Matthew Creamer discovers that an emerging market offers many PR challenges - and opportunities.When the lights go out in Havana, Fernando Remirez, Cuba's First Deputy Foreign Minister, is telling a small group of visiting Americans and Britons exactly what it is that he doesn't like about the US. This list isn't a short one, and, on this November day, it's been given some heft by the events that took place the previous night in Washington. A Congressional conference committee had stripped out language that would have ended a long-running ban on travel to Cuba, the first step in allowing Americans to visit the nation as tourists. But Remirez, deliberate and intense, is not talking about that. Instead, he is answering pointed questions about Cuba's arrest of a number of dissidents earlier this year by tersely rattling off some of the more negative facts of US political life. He gets to carping about low voter turnout only after he is interrupted by a blackout that darkens the already drab offices of the Cuban foreign ministry. The power failure is temporary and not unusual in Cuba, but, for a newcomer to the rhetoric that passes for political discourse in this nation, it seems almost a cosmic review of the meeting's hackneyed script, which could have been lifted from a Cold War political melodrama. At this moment, in this place, it seems that nothing has changed in the relationship between two countries that have been hostile towards each other for more than four decades. Yet, outside the doors of the ministry, there is a very different reality. The peeling city of Havana teems with vacationers from Europe, Latin America, and Canada, who are there buying art, rum, and cigars, often pumping into the economy that most desired of currencies, the US dollar. These tourists visit pristine beaches, listen to musical acts like the Buena Vista Social Club, and visit nightclubs eager to cater to them. Americans are there as well, though in much smaller numbers, of course, because of the ban. The restrictions, however, don't stop thousands each year from making the illicit trip by changing planes in Canada, Mexico, or the Bahamas. They are no less welcome than visitors from countries who enjoy better relations with Cuba. To an American, a trip here has the uncanny feeling of visiting a neighbor who lives on the other side of the world. At some point, the jarring disconnect between rhetoric and reality will dissolve, most likely following the demise of Fidel Castro's regime, which could lead to the lifting of the 43-year-old economic embargo that forbids US companies from exporting everything except food and medicine to Cuba. Then, US businesses, especially hotels, airlines, and consumer brands that can find a market in a land of 11.2 million largely literate people, will begin a southward push. Cuban goods, to a more limited extent, will find more buyers. The speed with which this all will happen depends on many factors, not least the type of political and economic systems that take hold with a new government. At this point, untangling reasonable predictions from hype and quantifying in any meaningful way the boon to US businesses is virtually impossible. "There are varying estimates as to how much US exports might increase if the restrictions were lifted," says John Howard, VP for international policy and programs at the US Chamber of Commerce. "All of them depend on the ability and willingness of the Cubans to buy what it is we want to sell. That may relate to finance, it may relate to cash-on-hand, it may relate to political decisions made there. There is no reliable number available." One thing is certain: when Cuba opens up, a new way of communicating will take shape. It will have to, because, more than a decade after the Soviet Union's collapse led to the start of quasi-market reforms, including the reinvigoration of its tourism industry, Cuba is still mired in a culture where propaganda rules and the news media is controlled by the government's iron fist. The international journalists' association Reporters Without Borders has called Cuba the "world's biggest prison for journalists," and ranked it second lowest in terms of press freedoms this year. (Only North Korea fared worse.) Moreover, there is little advertising in Cuba that doesn't have to do with the Cuban government. The majority of billboards that dot the countryside are paeans to the socialist revolution, festooned with images of the universal revolutionary figure, Che Guevara, which, ironically, are also available on T-shirts and berets sold in hotel gift shops and in Havana's sidewalk stands. Potential comms advantages in Cuba Despite the totalitarian grip that has made communication synonymous with government decree, US companies that try to market in a post-embargo Cuba will enjoy some advantages, mostly a result of the island's proximity to the US and the fact that many residents are in regular contact with family members who live there. "For companies, two of the greatest costs of entering a new market, or in the case of Cuba, reentering an old one, are the creation of brand awareness and brand preference," says John Kavulich II, president of the US-Cuba Trade and Economic Council. "In Cuba, companies will not have to spend the type of money to create brand awareness and preference as they may in other countries. Cuban people have one of the highest awarenesses of US brand names not only in the hemisphere, but in the world. They also have one of the highest preferences for US brands." Kavulich doesn't say this lightly, for, as head of an organization dedicated to educating the American business community on issues related to Cuba, he's aware of how current and future opportunities there can be both exaggerated and undersold. After all, there is a great deal that's romantic in the idea of a forbidden tropical island just 90 miles from Florida. In its least productive manifestations, this allure gets a good enough grip on executives to give them temporary leave of their business sense the same way it entices US tourists who risk fines to go there when they could more easily opt for nearby islands. Kavulich likens it to the days before the crumbling