Cuba: International Trade Proposal

Cuba: Medical Resort PURPOSE: As part of the requirements for International trade, individual assignments were given to research on a country and to set-up a company that would be based on the country of choosing. Assumptions for the research paper is that as theoretical corporations, we have unlimited sources of capital. This paper is submitted in fulfillment of course requirements. ABSTRACT This paper is about Cuba and the setting up of a 5-star medical resort. A medical resort is a hybrid state of the art medical institution with the amenities of a 5 star vacation resort.

By discussing Cuba, its economy and strengths, we would be able to understand the countries unique competitive advantage as a country and tap this advantage to make a profitable business venture. This paper will discuss how a medical resort can make this a possibility. BACKGROUND Cuba is located in the Caribbean. It is an archipelago of around 4,000 islands at the north of the Caribbean Sea and is bordered by the United States and the Bahamas to the North, Mexico the West, Haiti to the East and Jamaica and Cayman Islands to the South.

[1]The total land area is 110,860 km2 with the island Cuba covering almost 90% of the country’s total land area. It has a tropical climate with two seasons: the dry season running from November to April and the rainy season from May to October. It is the largest island nation in the Caribbean, with a population of 11,241,161. [2] It has a very diverse populace, with intermarriages fairly common such that ethnic diversity statistics are difficult to determine. Altogether, the estimates of Cubans with African descent range from 34% if the population to as high as 62%.

Cuba has also one of the lowest birth rates in the Western Hemisphere, and in fact since 2006 the population has been declining. HISTORY and GOVERNMENT Cuba was one of the most important colonies of the Spanish Empire. It was a key trading post for its South American territories. In fact in the 1820's, when all other territories in Latin America were revolting during the period of Gen. Bolivar, it was only Cuba who remained with the Crown, therefore attaining the name La Siempre Fidelisima Isla ("The Always Most Faithful Island").

But after the Spanish-American War, a defeated Spain and the United States signed the Treaty of Paris were Spain relinquished all claims to Cuba, paving the way for Cuba to declare “independence” in 1902. But it was a unique independence for Cuba since the United States retained the right to intervene in Cuba's domestic, international and financial affairs when it sees fit. The following decades saw numerous coups in Cuba. But in all of these changes of government what remained constant was the United States role in the affairs and economy of the country.

By 1940, Fulgencio Batista was elected president. Through elections and military maneuvering and support of the U. S, he was able to remain president for more than 15 years. Throughout this period, rapid growth due to investment resulted in Cuba being one of the most developed countries in Latin America. But it was riddled with corruption and most businesses were foreign owned.

In fact by 1959, “the United States owned 40% of sugar lands, almost all the cattle ranches, 90% of minerals and mining concessions, 80% of utilities, practically all the oil industry and supplied two-thirds of Cuba's imports. [3] This widespread corruption and foreign ownership inspired a band of revolutionaries led by Fidel Castro to start a military uprising. On December 2, 1956 a group of 82 people on a yacht landed in Cuba to start what will be known as the Cuban revolution. It was Marxist inspired revolution, trying to capture ideals popular in Eastern Europe at that time.

In 1959, the armies of Fidel Castro entered Havana, the capital of Cuba, marking the beginning of the revolutionary government in Cuba.In the first year in power, the revolutionary government expropriated private property without just compensation, nationalized public utilities, tightened control on private enterprises and closed down the Casinos. These actions affected U. S. Companies more than anyone else and sanctions were imposed on Cuba.

As it became apparent that the revolutionary government was transforming into a full-fledged Communist system patterned after the USSR, the sanctions became stricter until it became a full-fledged trade embargo. Until today, the embargo is still in effect albeit with further loosening up occurring these past few years.ECONOMY As a communist state, the Cuban economy is centrally planned. The fall of the Cuba's main trading partner USSR, the trade embargo and failed policies resulted in a 20 years of “Special Period”. This period was marked by severe food shortages on food, consumer goods, and services. From 1990 to 1992, Cuba's GDP shrank by 33%.

As a result Cuba's economy was in tatters. These past decade saw a limited transition into a more free market type of economy. But still the economy has a long way to go from its peak in 1950's. Cuba's GDP is at $ 57.

billion with a GDP/Capita of $ 9,900 (2011)[4]. But in spite of all of these difficulties, Cuba has been able to maintain the level of service for both the Education and Health Sectors. Currently, one the most pressing needs of Cuba is for foreign currencies in order for it to import goods and services needed by the population. To alleviate this need, one of the industries promoted by the government is tourism. HEALTH CARE One of the pillars of the Cuban revolution is its Health Care service.

It is a universal health care program free for all of the population.It is highly touted by medical experts around the world, in fact the World Health Organization identifies it as a model for third world health service. It is a health service that results in a life expectancy of 77. 7 years, even better than the United States at 77. 4 years; a child morality rate of 5 deaths per 1000 births (compared to 6 in high income nations). But what is spectacular is that these results are attained by spending only $300/person per year.

If you compare this with average spending on health care services in the United States of $7,000 per year or Britain's $ 4,000 per year, the results are truly remarkable.One of the keys in the success of the service is Cuba's abundance of doctors. In 2005, Cuba had a ratio of 1 medical personnel for every 200 citizens, this is double the ratio of 1/400 in the United States and the second highest ratio in the world after Italy. It has 21 medical schools, producing 4,000 doctors every year. Its doctors help serve in 35 other poorer countries and are requested by other developing nations to train their medical practitioners. The advance state of health care has also resulted in an advanced pharmaceutical and biotechnology industry.

