Cuba's Communist State Is Now A Client Of Its Capitalist Entrepreneurs

Mar 22, 2016

HAVANA - Rubén Valladares just might be one of the most important entrepreneurs in Cuba.

No, he’s not a tourism tycoon. He’s not a tech titan.

Truth is, he makes…paper bags.

“But we are the biggest provider of bags in Cuba,” says Valladares, a slender, middle-aged man who finishes his sentences with the sort of raspy chuckle that helps people get through each trying day on this island.

Valladares is especially proud of the gift bags he made up for President Obama’s historic visit to Havana this week. They sport Obama’s face between Cuban and U.S. flags with a message in English: It’s Time. Welcome to Cuba.

On the flip side is the logo of Valladares’ packaging company, Adorgraf – as well as an unabashed commercial message borrowed from the new normalization of U.S.-Cuba ties: “The First To Package A New Relationship.”

Bags this nice don’t pay for themselves, after all.

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That’s the sort of business acumen that changed Valladares’ life four years ago. He was a middle manager making a middling salary at a state-run Cuban firm printing business cards. One day a shop owner picked up his order and mentioned he couldn’t find anyone in Havana who could print his logo on sturdy paper bags.

“That guy, he made the idea for me,” says Valladares – who had one of those capitalist epiphanies you see a lot more of in communist Cuba today.

A year before, President Raúl Castro had expanded the range of private businesses Cubans could start up. So Valladares and his wife Maida launched Adorgraf making personalized bags – with handles, a deluxe feature in Cuba. (He makes sure I see the winding yarn grips on his Obama bags.)

The demand overwhelmed them – and so did the money that poured in.

Social responsibility is very important, but I think it's very important that we the Cuban private sector push and change this situation. Maybe Obama help to change this problem. -Ruben Valladares

As in, 20 percent annual revenue growth. Valladares recently bought his family’s first car – a shiny pink, Russian-made Lada 1600. He has almost 30 employees, most of whom earn three or more times the $20-a-month most Cuban workers make. They also get benefits like family leave.

Adorgraf still has just a modest workshop that sits on an unpaved street near Havana’s airport. But to understand why the company is a player, check out the wall inside, where Valladares displays bags with his clients’ logos.

“For example,” he says, “Caracol, Gaviota, BDC International, Café Escorial…”

Most of them are large, state-run firms. And that matters a lot to Cuba’s fledgling private sector.

Today in Cuba there are half a million private business owners, or cuentapropistas. Not long ago they were just considered folks making a few extra pesos in the island’s threadbare economy.

But today they account for almost a quarter of Cuba's economy and employ almost a third of its workforce. And the fact that the state is now a cuentrapropista customer means private ventures have assumed a much more essential role.

“It’s an important psychological step,” says Augusto Maxwell, a Cuban-American attorney who heads the Cuba practice at the Akerman law firm in Miami.

Maxwell is in Cuba this week during Obama’s visit – and he says a big question now is whether the entrepreneurs’ new clout might lead to more free-market reforms.

“That’s a conversation between the Cuban entrepreneurs and their government,” he says.

And it’s not any easy one.

“Oh, it is very complicated for us,” Valladares tells me with a more exasperated chuckle.

So complicated that he has to stop speaking English and explain it in Spanish.

POWER PLAY

For example, he points out: The Cuban government still won’t let private businesses buy materials directly from the wholesale market. It’s a power thing. So when Valladares needs paper from the state-run wholesaler to fill orders for bags, his clients have to buy the paper first. Then he buys it from them.

It doesn’t make sense in Spanish, either.

Which brings us to why Valladares printed up all those bags welcoming Obama – who is arguably the biggest champion of Cuban cuentapropistas.

“Social responsibility is very important,” he says, “but I think it’s very important that we the private sector push – change this situation. Maybe Obama can help to change this problem.”

In fact, Obama just took another step toward that end. Only Congress can lift the trade embargo against Cuba. But last week the U.S. issued new rules that let private Cuban firms buy and sell with America and access credit there.

Cuban entrepreneur Caridad Limonta (left) who owns a clothing firm called Procle in Havana. Her son Oskar (right) will attend a business training course at Florida International University this summer.
Credit Tim Padgett / WLRN.org

Maxwell says that puts the ball once again in the Castro government’s court.

“We’ve created the infrastructure that would allow them to plug into our side,” he says. “Now it’s up to the Cubans to figure out to what extent the Cuban entrepreneurs can plug in.”

But entrepreneurs like Valladares really aren’t waiting to find out.

And neither is South Florida.

That’s where Valladares last year hooked up with a Hialeah printing company, Florida Flex.

We are importing from Hialeah,” he says with a sly grin.

For months now Valladares has been engaged with Florida Flex in what cuentapropistas call Samsonite importing: Bringing raw goods – like silkscreen printing ink and equipment – from Hialeah to Havana in bulging suitcases and boxes.

Florida Flex, which is owned by Cuban-Americans, is also poised to bring some of Adorgraf’s employees up to Hialeah and train them in more advanced skills.

It’s that kind of, well, enterprising spirit that keeps Adorgraf’s workshop humming. And it earned Valladares an invitation to Obama’s event with Cuban entrepreneurs in Havana, where the President gave them a pep talk.

“Cuba’s economic future,” Obama told them, “depends on growth in the private sector.”

That seems as plain as a paper bag.