DPRK wants to be a Wal-Mart supplier

North Korean officials are reportedly interested in signing a deal to export textile products to Wal-Mart, a U.S. corporation that runs a chain of large, discount department stores, Radio Free Asia (RFA) reported Friday.

Wal-Mart is one of the largest retailers in the world, with an estimated 20 percent market share of the retail grocery and consumables business in the United States. The company relies on an extensive overseas outsourcing and subcontracting system, particularly with Chinese manufacturers.

Tony Namkung, senior advisor to New Mexico Governor Bill Richardson, recently returned from his trip to North Korea where he met with senior North Korean officials, the report said.

He said the North Korean government has high hopes for the lifting of economic sanctions, the Trading with the Enemy Act and the terrorism-sponsoring list, according to the report.

Namkung said North Korean officials seriously talked about the possibility of economic cooperation with U.S. companies. They mentioned the possibility of exporting North Korean textiles to U.S. retail stores, specifically mentioning Wal-Mart. The officials reportedly told Namkung that they were hoping Wal-Mart could come in with a textile quota.

He also said North Korea officials made references to exporting magnesite and working with U.S. mining companies to develop mineral sites. In the past few years, North Korea has sharply increased mineral exports to neighboring countries, including zinc exports to South Korea and China and gold exports to Thailand.

Read the full story here:
NK Seeks Textile Exports to Wal-Mart
Korea Times
5/16/2008

This entry was posted on Sunday, May 18th, 2008 at 2:27 pm and is filed under International trade, Manufacturing, Mining/Minerals. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Leonid Petrov

The stereotypical image of North Korea as a hopeless economic basket case ignores the fact that this country possesses extensive natural resources. Gold, iron ore, anthracite coal, zinc, lead, magnesite, and tungsten mines are significant assets of DPRK economy. But their production has declined or stopped altogether since early 1990s after China and Russia called off their support. Nowadays, trade with the USA and its allies is still impeded by numerous sanctions.

The North Korean economy is currently experiencing a stage where the mechanisms of the centrally planed system are not working properly any more but the market-oriented system has not yet been built. To some degree, the North Korean leadership is trying to emulate the South Korean model of export-based development, where a strong, dictatorial government aims for the increase of industrial productivity at any cost. But the main obstacle for this scenario is the lingering taboo on capitalist form of proprietorship in the DPRK. Politically, the country remains closed and extremely sensitive to foreign and domestic criticism. This is not a democratic way of development but it guarantees stability and precludes any possibility of labour unrest in the period of high growth.

North Korea is an industrialised (43%) nation, with moderately developed (33%) service sector and a small (23%) agricultural sector, which was badly affected by human mistakes, natural disasters compounded by the energy crisis and foreign trade sanctions. In July 2002 a series of measures to liberalise the national economy were undertaken but no steps were made toward privatisation of the means of production or real estate. Although all businesses and enterprises in North Korea are still treated as government-owned and collectively-run, these days they receive unprecedented freedom in managing the production and sales.

Profitability is the motto in today’s North Korea. Any prospect for foreign investment coming into the North Korean economy immediately opens doors to the high echelons of power. Since the industrial production in the DPRK was halted more than ten years ago and the import capability has been extremely limited, North Korea now has a huge appetite for goods and services.

One of Pyongyang’s major goals, following the removal of internationally imposed sanctions, remains long-term collaboration with foreign mining companies to modernise existing mines and to find and extract undeveloped mineral resources, with payment in minerals.

See more at http://www.nautilus.org/fora/security/08037Petrov.html

LP
NKeconWatch

Thanks for the post, Dr. Petrov.

I am wondering if raw materials exports are the best way to “build a market economy.” Raw materials-led exports seem to ruin as many economies as they help because governments become too dependent on their revenues, meanwhile human capital remains undeveloped as does contract and property law, commercial best practices, banking and finance, etc.

South Korea, if I am correct, never exported raw materials, but finished goods–meaning that value was added within the country (Improving human capital). With raw materials exports, you just have to get the stuff out of the ground and to the ports, which carries little extra benefit to the average North Korean worker. The DPRK needs to do figure out how to “add value” to these exports–through refining and/or textile manufacturing.

Any thoughts?

North Korean Economy Watch

DPRK wants to be a Wal-Mart supplier