of a different regime. "In the late 1980s," Kavulich says, "some companies would have a USSR strategy simply because the CEO wanted to meet Mikhail Gorbachev or they wanted to tell colleagues on the golf course, 'I have a deal going in Moscow.' There is a definite PR value to some companies being able to say they sell product to Cuba. The challenge is to show they've exported to Cuba, rather than just visited Cuba." By many accounts, the safest and most common predictions hold that tourism will see the most immediate benefit, but even figures related to the number of US travelers expected to flood Havana can be overblown, Kavulich says, because the infrastructure - the number of hotel rooms, restaurants, and so forth - won't be able to meet the initial demand. Behind tourism are food and agriculture and healthcare interests, all of which are already allowed to export there. Still, even as everyone acknowledges that Cuba is approaching a change, prudent businesses aren't shoehorning the country into their planning. And, with few exceptions, PR agencies are following suit. Much of this prudence hinges on the uncertainties of life beyond Castro - not only when it will begin, but what it will be like. "There's certainly an interest among clients as to what will happen there," says Jeffrey Sharlach, president and CEO of The Jeffrey Group, a PR firm that specializes in Latin America. "Everyone's convinced that change is in the wind, but when it happens, it's obviously not going to turn into a large consumer or b-to-b market overnight. The potential is still yet to be realized. Beyond travel, it's still going to be a while before it becomes a big consumer or b-to-b market." To get an idea of what Cuba's embrace of a market system might look like, one can look at a number of countries that have in recent decades shed trade restrictions in an effort to be included in globalization. One is China, one of Cuba's strongest current allies and an economy that's in the process of implementing the changes that have led to its acceptance in the World Trade Organization, a key badge showing the once-isolated nation's membership in the global economy. Yet these changes have been slow enough that China has earned criticism from a growing list of US officials. In October, US Commerce Secretary Donald Evans demanded that China offer better access to its markets and work to reduce the massive imbalance in trade with the US. Changed marketing needs Despite this, liberalization - and the changes to business culture it has wrought - has, over the past 18 months or so, led to a major difference in the way PR programs are executed, according to Alan VanderMolen, president of Edelman's Asia-Pacific region. "China used to be about getting a relationship with one government ministry and then your business could take off," he says. "Now with the explosion of media in the market, the implementation of technology, and the convergence of media and technology along with, at the same time, market liberalization coming on, the needs of corporates have changed. They've shifted from a focus on one stakeholder group and an end-buyer - whether that be a business, the government, or a consumer - into managing multiple constituencies." On the flip side, the loosening of trade restrictions in China, however slow, has also led businesses there to reconsider how they appear to outsiders. "Most businesses in China have been family businesses, and have not really been interested in or needed to develop brand identities," says Terresa Christenson, Asia-Pacific MD for Brodeur Worldwide. "It's all been based on relationships, and you can't downplay that. Because of this, however, they haven't built brands, marketing has been considered sales, and it's all been very localized. Now, with the WTO, local Chinese companies - especially the ones with growth prospects - know they don't have brands and are like sponges soaking up everything they can get as far as learning branding and marketing." But more important than anything as a driver of new business is a single factor: the influx of capital. "The general triggers for change in a market in terms of where multinational PR firms are concerned is the level of inbound investment in the industries in which that investment is going," says VanderMolen. "That's what leads to growth in any emerging market." Cuba, some believe, will be no different. A dramatic change from the current socialist system will effect change in every sphere of Cuban life and will include the eventual effect of establishing a free media. But this will not happen immediately, says Kavulich. In the post-Castro media world, he expects an immediate "disconnect" between the journalistic content and the media's business model, as news outlets continue to criticize the capitalist tendencies of businesses, even as they solicit advertising from them. This will undoubtedly have a far-reaching influence on the way PR is conducted, but, according to Sharlach, it will not be the most important factor in the industry's emergence there. Sharlach has experience working in Chile and Argentina in the years following the liberalizations of their economies. "Open access to media will be key, but it is most vital that a market develop for consumer products and b-to-b services," Sharlach says. "There are a lot of markets in Latin America right now - Bolivia, Paraguay, Guatemala - where you have a very small percentage of the population that actually has the income to purchase goods and services. As a result, PR tends not to be the best way to reach out to audiences because they're such small audiences. It's a lot better to do more direct forms of marketing and communication rather than going to the media. In Latin America, the countries where you have the most robust PR industries are the countries where there's a large middle-class or upper-middle-class population, specifically Brazil, Mexico and Argentina." In terms of economic class, the market in Cuba will fragment as some Cubans have a better time than others in the changing economic system. But even as the division between the haves and have-nots develops, the situation for Cubans will rise in the long-term. "The