about how many Cubans were happy when Obama’s visit to Cuba softened relations. The Cubans in government, on the other hand, did not know what to do. For 50 years, Cuba had cold relations with the US, and Fidel knew how to use that to his advantage. Saying that the US didn’t want to work with Cuba made it easier to convince Cubans to believe in Fidel and keep away from US relations. The Capitalist US influence could have negatively impacted the socialist movement. The Trump administration is a return to cold relations and is a “gift” to Cubans in government who are afraid of opening the floodgates to US business and capital.

Our class had an incredible time and made great friends through this trip. Thankful to have had the opportunity… but also thankful to be back on the grid online and in the states.

Adios y hasta luego amigos!

-Jill Wang ‘18

An American in Cuba

What are US-Cuban relations like overall? Pretty icy as of the Trump presidency. What have my relations with Cuban been like? ¿Acere, que bola? Bienvenido a la Habana!

Here’s a day in the life of an American in Cuba, and some of our learnings.

7:00AM: Log into Wi-Fi in the hotel. Wi-Fi is extremely difficult to get in Cuba because the state restricts it to public hotspots where you must bring a pre-paid card with a code on it to log in. You know where a hotspot is because you will see many people sitting on their cell phones. We are lucky enough to have hotel Wi-Fi, and the only time many of the group accessed it was in the morning and evening when at the hotel.

LRG_DSC04863
This is in Trinidad, not Havana, but you can quickly tell it’s a Wi-Fi hotspot

8:00AM: Eat breakfast at the Melia Cohiba hotel in Havana. The hotel is operated by Spanish company Melia and owned by the Cuban government.

9:00AM: Meet with Cuba Emprende, a Catholic Church sponsored organization that educates and supports private small business entrepreneurs. We spoke with several students of the program. These entrepreneurs usually have outside remittances or family support to start businesses. A paladar, or a Cuban restaurant, can be as costly as $200K CUC (roughly $200K USD) to start.

LRG_DSC04808
Meeting with Cuba Emprende

11:00AM: Visit small private business, Clandestina. The founders are two very impressive and scrappy women, one Spanish and one Cuban, who own the only major retail/clothing brand in Cuba. They bring materials from the US themselves, and hand paint or stamp designs on their cheeky t-shirts. Their most famous shirt design says, “Actually, I’m in Havana” – an ode to the fact that internet is extremely difficult to connect to, and you would tell a friend when you finally do connect that “Actually, I’m in Havana [and have limited internet]”.

LRG_DSC04843

Noon: Eat lunch on the rooftop patio of La Makina Gastro Bar. We had the option of fish, chicken or lamb at most restaurants, and most automatically served a mojito with every meal. The meals we had on our trip were the best of the best Cuban cuisine, and it is important to note, we saw no Cuban sandwiches on any menus! Our tour guide, Rossi, warned us that Cuba is not known for its food given the difficulties of importing supplies and the lack of production in the country (as the highly educated population is not incentivized to work in agriculture).

1:00PM: After the meal a brand ambassador of Havana Club, a JV with French company Pernod Ricard, spoke with us about how to taste Cuban rum, and how the Cuban and French companies work together quite well to sell over $40M in Havana Club in Cuba alone each year. It is not available in the US due to the Embargo.

IMG_8498
Enjoying Havana Club after lunch

3PM: Meet with the EU embassy. The diplomats we spoke to from the embassy were relatively new to the office and spoke about their thoughts on Cuban-EU and Cuban-US relations. They were notably, very diplomatic in their responses!

6PM: Dinner at La Guarida, an old dilapidated mansion whose top floor was renovated and turned into a restaurant and rooftop bar. The cuisine was excellent by Cuban standards and the atmosphere was absolutely charming.

IMG_8516
Bar at La Guarida

9PM: Enjoy a daiquiri at Floridita, a bar Ernest Hemingway frequented during his extradition in Cuba. Afterwards, head home to connect to Wi-Fi and recharge prior to a trip to the historic colonial city of Trinidad, a 5 hour bus ride from Havana.

