Archive for June, 2009

UN, US, ROK, sanction DPRK arms companies–and partners

Tuesday, June 30th, 2009

On January 21, the day after the Obama administration took office, the White House approved certain trade sanctions–initiated by the Bush administration–to be printed in the Federal Register.  These sanctions targeted specific Chinese, Iranian, and North Korean companies that the US believes were/are violating arms export regulations governing missile technology and other proliferation activities.  [Read more, including Federal Register text, here]

After North Korea conducted a long-range missile test in April, the US pushed the UN Security Council to adopt a presidential statement which blacklists several additional North Korean firms. [Read more here].

After North Korea conducted a second nuclear test, in violation of UNSC resolution, the UNSC adopted a resolution which tightened sanctions on the DPRK. [Read more here]

In June, the South Korean government imposed sanctions on these DPRK companies for the first time [Read more here]

The US followed up the UNSC resolution by announcing an inter-agency team that will focus exclusively on enforcing DPRK sanctions [Read more here

Today, the US Treasury Department announced it was targeting Hong Kong Electronics (Kish Island, Iran) [from where a former FBI agent is still missing] for supporting the balcklisted North Korean organizations.  According to Market Watch:

The Treasury Department said Tuesday that it has targeted another player in North Korea’s missile proliferation network. The agency designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank and Korea Mining Development Trading Corp. Those two firms have been targeted by the U.S. and the United Nations as part of North Korea’s nuclear proliferation network. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world,” said Stuart Levy, Treasury under-secretary for terrorism.

What does this mean? It means that any bank accounts or other financial assets found in the United States belonging to the company must be frozen. Americans also are forbidden from doing business with the firm. This probably does not amount to much economically, but is probably intended to discourage banks outside of the US from doing business with these firms.

UPDATE 1: It looks like the State Departmet is also going after a North Korean company believe to be involved in weapons proliferation today.  According to a statement by the Treasury Department:

The U.S. Department of the Treasury today targeted North Korea’s missile proliferation network by designating Hong Kong Electronics under Executive Order 13382.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them, thereby isolating them from the U.S. financial and commercial systems.  Hong Kong Electronics, located in Kish Island, Iran, has been designated for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID).

Tanchon and KOMID have also been designated by the United States under E.O. 13382 and the UN Security Council under Resolution 1718. The Department of State also today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG), a North Korean nuclear-related company in Pyongyang, under E.O. 13382. 

“North Korea uses front companies like Hong Kong Electronics and a range of other deceptive practices to obscure the true nature of its financial dealings, making it nearly impossible for responsible banks and governments to distinguish legitimate from illegitimate North Korean transactions,” said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. “Today’s action is a part of our overall effort to prevent North Korea from misusing the international financial system to advance its nuclear and missile programs and to sell dangerous technology around the world.”

Since 2007, Hong Kong Electronics has transferred millions of dollars of proliferation- related funds on behalf of Tanchon and KOMID. Hong Kong Electronics has also facilitated the movement of money from Iran to North Korea on behalf of KOMID. Tanchon, a commercial bank based in Pyongyang, North Korea, is the financial arm for KOMID – North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

Tanchon plays a key role in financing the sales of ballistic missiles for KOMID. Tanchon has also been involved in financing ballistic missile sales from KOMID to Iran’s Shahid Hemmat Industrial Group (SHIG), which is the Iranian organization responsible for developing liquid-fueled missiles. SHIG has been designated under E.O. 13382 and sanctioned by the United Nations under UN Security Council Resolution (UNSCR) 1737. Since 2005, Tanchon has maintained an active relationship with various branches of Iran’s Bank Sepah, an entity designated under E.O. 13382 and sanctioned by the United Nations under UNSCR 1747, for providing financial services to Iran’s missile program. The U.S. has reason to believe that the Tanchon-Bank Sepah relationship has been used for North Korea-Iran proliferation-related transactions.

Here is the press release by the State Department:

The U.S. Department of State today targeted North Korea’s nuclear proliferation network by designating Namchongang Trading Corporation (NCG) under Executive Order 13382. E.O. 13382 is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Entities designated under E.O. 13382 are prohibited from engaging in all transactions with any U.S. person and are subject to a U.S. asset freeze.

