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					    Logistic aspects of the
Electronic Commerce in Cuba

               Juan Fernández
    Cuban Commission of Electronic Commerce
    Ministry of Informatics and Communications
                   Republic of Cuba
      Some Statistics About Cuba

• Area:                          110,860 km²
• Population:                    11.2 million
• Provinces:                     14
• Municipalities:                169
• Schooling rate (6-14 years):   97.8%
• Number of telephones:          4.7 per 100 inhab.
  (Fixed lines)                  (digital only 60%)
• Number of computers:           2 per 100 inhab.
• Number of e-mail accounts:     ~ 100,000
• Computers with internet:       ~ 60,000

Program for the Information Society in Cuba
It was outlined in 1997. It aims for the massive use of the
information and communication technologies (ICT) with
the following general objectives:

1) To increase the efficiency and competitiveness of
   production and services, improving their quality and
   decreasing their material and energy consumption.
2) To increase the effectiveness and to ease the
   decision making process of government and the
   administration through the availability of reliable and
   updated information at all the levels.
3) To generate a source of revenue for Cuba through
   the export of products and services of the national
   software industry.
 Program for the Information Society in Cuba
General objectives (cont.):
4) To raise the quality of the public services, especially in
   the education, health and social security sectors.
5) To improve the quality of the services that the popular
   administration councils offers by diminishing the average
   time and the steps that the citizen must carry out.
6) To offer to the world, by means of internet, trustworthy
   information about Cuba, its political, social and economic
7) To offer to researchers, educators, students, functionaries
   and any interested person, access to information that
   exist in the internet and in other electronic formats.
           Cuban situation to undertake
              Electronic Commerce
•   Deficient infrastructure (network and services).
•   Lack of knowledge on the subject.
•   Inadequate regulations.
•   State will to advance in this activity:
    Creation of the Cuban Commission of e-commerce (1999)
    and the Ministry of Informatics and Communications (2000).
•   Investments already going on to improve the infrastructure.
•   Great number of trained or “trainable” specialists.
Cuban Commission of Electronic Commerce
   Created in January of 1999

   Government involvement and support

      To build the proper infrastructure:

         • Telecomm infrastructure
         • Service infrastructure
         • Regulatory infrastructure
      To train and educate:

         • In the development of applications
         • In the marketing and managerial aspects
                 Cuban e-commerce sites
No delivery (intangibles or services):
Company:          Internet address:           Product or service:
                      Rental of cell phones
CUBANACÁN Car rental
Hotel Nacional Hotel reservation
                Money remittances
           Car and minibus rental
                                              with chauffer
                       Bus rental and
                                              transportation services
            Cuban e-commerce sites
Delivery inside Cuba (domestic e-commerce):
Company:      Internet address:        Product or service:
            Gift shops with the
        delivery inside Cuba
       Optician consultation,
                                       services and articles
         Cigar boxes to be
                                       delivered in Cuba
                   Domestic B2B industrial
                                       supply store
                Cuban e-commerce sites
Delivery outside of Cuba (Export):
Company:        Internet address:    Product or service:
          Books, music CDs, videos,
                                     perfumes and cosmetics
            CDs of cuban music
Prensa Latina
          Virtual store of Cuban
                                     information products
       Electronic commerce and
    international transport services

The only experience so far is the use in the Cuban
shipping companies of the Internet for internal
communication between their premises and with
their vessels through Internet – Inmarsat.

   • Electronic mail.
In development:

   • On-line chat and voice.
   • Videoconferencing.
 Avoiding the logistic bottleneck?

Of the 14 ongoing e-commerce projects
only 3 tackle the thorny problem of
international fulfillment.
What is restraining the Cuban enterprises?

• Logistic personnel with little knowledge of the best

• Insufficient compatibility among the information systems
  (if any) of the different enterprises in the supply chain.

• Deficient connectivity for clients and providers.
• Difficulties to obtain the best components for a secure
  and low cost packaging.

• Non-existence or limited in quantity and quality of
  specialized service providers.

• No integration of the supply – production – distribution
Additional hurdles for the Cuban enterprises:

• Cuban customs regulations not appropriate for B2C

• High cost of the international parcel companies.
• Difficulties to process the claims of the customers.
• The blockade of the United States to Cuba sets
  additional hurdles:

   • Limiting the access to the biggest market (the U.S.).
   • Impossibility to use US dollars as the currency for the
     payments in the virtual stores.
       As a consequence, the service
            is characterized by:
• Orders incompletely delivered.
• Violation of delivery deadlines.
• Lengthy order-delivery cycles.
• Limited capacity to react to contingencies.
• Slow response to the changes in the clients demands.
• Increase in the stock levels and immobilization of capital.
• Interruptions in the material flow due to unbalances
  between the processes that form the logistic chain.
         Working for a solution:

• Re-engineering of the enterprises.
• Automation of the business processes in the

• Improve the connectivity of the enterprises.
• Big effort in training everybody involved, from
  managers to foremen.

• Preparing the regulatory framework.
• Implementing “Pilot Projects” to identify and test
  the best practices.

• Creation of enterprises specialized in logistics.

• The problems that affect the viability of the electronic
  commerce in a developing country like Cuba can not
  be isolated from other problems that emanate from
  the underdevelopment state of it’s economy.

• Therefore, it’s solution should be part of a wider
  strategy of ICT for development.

• In the end, these problems will have to be solved by
  persons, so that’s why to increase the cultural level
  of the population has a paramount importance.

• And this knowledge should be supported by the
  proper organizational scheme and regulations.
                  Thank you

For more information please contact:

Juan Fernández
Coordinator of the Cuban Commission of E-Commerce
Ministry of Informatics and Communications
Republic of Cuba

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