-Jill Wang ’18

Cuba: a Socialist Country in Transition

Since the revolution in 1960, Cuba has been a democratic socialist country. To most Americans, the concept is extremely foreign. Many of the questions we have had during our meetings in the country thus far question if privatization is possible, and what it is like living day to day in a socialist country. A few highlights on this topic from the trip so far…

2013 marked a new era for the country, with the passing of legislation allowing private (mainly touristic) businesses to operate. Small business owners now have to pay taxes on their businesses, a concept that had been foreign to Cubans until this time.

IMG_8345.jpg
A chat with a paladar (restaurant) owner at Atelier restaurant

Cubans receive free healthcare, education, some rationed food, and social services but are otherwise paid state sanctioned wages of the equivalent of $20-30 USD a month. There is opportunity to make more than the state wage in the private sector through tips and contact with foreign tourists.

IMG_8253
The artful ceiling of a paladar in Old Havana

The US Cuban Embargo means that businesses who need supplies need contacts in the US to buy supplies for them, and bring them back in their luggage. Anything that cannot fit in luggage is sent through other countries – for example, Julio who restores cars has large parts shipped through three different countries before it can come to Cuba. 

LRG_DSC04715
Owner of vintage car restoration company, Nostalgic Cars, and his staff

Foreign investment has begun to bloom in Cuba – much to the benefit of the government. Swiss hotel company Manzana Kempinski operates a hotel in Havana. They earn 17% of revenues and 1% of profits, and the Cuban government takes the rest.

LRG_DSC04690

The journalists, lawyers, educators and urban planners all agree that public healthcare and education has worked well for Cuba, but changes have and will continue to occur in the market, as Cuba’s GDP has been contracting and private businesses have afforded Cuba new avenues of growth.

-Jill Wang ’18

Tips for CBS Capitalists Coming to Cuba

Cuba: the land of cigars, rum, and pre-conceived notions.

maxresdefault

A group of 28 CBS students are venturing to Havana this Saturday. Despite what many Americans may think, Cuba is a “low” travel risk country, and you can still visit despite President Trump’s travel restrictions. If you don’t know the first thing about actually living in a communist nation (or perhaps if you’ve just heard Camila Cabello’s song “Havana” and are feeling particularly inspired), I’m here to give you a few pointers we learned in our pre-class sessions prior to departing for Cuba.

  1. Cuba has two currencies. If you’re not Cuban, you have to bring cash. There are two currencies, the CUC (Cuban Convertible Peso, or “kook”) and the CUP (monida nacional, 1.00 CUC = 25.00 CUP). The CUC is not traded internationally and is used in all the enterprises that use hard currencies such as: stores, hotels, privates and state restaurants, bars, cafeterias, taxis and car rental agencies. You can only access CUC as a non-Cuban citizen, and the official exchange rate for dollars is $0.873. If you’re changing money, expect to pay a 10% tax on USD that Euros, CAS and other currencies don’t have. The US credit cards and ATM cards will not work. fullsizerender-3-copy
  2. Don’t expect your iPhone to work. Though telecom in Cuba has vastly improved, it is still at times slow and unreliable. Internet is limited to hotel lobbies and public Wi-Fi hotspots scattered throughout major cities. You can roam in Cuba with your cell phone, but rates are very high. Try downloading Maps.me or OSMAND for functional offline map apps of Cuba.
  3. Don’t forget your papers! The US currently has a comprehensive set of trade and travel restrictions in place with Cuba (the “Cuban Embargo”). Under this embargo, only certain types of travel is authorized to Cuba. Entities are granted permission to organize educational tours, business trips, research delegations, and conferences. We are visiting under the educational visa, through Cuba Educational Travel. The Cuban government and citizens open their arms to visitors, but at times we may receive questioning about why we are visiting (especially at US customs when coming back).
  4. Tipping well is a social good. Cuba is a communist country. Doctors and engineers sometimes are motivated to work as hotel attendants or taxi drivers, because they have contact with hard currency. If they worked in their normal professions, they could be paid $20 a month – versus $100+ a day that can be earned from foreign tips! tippingincuba04
  5. You don’t need to worry about getting ill when you’re in Havana. Well – to some extent! It’s never good to get ill, but Cuban doctors are best in class. Cuba infant mortality rate is lower, at an estimated 4.76 deaths per 1,000 live births in 2013, compared to 5.90 for the United States. The life expectancy in Cuba about the same if not greater than the US. The Pan American Health Organization found in 2012 that life expectancy was 79.2 years in Cuba, compared to 78.8 years in the U.S.

