More on the Closed-Down “China Import” Store in Havana

By Francisco Acevedo

HAVANA TIMES – The first conclusions have come out about the sudden closure of the Chinese store that sold wholesale in Havana, and they confirm my worst suspicions.

As I mentioned in a previous comment, what happened was not the result of improvisation but rather involves a much darker scheme, where corruption seems to be behind everything.

The provincial government of the capital made the first investigations public, and the initial hypothesis of embezzlement in the warehouses has been ruled out. That had been initially used to justify the audit that prevented the store from continuing operations as they had for about a month.

I had already pointed out in the previous article that it was very suspicious that all the store’s signs and advertising were immediately removed because when a business is under an inspection like this, such measures are not usually taken until the matter is fully investigated.

On the same Thursday when the sign “closed until further notice” was put up, the product promotions at the store’s entrance had already been removed, and the old logo of Suchel Debon, the former soap factory that previously operated there, was visible.

Evidently, “China Import” seems to be gone for good.

It’s worth remembering that at this store, the exchange rate was set at around 320 pesos per dollar, and following the commotion caused by videos on social media and reports from independent press, the authorities took action.

According to the official statement, the closure decreed on August 23 was due to several procedural violations, including “selling goods in dollars, products for sale without visible prices, failure to activate established electronic payment gateways, illegal hiring of labor, and foreign nationals working in violation of their conditions of stay in the country.”

The investigation also revealed the use of personal bank accounts to manage business money, which could suggest a large-scale tax evasion scheme.

However, the claim that the closure was due to public complaints is hard to believe, as the public was the main beneficiary of the store’s products, which, even with the store’s peculiar policies, were cheaper than elsewhere.

I continue to believe that the complaint likely came from owners of Small and Medium Enterprises (SMEs), particularly someone related to a government official, given how quickly everything unfolded.

As a business owner, it’s understandable that they would question things like the use of the informal exchange rate or the direct handling of hard currency, which is not allowed for other businesses. But the speed with which this audit was carried out suggests a direct conflict with the interests of some “big shot,” as government officials or their relatives are known in Cuba.

The claim about invisible prices probably applies to certain specific products, as videos circulating on social media showed visible prices, and other SMEs face the same issue.

The electronic payment gateways were enabled, but like many things in this country, they didn’t work properly. In fact, when the store opened, they were being used normally, but when the owners faced difficulties withdrawing cash from banks, they decided to forgo them, although they always said it was temporary.

Additionally, this operation was supposedly approved by the Ministry of Domestic Trade and the Ministry of Finance and Prices, and it’s likely that soon the names of those responsible will be revealed (the statement says: “Measures are being taken to identify those responsible and apply the corresponding sanctions”), unless they try to cover up the matter to avoid undermining the supposed flexibility of economic policies.

At the time, we also pointed out that this was not a local or isolated case but reflected the chaotic way things function in this country. Now, we want to recall what happened at the asphalt factory located on the edge of the National Highway in the municipality of San José de Las Lajas, about 25 kilometers from Havana.

In that case, too, there was a Chinese investor involved. However, unlike the controversial store located at the intersection of Manglar and Oquendo streets in the Cerro municipality, belonging to the Chinese Nihao53 chain, where the owner was likely aware of what was happening, the other was literally deceived.

The Chinese investor was convinced to invest in the factory, but he only came to Cuba to take a look at the place, which was a small space but sufficient for the expected production.

He returned to his country, and later photos and videos of the quarries where the raw material would be sourced were sent to him. However, they never told him the quarries were in Cienfuegos, more than 200 kilometers away. Naturally, this distance greatly increases production costs. After calculating the costs, the Chinese investor —whose name was never made public— backed out, but he had already invested a significant amount of money in the factory’s renovation.

The end result, as expected, is that the outdated facility continues to produce minimal amounts of asphalt because the investment was never completed.

Again, perhaps the owner of “China Import” is not entirely innocent, but the other investor certainly was. In either case, these are examples of the lack of seriousness in dealing with foreign investors, something that Cuba’s economy desperately needs to survive in the midst of a perpetual crisis. But simply put, this is not how business is done. We will continue waiting for the final outcome of this story, which may still hold some surprises, and some important head will surely roll.

Read more from Cuba here on Havana Times.