• Submitted by: lena campos
• Business and Economy
• 10 / 12 / 2013

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In the three years since the island's communist government expanded the opportunities for private business, the clothes stores have sprung up across Cuba, usually offering a wider choice and cheaper price tag than state-run alternatives.

But now the government has announced it is tightening the trading rules, leaving thousands of retailers facing the loss of their licenses and their livelihood.

"We're waiting for the inspectors to show at any moment," says Victor, in the porch of his central Havana home where he set up shop three years ago.

I've invested a lot of money here. Now what will I do?”

Stall-holder in Havana
The amended rules were published in the government's official gazette and specify that the clothes sellers, whose licenses define them as tailors and dressmakers, are banned from selling imported fashions.

"We're supposed to sell things we make ourselves, but people started bringing clothes into the country and we started selling them - and they let us do it," Victor explains, as customers browse rows of brightly coloured shorts, shoes and baseball caps.

Officially, individuals are not allowed to import items for sale.

But Cuba has no wholesale provision for its nascent private sector, so unlicensed suppliers run networks of "mules", people who hand-carry everything from clothing to computer parts into the country.

"We invested and invested in our businesses and they didn't stop us," says Victor, whose stock is mostly from Panama and the US. "Now Havana's full of imported clothes stalls."

But now the Communist Party newspaper Granma has informed license-holders that by selling imported clothes they are breaking the law, meaning that as many as 20,000 stores will have to close.

Slump in sales
"We pay taxes, we pay salaries and taxes for our employees. I'm sure the state benefits from us," points out Victor, bemused - like many - at the sudden change.


License holders say state shops do not offer the kind of fashion Cubans demand
It comes despite a government target of moving 1.5 million employees off the bloated state payroll and into the newly extended private sector.

And it is a target they are far off from reaching, having issued just 436,342 private licenses so far - 18% of which are for workers who have kept their state-sector jobs.

Many shopkeepers say there is an easy answer to the problem. They suggest the government simply alters the licences from "seamstress" to "clothes-seller" and charge higher taxes, benefitting the government, and allowing them to stay in business.

But officials insist the new measure will "bring order" to the non-state sector and put an end to illegal practices.

They point to the approval of ten additional business activities, including allowing people to set up as estate agents, as proof of the state's continued commitment to expanding "non-state" employment.

But Cuba's new breed of retailers detect an ulterior motive. Anecdotal evidence suggests sales in often drab and poorly stocked state stores have slumped.

"It's always the same stuff in the state clothes shops, like they're incapable of buying any nice things!" housewife-turned-shop-owner Sandra says.

"So people come to us for what they like, for what's modern."

Young and trendy
"We buy everything in the markets. The clothes are really dear in state shops, and uglier," a young bicycle taxi driver agrees. "You can pay $60 (£38) for a pair of shoes in the state stores. Do you know how far I have to pedal, to make that much?!"

He is sporting a bag decorated with the UK's Union flag, a relic from last year's big major trend. Then, it was exclusively the private vendors who fed demand, sourcing and supplying the fashion-conscious with customised T-shirts, shoes and belts.


Fashion-trendy youngsters say clothes in state-run shops are "ugly"
"This business certainly offers serious competition to the state shops," agrees Omar Everleny, of the state-run Centre for the Study of the Cuban Economy. He calls the decision to revoke the licenses "an error".

"The state should be competitive, not use these mechanisms," he believes, echoing the widely held view that the clampdown will drive goods back onto the black market, precisely the reverse of the reforms' supposed aim.

"For 54 years we thought the private sector was bad. Still the word 'private' is not even used here," the economist points out, probing the logic of the move.

"It's very difficult. There is still a lot of resistance to change."

Uncertain future
So as shopkeepers pondered their future, a state TV programme extolled the virtues of home-made clothing, decrying the dictates of an "exploitative" global fashion industry. Commentators talked of a potential revival of home-grown designers.


Stall holders fear their businesses could be closed down at any minute
The newly market-savvy traders are highly sceptical.

"No-one will buy handmade stuff now they're used to coming to us and buying imports," Sandra scoffs.

"But we don't know what we're going to do now," she says, surrounded by racks of clothes.

A Labour Ministry official informed state media that license-holders would get a personal explanation of the new measures, but stressed that "the law is already in force and should be complied with".

So Cuba's clothes sellers are waiting - still working - unsure and anxious about what comes next.

"This business isn't going to make me rich," one woman says, folding her stock after a tough day without a single sale.

"But I've invested a lot of money here," she points out. "Now what will I do?"

Source: BBC.co.uk