Now, onto packing… looking forward to this forecast!

-Jill Wang, 18

Screen Shot 2018-03-08 at 10.17.09 AM

Reflexiones después de regresar de Cuba (Reflections after returning from Cuba)

It’s hard to imagine that just a couple weeks ago, I was traveling through Cuba, learning about the business environment, culture, and history of the country. For this final post, I asked my classmates to contribute their own reflections, opinions, and photos. I’m grateful and excited to share their contributions and insights with you.

Group by Che sign 照片 2017-3-16 15 15 35_photo by Adam.jpg
Our class in Cuba, photo courtesy of Adam Fu

“The highlight of our trip to Cuba was striking up a conversation with a local woman who then invited us into her home to tell us about her experiences during the revolution. She then made us Cuban coffee, showed us pictures of her family, and had us call her abuelita.” – Oliver

Oliver and Ron_Cuba 2017
Oliver and Ron, photo courtesy of Oliver Noteware

“Cuba exceeded my expectations on many levels. One thing I found fascinating is how advanced Cuba is on gender issues in comparison to the United States. Despite the low salaries, women and men are paid equally. In terms of abortion, all women have the right to abort. Here in the United States, we are still fighting for pay equality and for abortion rights. “ – Silvana

“After visiting Cuba, I now realize how easier it is to live in a country with no crime and violence. However, I also understand how lucky I am to have been given opportunities to pursue my dreams.” – Federico

照片 2017-3-15 09 13 45_photo by Adam Fu
Stephanie, TJ. and Tatiana, photo courtesy of Adam Fu
照片 2017-3-15 09 42 24_photo by Adam
Natasha, Teresa, Isobel, and Silvana, photo courtesy of Adam Fu

“After visiting Cuba, I now realize that the allure of the island for Americans is the fact that we mostly forbidden to go. Cuba has a long way to go if it wants to consistently attract tourists in the future.” – T.J.

“One thing that surprised me was the openness that young Cuban people had to discussing how the current system benefits them, as well as their ideas for how to improve it. The most interesting thing I learned was that workers have the daily newspaper (and novels) read to them as they work in state-operated cigar factories. I was really moved by the state’s commitment to ongoing education for Cuban citizens. After visiting Cuba, I now realize the many ways in which the system there works for the Cuban people, and I feel excited to see how that system adapts in upcoming years to provide even more opportunity for young Cubans.” – Natasha

Marc and Jefferson at steps_Cuba 2017_photo by Laila
Marc and Jefferson at organic farm, photo courtesy of Laila Marouf
Photo Mar 12, 12 58 23 PM_photo by Laila
Teresa and Laila, photo courtesy of Laila Marouf
Photo Mar 15, 7 15 56 PM photo by Silvana
Michele and Tatiana, photo courtesy of Silvana Ordonez

The diverse perspectives of my classmates and I reflect how many topics were touched on during our Global Immersion Program (GIP) in Cuba. To say Cuban economics and politics are complex would be an understatement, yet the Cubans we met continue to do the best they can to overcome their financial circumstances and maintain hope for the future.

Thank you to everyone who provided photos, comments, and feedback on these blog posts. And thank you to Chazen and CBS for this incredible opportunity!

Group lunch 照片 2017-3-16 12 38 58_photo by Adam.jpg
Professor Meier, Maggie Hopkins (Chazen), and our class, photo courtesy of Adam Fu

La Habana (Havana)

Some say that traveling to Havana (La Habana) feels like going back in time. I think this is most true when you are riding around in the vintage American convertibles from the 1950s, which is exactly what we did on Wednesday morning. Though a cloudy morning, this experience was probably one of the most enjoyable and memorable moments of our trip. Our tour guide explained that the cars were nicknamed “almondrones,” referring to how hard almonds are to break.

IMG_9322

Two contrasting periods in time in Havana help explain its current state: First, you have the glamorous decades of the 1920s-1950s where Cuba was a cultural epicenter in Latin America, and much later, you have the Special Period of severe economic recession in the 1990s, which led to extreme rationing and a lack of investment to maintain the incredible buildings and opulent attractions.