percentage of their income that they will use outside of what's provided by the government will change and it will increase," Kavulich says. "[But] there will be a dip before the increase, as the commercial and economic structures reconfigure. As Cuba continues to change, it will have to become more responsible for its foreign debt. That will mean additional sacrifice, which means that there's going to be more pain before gain." The benefits of an 'open' Cuba Just how the Cuban economy would benefit from the opening of the US market is unclear, besides the obvious advantages that would exist for any tourism-related businesses. "Say Cuba were given the right to sell products in the US. There's not a lot that Cuba produces at this point that would be of interest to people purchasing on the US end," says Gary Prevost, a political science professor and Cuba expert at the College of St. Benedict at St. John's University in Minnesota. Not even cigars, Cuba's best-known export to the rest of the world, would provide much of a boon because of the requirements of the process that makes them so desirable in the first place. "Cuba can't expand its tobacco production," Prevost says. "The quality is based on a narrow part of the country where tobacco is grown. If the US market directly opened up, that would just redirect where the cigars legally ended up in the world. It wouldn't necessarily be a bonanza for Cuba. For other products they have, other US protectionist measures that are not just directed at Cuba - ones that protect industries like orange juice and sugar - would still be in place, so Cuba wouldn't necessarily have markets for those products." For US companies, the prospects are a bit better, if no less clear. Depending on the post-Castro political and economic systems, Kavulich says, American businesses from financial services to food-service companies to consumer brands and retailers could enjoy success. Though not massive, the Cuban market is not small, either. After all, it took a few years for Cuba to become the 50th largest export market for US agriculture, as it was in 2002. And Kavulich can envisage the unfolding of that litmus test of American business influence, a marketing war between Pepsi and Coca-Cola, which had property in Cuba nationalized during the revolution. But, as always, he is cautious in his forecasting. "Anyone who believes the death of President Castro will mean wholesale change in Cuba's commercial, economic, and political structures has the courage of their ignorance," he says. "[Cuba] will continue to evolve and devolve. It will continue to be in transition and the changes will be gradual." ----- Cuba's PR pioneers For most US PR pros, the idea of working on issues related to Cuba either doesn't come to mind or is filed away for a very different future. However, two PR firms are presently doing this in two very different ways. New York- and London-based firm Brown Lloyd James (BLJ) has been introducing clients to Cuba for the past three years as part of its international specialty. The yearly trips have a dual purpose. They're designed first to help clients from a broad range of business and cultural backgrounds establish contacts in the country for a day when the embargo is no more. The secondary goal is to get clients to spread the word about Cuba upon their US return. "Literally, PR acts as a bridge in this case," says Mike Holtzman, EVP at BLJ. "Unfortunately, it's acting as a substitute for what the US government ought to do, which is promote contact with another country, promote commerce, anchor other countries to the US. This trip and others like it are doing this job for the government." In the next few months, BLJ plans to unveil a more formal media campaign aimed at bringing the embargo to the American public's attention and making it an election-year issue. "There's a presumption in PR that it's a neutral sport, that PR exists to serve clients irrespective of their views," Holtzman says. "In our view, Cuba is part of the US' future. It's certainly part of its past. As an agency, we believe strongly that we ought to build these bridges, not just on behalf of our clients, but on behalf of the country. We take it not just from a business perspective, but from a moral perspective." Tampa's Tucker/Hall takes a different tack when it comes to Cuba. The agency represents about a half-dozen clients with issues related to the nation. One of these clients, J.P. Wright & Co., is one of the US companies that exports agricultural commodities - cattle, in this case - to Cuba. When a deal is announced, Tucker/Hall's staff manages media relations both in Florida and Cuba for clients without leaving the country because only the client is able to get licenses for travel. "The biggest operational challenge is that we just can't get on a plane and go down there to hold a press conference," says Tucker/Hall president Bill Carlson. "We have to coordinate with clients. Logistically, there are problems in sending supplies back and forth. We can't hire suppliers down there." The agency originally became interested in Cuba as a potential economic development issue for Florida and began hosting and sponsoring conferences on US-Cuba relations. That interest evolved into a business opportunity once food exports were legalized. Over the years, Carlson has witnessed a falling off in the influence of the pro-embargo group, whose central organization is the Cuban American National Foundation. "The perception is that all of Florida is anti-embargo," he says. "That's not true. It's a very small group in Miami. The group in Tampa is about 20 people." Still, Tucker/Hall will often enlist the help of anti-embargo groups comprised of Cuban-Americans when the pro-embargo side takes up an issue. But, as recent polls show, the pro-embargo group's sway is diminished, and that allows Carlson's agency to call more attention to the work it does. "The opposition just does not have the power and influence it had three or four years ago," Carlson says. "At the start, about five years ago, we took a fairly low profile. We worked with small groups. In the past three years, we've been out in the open about it."