Castro death to impact Chinese investments

Updated 2016-11-28 09:22:37 Global Times

Developing U.S.-Cuba ties could intensify competition for companies

The developing relationship between the U.S. and Cuba, during the time of the death of Fidel Castro on Friday, will likely have an impact on Chinese businesses in Cuba, with some experts warning that a possible influx of American companies in Cuba could intensify competition for Chinese firms.

The death of the revolutionary icon comes at a time when the U.S. and Cuba are on track of a normalization of ties that could end a U.S. economic embargo that has lasted for more than half a century.

Chinese businessmen in Havana are watching the situation closely.

"The sentiment has been calm on the streets of Havana after the news of Fidel's death was announced, for me, it means the political environment is stable and I also sensed the Cuban government has wanted to open up. Both are good news for us," a source familiar with a prospective golf course project east of Havana in an area called Bello Monte told the Global Times Sunday on condition of anonymity.

Bello Monte is a joint venture between the Beijing Enterprises Group and the Cuban government.

Evolving relations

In March, U.S. President Barack Obama paid a historic visit to Cuba, opening a new chapter with the country and abandoning the longtime U.S. policy of isolating Cuba.

Relying on executive powers to jump-start the normalization of ties, Obama said that he believed the U.S. Congress would remove the embargo in the next administration, regardless of whether it was led by a Democrat or a Republican, according to a Reuters report in March.

Jiang Shixue, director of the Latin American Studies Center at Shanghai University, said that if the U.S. lifted its ban, then Chinese companies might find it easier to do business in Cuba.

The current U.S. embargo had some adverse effects on Chinese companies working with Cuba. For example, ships that have entered Cuban ports cannot offload cargo in any U.S. port for 180 days, according to media reports.

However, Jiang said there is still uncertainty in how Trump will handle the U.S.-Cuban relationship.

"From campaign rhetoric, you don't know for sure if U.S. President-elect Donald Trump will pursue the path set up by President Obama. There might be some overhauls. I am 51 percent pessimistic on the prospect between the two countries," Jiang told the Global Times on Sunday.

"However, Trump will not likely do something drastic too, like closing down the newly opened embassy in Havana. Plus the fact is that Cuba is far from the most urgent issue on Trump's to-do list, and the most likely situation will be that the new administration lets the bilateral relationship cool down a bit from the current level," Jiang said.

Lifting the embargo

The source associated with Bello Monte said that while political stability is a boon for business, the prospect of the U.S. lifting its embargo against Cuba could be a source of uncertainty for Chinese businesses in Cuba.

"The embargo could be lifted within two years at the earliest. So we must be prepared, to ready ourselves," the source said. "Investors and developers are coming sniffing for opportunities, from the U.S. and from Japan, and if we wait until all the others come to squeeze the market, it is bad."

The person believes the construction of the Bello Monte resort, which has just acquired the land, should be quickened to avoid any uncertainty that might happen in the future.

The golf resort will boast 2,000 rooms when it is completed.

"U.S. companies bear advantages in three aspects - close vicinity, no barrier in language and communication, and the longtime historic ties," Jiang said, noting that many U.S. commercial interests had deep roots in Cuba before the revolution.

"I heard that one U.S. company called its consultant to ask about the prospect of the company selling its kitchenware it made in Cuba within 24 hours after the two countries announced the process toward normalization of ties in the end of 2014. How many of our companies did the same thing?" Jiang said.

Before Obama's visit, U.S.-based Starwood Hotels & Resorts Worldwide signed a deal with Cuba on a multimillion-dollar investment to manage and market two properties in Havana.

Chinese passenger carmaker Zhejiang Geely Holding Group and Chinese bus maker Yutong, both having seized a handsome market share in recent years in Cuba, could also feel an impact if the embargo is removed, experts said.

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