After a panoramic tour of the city, we arrived at an organic farm where Miguel Salcines spoke with us about the history and significance of the farm. Since Cubans were unable to import products like pesticides for their crops during the recession, the organic farm was born out of necessity. Organic farming, as Miguel explained, is becoming increasingly popular and attractive as both a sustainability measure and a good business model.

Miguel extolled the benefits of eating organic products and lamented the American fast food diet. Halfway through the tour, he pointed ahead to a path of steps and stones and said he named these, the “Obama Steps.” He explained that if a Republican candidate had been elected instead of Obama, he would have lost business but that didn’t happen due to Obama’s reelection. He also told us to watch his TED Talk about “afrodisíacos y alimentos” (aphrodisiacs and food), which we plan to do once we have WiFi access and are back in the United States.

On Wednesday evening, we went to La Guarida for dinner and heard from the owner, Enrique Núñez, about his business and the fame garnered from the book and movie, Fresa y Chocolate (Strawberry and Chocolate) that features the restaurant. (And yes, there was a dessert called fresa y chocolate and it was my favorite part of the meal.) Due to laws for non-state businesses like his, he has had to be creative in order to grow and expand his restaurant, including having tenants who both live and work there, as well as having different sections of his business under the names of various family members.

IMG_9382
La Guarida Owner, Enrique Nunez
FullSizeRender (1)
View of Havana from La Guarida

The next day was equally educational and unique. After hearing from two representatives of Habanos, the largest cigar company in Cuba, our group took a tour of their cigar factory. Like Havana Club, Habanos is also a joint venture and we were fortunate to hear from a staff member of Cubatabaco (the state-run Cuban company) and another from Altadis (a Spanish company owned by Imperial Tobacco). Though obviously still illegal in the United States, Habanos distributes cigars all over the world, with 55% sold in Europe and 19% in the the Americas. According to our presenter from Altadis, the US is a huge consumer of cigars (2/3 of the total consumption). One could anticipate a dramatic shift in distribution toward the Americas should the US embargo be lifted.

Inside the Habanos factory, we learned that each employee works 8 hours per day, though the factory is open and operating 24 hours a day. A worker makes over 100 cigars per day, the exact number depending on type/size, and they are paid extra if they make more than the required amount. The best employees are tasked with making the biggest cigars. Each is rolled by hand and inspected one by one, with those not passing quality tests remaining in the factory. (Employees are allowed to take five of these cigars home each day).

The next two visits on Thursday were two of my favorite activities of the trip. First, we went to the house of artist Mabel Poblet, one of the most successful young Cuban artists in the world. Upon walking into her gallery house, your eyes are immediately drawn to circular pieces of art on the wall made of cut photographs and a interactive artwork of dangling squares, blue sea on one side and a mirror on the other. She described the inspiration behind her pieces, including large glass squares on the wall with engraved quotations from famous Cubans.

IMG_9413
Cuban Artist, Mabel Poblet

Next, we traveled to Clandestina, the first independent design studio in Cuba, where we were inspired by the owners’ creativity and tenacity in the face of a difficult economic environment. They told us that not many locals in the neighborhood understood their business as a design studio, thus, in order to foster a closer relationship with the community, the Clandestina co-owners hosted parties with the understanding that drinking and music were common denominators that could bring people together. I asked Idania, one of the co-owners, how they maintained their social media accounts in a country where internet access was so limited. She admitted it was difficult yet they were doing the best to consistently update their content and utilize the public WiFi hotspots.

IMG_9428

On Friday, our day began with a visit to the Mariel Corporate port, a special economic zone, to learn about the international investors this port is attracting. Though Mariel is 100% Cuban owned, they have hired a company from Singapore to manage their operations. After Mariel, we headed to Estadio Latinoamericano to meet with Rodolfo Puente, former béisbol (baseball) player and current Vice President of the Cuban Baseball Federation. Our day ended with a tour and a meeting at the US Embassy.

FullSizeRender
Our class with members of the Cuban Baseball Federation at Estadio Latinoamericano. (Photo courtesy of Maggie Hopkins)

It’s hard to believe everything will come to an end this weekend. Stay tuned for my final post next with a reflection on Cuba and more amazing photos from our trip!