Currently vaccines and treatments from Cuba are being exported all around the world. The success of its health care industry has prompted the government to promote medical tourism as a key industry. Approximately 20,000 tourist around the world travel to Cuba for treatments ranging from neuro surgery, treatment for Parkinson, hip replacement and even cosmetic enhancement. Most come from Europe, Canda and Latin America. The main reason for getting treatment in Cuba is the cost, for example an average hip replacement surgery will cost $ 6,000 in Cuba and $ 60,000 in Canada. 5] TOURISM Due to ins geographic location and climate.

Cuba has always been a favorite destination for tourist. The industry suffered declines during the 1980's and 1990's but due to the focus of the government, tourism in Cuba has been a growing industry in Cuba. There are 2 million tourists who visit Cuba per year. The biggest portion of which are from Canada and the United Kingdom.

Much needed foreign investments and dollar based earnings drives the industry. 6 IDEA: An analysis of the strengths and conditions in Cuba presented an interesting opportunity.A few questions that I looked at were the following: How can Cuba capitalize on its Health Care service? How can Cuba use its location as a tourist destination in the Caribbean? What can I do to help Cuba's need to earn foreign currency? Can we leverage on Cuba's new direction of opening up the market? As the embargo continue to ease, can we take advantage? I looked at possibilities of merging industries that will solve the queries, I listed above and decided that as an entrepreneur with an assumption of unlimited resources to funding, I will set up the first Medical Resort in the region.The medical resort I had in mind is a fully functioning state-of-the art medical facility with resort amenities and accommodation. A full hospital will be built surrounded by villas and a hotel.

All of these facilities in a beach setting with all the amenities of a five-star resort. [6]It will allows patients to be treated by a range of expert Cuban doctors and at the same time allow for rehabilitation in a Caribbean tropical resort setting. HOW IT WORKS The idea is simple. A patient, let's say from Canada would want a Hip replacement.

It would cost around $ 60,000 to do the procedure in his home country, so instead he books the procedure in Cuba for $ 6,000. But unlike before where the patient immediately flies back immediately after the surgery, the patient decides to rehabilitate at the facility, he spends an additional $ 20,000 for recuperation in the resort hotel. The rehabilitation will be monitored by medical personnel and at the same time the individual enjoys a much needed vacation. I was thinking of a Built-Operate-Transfer arrangement with the Cuban government or if not possible at the very least a joint-venture agreement. Due to the U.S.

Embargo still in effect the possibility of getting funding from the United States would be almost impossible, a few capital markets that I can be able to tap into would be the Latin American market, European and Chinese Markets. Most of the equipment needed for the facility will be sourced from Europe, again because of the embargo. And most of the supplies as well. Due to the nature of the business, the customers will have to be on the upper end consumers in Latin America and developing countries but what's great about the idea is that for the more developed countries, the clientele could include the middle class.These are the people who can not afford the very expensive treatments back in their country and are looking for cheaper medical alternatives. The businesses would not want them to spend as much as they would back in their country, they should be able to save still significant amounts, but the venture aims that they spend more than just treatment, thus the “vacation”.

The marketing will be targeted to Canada, Latin America and Europe. These are consumers who are familiar with the Caribbean as a resort destination, so it lessens the need to inform on the beauty of the tropical area.The marketing message will focus on reinforcing the perception of the strengths of the Cuban health service. Marketing tags like: “Get well. Live Life. ” or “Get well with your family.

” will send the message that treatment and rehabilitation need not be a painful and lonely process. The marketing will continue to emphasize the cost savings component but at the same type reinforce the hybrid benefit of treatment and recreation. BENEFITS: Benefits are three fold: For the patients – It allows for cost savings, effective treatment and a more beneficial recuperation process.It will allow them easier access to care since the accommodations are within the vicinity of the hospital and due to the nature of the resort, they can spend time with their families as well on a vacation. For Cuba – foreign currency will be generated.

And since the spend will be more than just the regular treatment, earnings will be more significant It also provides employment in two industries: health care and hospitality. For the Investors – success will allow it to tap into the Cuban market.As the country becomes more free market orientated, it will would have already a foothold of the economy. And as the health care services continue to increase in cost in developing nations an expansion of the market will continue. Plus, as the embargo continues to ease, the access to the biggest market is yet to come, the United States. CONCLUSION By looking at the unique labor offering of Cuba and by being sensitive to its political situation, one can afford to merge Cuba's biggest industries, health service and tourism.

By introducing a medical resort all the stakeholders involved, I feel, will come out successful. References: Wikipedia Cuba, http://en. wikipedia. org/wiki/Cuba “Health Care in Cuba”, http://library.

thinkquest. org/18355/health_care_in_cuba. html “What Cuba Can Teach Us About Health Care”, by Brandon Keim, April 29,2010, Wired Science, www. wiredscience. com "First world results on a third world budget” by Rory Carroll, http://www.

guardian. co. uk/world/2007/sep/12/film. health "WHO Praises Cuba's Health Care System”, http://news.

xinhuanet. om/english/health/2012-03/28/c_131493136. htm Economy of Cuba; http://en. wikipedia.

org/wiki/Economy_of_Cuba Health Care in Cuba; http://en. wikipedia. org/wiki/Healthcare_in_Cuba Tourism in Cuba; http://en. wikipedia. org/wiki/Tourism_in_Cuba ----------------------- [1] http://en. wikipedia.

org/wiki/Cuba [2] http://en. wikipedia. org/wiki/Cuba [3]John F. Kennedy, Speech, 1959 [4]http://en. wikipedia.

org/wiki/Economy_of_Cuba [5]“What Cuba Can Teach Us About Health Care” by Brandon Keim, www. wired. com [6] http://en. wikipedia. org/wiki/Tourism_in_Cuba