NCG is a North Korean nuclear-related company in Pyongyang. It has been involved in the purchase of aluminum tubes and other equipment specifically suitable for a uranium enrichment program since the late 1990s.

The Department of the Treasury also today designated Hong Kong Electronics, located in Kish Island, Iran, for providing support to North Korea’s Tanchon Commercial Bank (Tanchon) and Korea Mining Development Trading Corporation (KOMID). Tanchon and KOMID were designated by the United States under E.O. 13382 on June 28, 2005 and the UN Security Council under Resolution 1718 on April 24, 2009.

North Korea’s April 5, 2009 launch of a Taepo Dong-2 (TD-2) missile and May 25, 2009 nuclear test demonstrate a need for continued vigilance with respect to North Korea’s activities of proliferation concern. The designations add to continuing U.S. efforts to prevent North Korean entities of proliferation concern from accessing financial and commercial markets that could aid the regime’s efforts to develop nuclear weapons and the missiles capable of delivering them.

McClatchy has more here.


Bank of Korea releases 2008 DPRK economic stats

Sunday, June 28th, 2009

North Korea doesn’t release official economic data.  Since 1991, the South Korean central bank has released its own estimates of the North Korean economy to fill the void.  Its figures are derived from information provided by the ROK’s National Intelligence Service and other sources.  The 2008 statistics can be downloaded here.

According to coverage by the Associated Press:

The North’s gross domestic product for last year was estimated at $24.7 billion, a 3.7% increase from 2007, Seoul’s Bank of Korea said in a news release. The impoverished North’s economy shrank 2.3% in 2007 and 1.1% in 2006.

The central bank said the North’s economic growth was mainly because of “temporary factors” such as favorable weather conditions that resulted in an increase in agricultural production, and the arrival of oil shipments under an international disarmament deal on its nuclear program.

The size of North Korea’s economy, however, was still about 2.6% of South Korea’s, the bank said, adding it was “difficult” to determine whether last year’s growth means the country’s internal economic conditions have improved.

The bank said the North’s agricultural production increased 10.9% last year compared with 2007. The production of coal, iron ore and other minerals expanded 2.3% and the manufacturing industry 2.5%.

…and BBC coverage:

Agricultural production rose nearly 11% in 2008 compared with 2007. And coal, iron ore and other mineral production grew 2.3% for the year.

UPDATE from Business Week:

The surprise underscores the tiny size of the North Korean economy, which could be easily swayed by such factors as weather and outside assistance. Just over two-thirds of the 3.7% growth came from the agricultural sector, and that is heavily dictated by weather. North Korea’s agricultural output increased by 10.9% in 2008 after falling by 12.1% in the previous year as it managed to escape from major floods and drought. Its 2008 manufacturing production also grew by 2.5%, compared with a gain of a mere 0.8% in 2007, thanks to heavy oil supplies by the U.S. and its allies as a result of Pyongyang’s agreement last year to begin dismantling its nuclear facilities.

Even as hope builds in South Korea about a recovery, with the U.S. and China showing signs of revival, prospects for North Korea’s economy are looking grimmer. North Korea’s nuclear test in May and the regime’s missile tests this year have led to an end to outside help and economic sanctions by the U.N. This heralds a poor performance in the manufacturing sector, which will almost certainly face an acute shortage of oil and electricity this year.

Pyongyang can’t count on the agricultural industry for any major contribution to economic growth in 2009, either. Even if North Korea manages to maintain the 2008 grain output of 4.3 million tons, which will be difficult to achieve unless last year’s exceptionally good weather is repeated, it won’t help the economy grow as it starts from a high base.

Those factors make North Korea’s economic growth last year an anomaly. “There’s no indication that North Korea’s growth engine has improved in any fundamental way,” says Bank of Korea economist Shin Seung Cheol. Even with last year’s extraordinary growth, North Korea’s gross domestic product was 1/38 of South Korea’s $935 billion and its trade volume was 1/224 of the South’s $857.3 billion in 2008. As long as North Korea’s reclusive leader Kim Jong Il refuses to open up his country, the gap is bound to keep expanding.

I have collected the most commonly referenced North Korean economic statistics here.

Read more here:
South Korea’s Central Bank Says North’s Economy Grew in 2008
Associated Press

North Korea’s GDP Growth Better Than South Korea’s
Business Week
Moon Ihlwan


Nick Bonner offers comments on North Korea tourism

Sunday, June 28th, 2009

From China Business News:

Q: Koryo Tours has built its business by providing tour trips to North Korea. Why did you choose North Korea, and how tricky was it to get the business started?

