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Posted November 24, 2011 by publisher in Business In Cuba

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Esteban Israel | Reuters

Brazilian retail chain TendTudo, which sells home improvement products and construction materials, has taken the first steps into what it believes could be a $400 million a year market in communist Cuba.

The company recently signed a contract to start supplying in the first half of 2012 a Havana store for Cuban state company Palco, modeled on TendTudo’s “home center” stores in Brazil though much smaller.

TendTudo’s interest in part lies in the prospect of a strengthening market for its products after a recent reform by the Cuban government to allow the buying and selling of homes for the first time in decades, said Carlos Christensen, president of TendTudo’s international unit.

“Cuba has an important demand for tools, construction materials and articles for the home,” he told Reuters in a telephone interview.

“There are important challenges but for us it’s a long-term objective. The idea is to start small and go accompanying the changes in the Cuban market,” he said.

Cuba, a country of 11 million people, is in the midst of reforms liberalizing its troubled Soviet-style economy with the goal of assuring the survival of the communist system put in place after the 1959 Cuban revolution.

The housing reform is expected to increase demand for building materials, not only because the country has a housing shortage of more than 600,000 units but because so many of the existing homes are in bad shape after years of economic crisis and neglect.

Christensen believes that purchases just by the Cuban state, which controls 90 percent of the island’s economy, would exceed $400 million annually for the electrical supplies, tools, paint, bathroom fixtures, tiles and myriad other products TendTudo sells.

Cuba’s retail sector is still off-limits to private companies, but its opening would add to the island’s potential, he said.

“But what happens if we establish ourselves there with a long-term vision, first looking at the corporate sector and then eventually the retail sector?” Christensen said. “The challenges are important but we are patient.”

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