 

Cienfuegos, Trinidad, y finalmente, Havana.

Try to see Cuba as Cuba is, not as you think it is (or should be),” our tour guide, Yanailis, told us on our first day in the country. “It might not be what you expect, but that doesn’t make it any less charming.” 

 

Reflecting on the first part of the trip, I’m grateful Yanailis encouraged us to observe and understand Cuba, rather than judge and make assumptions. As I mentioned in my first post, we began our trip in Cienfuegos, known as La Perla del Sur (the Pearl of the South) for a cultural, historic, and community visit that involved a stay in a casa particular (private house) and trip to Trinidad. 

 

In the town of Cienfuegos, our group was broken up into 2-4 people per casa particular, all within a five minute walk of each other. Our host, Ana, warmly greeted my clustermate Stephanie and I as we hauled our suitcases into her quaint pink house. Each morning, our hosts prepared a hearty breakfast of fruit, bread, omelettes with fresh juice, serving it with friendly questions about our day. Though we often ate other meals with our fellow classmates, we were grateful to have had a delicious dinner at the house one evening, which was an authentic meal of pork, rice, soup, and Cuban salad. A day trip to charming Trinidad, where we finished an afternoon of touring with Mojitos on a patio jam packed with locals, was the perfect way to experience colonial Cuba.

 

Monday was primarily a travel day, as we bid farewell to our hosts in Cienfuegos and arrived four hours later in Havana. It’s hard to adequately describe the beauty of first seeing Havana, with its bright colored walls, classic American cars from the 1950s, and the Caribbean ocean waves crashing a few feet from the road. After a relatively peaceful and quiet stay in Cienfuegos, we were excited to explore the restaurants and vibrant nightlife of Havana. On Monday night, many of us went to Le Chansonnier, which looked more like a house with a private art collection than a place to eat. It became even clearer that creativity and artistic expression fuel the success of many businesses in Havana. 

 

Tuesday morning, we heard from three incredible lecturers who each gave us unique perspective on Cuba. First, José Luis Rodriguez García, the former Minister and special adviser to the Center of Studies of World Economy, presented a brief history of Cuba’s economic and political environment while citing key statistics and indicators. Jose told us that in 1989, only 6% of the employees were non-state, compared to about 30% today. 

 

We later heard from the CEO of Meliá Hotels International about their historic joint venture with Cuba. In 1990, Meliá established the first joint venture of its kind between Cuba and a foreign country, during a time when many countries wouldn’t consider going into business with Cuba. (In full disclosure, our group is staying at a Meliá hotel in Havana.)

 

The last lecturer that morning was Gregory Biniowsky, of Gowlings law firm. Though born in British Columbia, Gregory has spent over 20 years in Cuba and serves as both a consultant and legal advisor for foreign investors in Cuba. His advice to our class was practical and honest: Gregory encouraged any of us who were thinking of doing business in Cuba to approach any negotiation with humility, respect, and patience. Though it may be normal to “ignore politics” in the United States, this is impossible to do in Cuba, whose people have historically prioritized politics and social concerns above economics. 

 

Tuesday afternoon, we also toured the Rum Museum at Havana Club and spoke with Miguel Diaz Vargas, the Havana Club 7 Brand Manager.  Havana Club International is a joint venture between Cuba Ron, the state-owned rum enterprise, and the French liquor company Pernod Ricard. Miguel showed us videos of the new marketing campaigns and social media promotions that Havana Club has initiated to expand its global image and consumer base. If you live in the US, you aren’t able to get Havana Club rum from Havana Club, but rather from Barcardi, which also has its roots in Cuba. If you want to learn why, I suggest reading further about that the historic rivalry, cultural significance, and legal disputes between Havana Club and Barcardi. Despite the lack of advertising allowed in Cuba, with political signs and wall paintings about socialism being abundant, the Havana Club brand and product is an economic symbol of pride.  

 

Cliche as it may sound, it’s hard to believe how fast my time in Cuba is going and how quickly it will soon come to an end. In a few days, I can’t wait to tell you more about the second half of the trip and the awesomeness that is Havana, Cuba.  

– Anna Aagenes ’18

Cienfuegos – photos by Stephanie Hu