A: In 1993, Joshua Green and I were approached by a North Korean colleague (that Josh had studied Chinese with at the Beijing Foreign Language University in 1998 and Nick played football with in 1993) who, after returning to Pyongyang had worked in the national travel company. At that time, it was a real fledgling travel industry (they only opened to western tourism in 1987) and less than 50 western tourists visited per year. We started going every month but with very few tourists, mainly driven by fascination, realisation that we had incredible access and the fun of working with some amazing Koreans. During the famine, we worked with aid agencies and continued tourism which brought in a steady amount of work for our Korean colleagues. in the past five years, DPRK tourism have seen growth, and we now take just under 1,000 tourists a year – about half of all western visitors. With my colleagues Simon and Hannah, we make sure that tourists have the best access possible to the country and people. Having specialised in one country for 16 years, it really does mean we are literally the only experts in this destination, and for every tourist we have taken it rates as one of their most amazing experiences.

Q: What effect does North Korea’s aggressive stance on defense have on your business – do people become more or less interested in visiting when it tests a nuclear bomb or fires a missile?

A: Every few weeks, North Korea makes the news for one reason or another, usually a negative reason of course. However, North Korea remains one of the safest and most fascinating countries in the world to visit. For those who are of the opinion that seeing a country for yourself is more valuable than watching the interpretation on the world news, then we provide them that access. In addition, as we accompany the tours, we provide an insight into the country that is difficult for a visitor to interpret. Our clientele are generally very worldly and aware and interested in what is going on, I think the DPRK being in the news for any reason puts it on people’s mental map and thus makes more people visit rather than being scared off.  

Q: North Korea is a pretty ‘left-field’ travel destination. What have been the key approaches to marketing your company, both locally and internationally?  

A: Our reputation has been established because we provide excellent service and we really do make sure that any visitor to Korea will have the time of their lives. We have a company responsibility to engage with the Koreans and much of our work is involved in cultural exchanges, film making and charity projects. I think this aspect of our work comes across to potential clients who see we really are more than a travel agency. We rely heavily on word of mouth and a great deal of our tourists know someone else who has been before, also we get a good number of repeat visitors as we don’t simply run the same tour over and over again. Being honest, doing the best job possible and maintaining good contacts with our previous clients are critical. This is how we keep a good reputation which we see as being the key to selling our product.  

Q:  Are you planning to diversify to other locations beyond North Korea – and if so, how do you choose new destinations?

A: Since 2006, we have been running twice-yearly tours to Turkmenistan, which is a fascinating and amazing place to go. In addition to this, in 2010, we are planning on offering a wider range of tours to places such as Tajikistan (for Persian New Year – when they hold a Buzkashi event), to the Tumen river area including Yanji in China, the North Korean free trade zone of Rajin-Sonbong, and Far Eastern Russia (around Vladivostok), also a tour to the North Western Caspian Sea region including Volgograd (once known as Stalingrad) and the mysterious republics of Kalmykia and Dagestan. All are remarkable, highly-interesting, and unique places that we think our discerning clients will be interested in. North Korea remains the focal point of our company, but these other destinations fit well in the mould of visiting unusual but interesting places.

Although I have never visited the DPRK with Koryo Tours, I did travel to Turkmenistan and I recommend it.  That trip launched my interest in Central Asia, and I quickly followed it up with visits to Iran and Tajikistan.

Read the full story here:
BizTalk Interview: Nick Bonner, Founder of Koryo Group
Gary Bowerman


DPRK cigarettes to sell in ROK

Sunday, June 28th, 2009

According to KBS Global (h/t ROK Drop):

Consumers can buy cigarettes produced by a North Korean firm starting next month.

A South Korean company announced Friday that it will start selling some 175-thousand packs of the “Baeksan” cigarettes from July sixth, with each pack costing two-thousand-300 won, or about one dollar and 80 cents.

It’s not the first time a South Korean company has imported a North Korean tobacco product. In 2000, the South’s Korea Tobacco and Ginseng Corporation imported North Korean cigarettes under a temporary contract.

Here are previous posts on North Korean cigarettes.

Here is a photo of the North Korean cigarattes I purchased on my trips.


White House forms DPRK sanctions team

Sunday, June 28th, 2009

According to the Washington Post:

The White House is ramping up its efforts to enforce sanctions against North Korea by forming a new interagency team to coordinate U.S. actions with other nations, senior administration officials said today.

The new team will be led by former ambassador to Bolivia Philip S. Goldberg, who is slated to leave for China in the near future as the U.S seeks concerted action to stop the North Korean regime from developing nuclear weapons.

“There is a broad consensus about the need to have a focused and engaged effort to see that these sanctions are implemented … and that we’re sharing information with each other,” one official said, speaking on background.

U.S. officials described the new group as a way to focus the administration more squarely on implementation of the latest sanctions, which were approved by the United Nations in the wake of North Korea’s nuclear test last month.

The officials said they are hoping the group — with representatives from the State Department, the White House, the National Security Agency, Treasury and others — will help “shine a spotlight” on the actions of the regime.

“We wanted somebody who woke up every morning and thought about nothing but sanctions implementation,” one official said. “It’s a huge difference when you have somebody who isn’t worried about any of the other aspects of this.”

The White House also announced a renewed effort to use the authority of the U.N. resolution to take financial actions against the North Korean regime in an effort to choke off the money flowing from small arms trade and other activity.

Treasury officials have issued a public memorandum to private financial institutions reminding them of the global condemnation and other risks of doing business with the North Korean regime.

The letter warns that North Korean banks and institutions often use deceptive techniques to engage in financial transactions that could place legitimate financial firms at risk.

“Financial institutions should apply enhanced scrutiny to any such correspondent accounts they maintain, including with respect to transaction monitoring,” the letter states.

One senior official said the U.S. is confident that the financial sanctions will over time help to further isolate North Korea and pressure its leaders to abandon its nuclear program.

“It’s going to take time to have a bite,” he conceded. “But we’re trying to get out of the box quickly.”

The Bush administration also had a sustained effort to implement United Nations sanctions after North Korea first tested a nuclear weapon in 2006.

The Counterproliferation Directorate of the White House National Security Council coordinated the effort, while the State Department and Treasury also co-chaired an interagency effort to examine specific cases that eventually worked their way up the chain for approval.

A team of senior officials, led by the undersecretary of State for arms control, traveled to Asia to work closely with allies. But the effort was dropped after Bush shifted course and decided to pursue diplomacy with North Korea.

Their first stops: China then Malaysia.

New North Korea Sanctions Team Formed
Washington Post
Michael D. Shear and Glenn Kessler

U.S. North Korea sanctions team to visit Malaysia
Reuters UK


Orascom reports DPRK profits

Sunday, June 28th, 2009

According to Yonhap:

Egypt-based mobile operator Orascom Telecom earned US$312,000 in first-quarter sales this year from its mobile service in North Korea on surging demand among the communist nation’s upper class, a company press release said Thursday.

More than 19,200 people have signed up for Orascom’s mobile phone service as of March since it began with 5,300 subscribers last December, according to the firm’s report on its first quarter earnings in 2009.

Martyn Williams offers some additional details which could call the venture’s profitability into question:

The network generated modest earnings of US$312,000 for its operators in the first quarter, before accounting for interest payments, taxes, depreciation and amortization. Orascom did not disclose whether the network made a profit or a loss for the period.

Koryolink achieved the EBIDTA (earnings before interest, taxes, depreciation and amortization) results on consolidated sales of US$4.4 million, said Egypt’s Orascom. The company holds a 75 percent stake in the network operator, which is called Cheo Technology but uses the Koryolink brand name. State-owned Korea Post and Telecommunications holds the remaining 25 percent.

Martyn also gives us some Koryolink prices:

The handsets, which are localized versions of Chinese models, cost between US$400 and $600 and the cheapest subscription costs 850 North Korean won per month.

That works out to about US$6 at the official exchange rate, but about 24 cents at the current black market rate used by many citizens and traders. Calls on this tariff are charged at 10.2 won per minute. The most expensive calling package costs 2,550 won per month and call rates are 6.8 won per minute.

Cheo offers service through a single retail shop in Pyongyang but opened a second temporary outlet during a March sales promotion. The promotion, available during the final two weeks of the quarter, offered lower price handsets, cheaper calling packages and free minutes. As a result, sales in March increased by 138 percent over February, said Orascom.

Read previous Orascom posts here

On a similar note, Kim Jong il’s English language translator was named ambassador to Egypt.

Read more here:
Egypt’s Orascom reports profit from N. Korean mobile service
Kim Eun-jung

North Korean 3G network hits 19,000 subscribers
Martyn Williams


North Korea on Google Earth v.18

Thursday, June 25th, 2009

North Korea Uncovered version 18 is available.  This Google Earth overlay maps North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks.

This project has now been downloaded over 140,000 times since launching in April 2007 and received much media attention last month following a Wall Street Journal article highlighting the work.

Note: Kimchaek City is now in high resolution for the first time.  Information on this city is pretty scarce.  Contributions welcome.

Additions to this version include: New image overlays in Nampo (infrastructure update), Haeju (infrastructure update, apricot trees), Kanggye (infrastructure update, wood processing factory), Kimchaek (infrastructure update). Also, river dredges (h/t Christopher Del Riesgo), the Handure Plain, Musudan update, Nuclear Test Site revamp (h/t Ogle Earth), The International School of Berne (Kim Jong un school), Ongjin Shallow Sea Farms, Monument to  “Horizon of the Handure Plain”, Unhung Youth Power Station, Hwangnyong Fortress Wall, Kim Ung so House, Tomb of Kim Ung so, Chungnyol Shrine, Onchon Public Library, Onchon Public bathhouse, Anbyon Youth Power Stations.


FDI and JVCs in the DPRK…

Thursday, June 25th, 2009

The General Association of Koreans in Japan (Chongryun) have made a video about foreign direct investment and joint venture companies in the DPRK.  I have posted links to the video below.  It features the PyongSu pharmaceutical factory among other things.  It is in Korean and Japanese (with Japanese subtitles), so if there are any readers who care to translate, please let me know if there is any interesting information in the videos:

Part 1:

Part 2:

Part 3:


DPRK tech sector update

Tuesday, June 23rd, 2009

Time offers a short update on the DPRK’s technology sector.  According to the article:

The country’s Dear Leader has quietly launched an educational offensive to ramp up his country’s computing skills and build an internationally competitive IT industry, moves that experts say have been strongly encouraged by Kim’s oldest son, Jong Nam, who directs the Korea Computer Center. Grade-school kids are now drilled in Pascal and other computer languages, while gifted students are channeled into science and technology programs at Kim Il Sung University and Kim Chaek University, which some have dubbed the MIT of North Korea. Although currently stalled because of troubled bilateral relations with South Korea, another technical university, Pyongyang University of Science and Technology (PUST), is scheduled to open soon; foreign professors are supposed to eventually teach there, in English.

“They understand IT is critical for their development,” says Frederick Carriere, executive director of the New York–based Korea Society, who plays a pivotal role in bilateral programs with both halves of the Korean peninsula. This includes helping to broker a seven-year-long academic exchange between Syracuse University and Kim Chaek, which recently was able to open the country’s first digital library, using open-source software.

“I’d like to see more incentives for the DPRK to participate in this kind of standards-based [open-source] work, because through that participation, you get investment in the world of the sort that presumably reduces the likelihood of certain types of conflict,” argues Stuart Thorson, an IT and governance expert at Syracuse who oversees the program with Kim Chaek, which he says has been hampered by ineffectual U.S. export controls.

Those export controls, of course, are just a symptom of the growing international tensions between Pyongyang and the West. Whether it’s the country’s recent nuclear tests and heated rhetoric directed toward its southern neighbor or the standoff over its jailing of two U.S. reporters, the unstable relations make it more difficult for Kim to deliver on his IT promises.

Even more problematic are the regime’s overriding security preoccupations. Key power and telecom transmissions are buried underground, which complicates much needed maintenance and upgrades. More communications also means eroded state control, which is a vital regime concern. There are currently only a little more than 1 million domestic phone lines — about 5 per 100 inhabitants — although just 10% belong to individuals or households. Unauthorized international calls abroad can lead to fines and arrest and in one case reportedly led to the public execution of a plant manager in October 2007, according to Good Friends, a Seoul-based aid organization. The same fears of the outside world will mean a very cautious and slow opening of the Internet, which is now reserved for trusted government officials and foreigners.

“It would be nice to think that a new high-tech day is dawning over North Korea, but that would be a mistake,” argues David J. Smith, chief operating officer and director of the North Korea Project at the National Institute for Public Policy, a U.S. foreign policy think tank. “North Korea’s high-tech ventures will fail to save its economy without a systemic overhaul, of which the regime is incapable.”

Given a chance, though, North Koreans’ native intelligence does flourish. Two years after first entering a team in the IBM-sponsored Computer Olympics (the International Collegiate Programming Contest), the North Koreans made it into the finals. “They are capable of handling very complicated software, and the results are extremely good,” says Paul Tjia, a Dutchman whose GPI Consultancy has arranged for several European clients to outsource work to North Korean programmers. At Seoul’s Unification Ministry, IT expert Lee Duk Haeng says Samsung and Korean Telecom are among a handful of South Korean firms currently using North Korean engineers.

There are already hundreds of North Korean software engineers working in China, in border cities and elsewhere, according to Heejin Lee, a professor at Yonsei University, who has conducted fieldwork in the region. Most work as subcontractors for South Korean, Japanese or Chinese firms — sometimes in joint ventures — and Lee says there are numerous clandestine firms. The North Koreans earn high marks for their scientific and mathematical skills and come substantially cheaper than their Chinese counterparts — $300-$500 a month, one-third the cost of a Chinese engineer, or half the price of an Indian one, he says.

UPDATE: The first joint venture software company in the DPRK (which handles a number of outsourced projects) is NosotekHere is an interview with the vice president Ju Jong Chol and German president Volker Eloesser.

Read the full article here:
North Korea Tries to Ramp Up Tech Infrastructure
Ken Stier


Legea sponsors DPRK men’s 2010 and women’s 2011 World Cup teams

Sunday, June 21st, 2009

UPDATE 5 (2011-3-28): Radio Free Asia updates us on the Legea deal.  According to the article:

Officials of North Korea’s team and Legea met last week at the company’s headquarters in the Italian city of Pompeii and discussed details of a new jersey design under a four-year sponsorship agreement initiated at the end of the last World Cup tournament.

Two “key stakeholders” from the North Korean team discussed new designs for the team uniform and an expansion of their successful partnership during the 2010 World Cup in South Africa, according to Lorenzo Grimaldi, the company’s marketing and sponsorship manager.

“Two core members of the North Korean soccer team met with company officials over the course of the two days mostly to discuss new [uniform] collections,” resulting in a decision to move forward, Grimaldi told RFA.

During the meetings, the two sides are believed to have exchanged ideas about Legea’s newly-launched Saga soccer uniform line and related supplies, as well as what support would be provided for the North Korean team.

Specific details of the arrangement were also discussed ahead of the North Korean women’s national soccer team’s participation in the 2011 Women’s World Cup in Germany. Legea will be sponsoring the women’s team for the tournament.

Originally, North Korean national soccer team officials and Legea had scheduled the meetings in February, but Grimaldi said they were rescheduled due to visa approval and flight delay issues.

Key sponsor

Legea has sponsored the North Korean national soccer team since the 2010 FIFA World Cup and has agreed to continue as a key sponsor for the next four years. The sponsorship for the period was valued at U.S. $4.9 million, including products for the national women’s and youth teams.

Last year, Legea sold a substantial amount of North Korean team replica jerseys, team-related merchandise and other apparel from a selection of more than 2,000 items, and Grimaldi said continued sanctions on the country have only increased the popularity of the merchandise.

He said Legea confirmed a global interest in the North Korean soccer team through its surprisingly high sales of replica jerseys last year, despite the team’s early exit from the World Cup.

Legea said the soccer team’s sportswear was popular in countries including the U.K., Spain, the U.S., and South Korea.

In Spain, Legea recorded sales of nearly 1 million Euros (U.S. $1.35 million).

Itagoal, a Legea product retailer in New York, confirmed high numbers of sales in the U.S. last year.

A representative of Itagoal said the company is eagerly awaiting a new shipment of North Korean team products from Italy.

Here (2008 Olympics), and here (2010 FIFA) are past stories on sponsorship of North Korean athletic teams.

UPDATE 4 (2010-6-2): According to Bloomberg/Busiessweek:

North Korea is returning to the World Cup after 44 years, and venturing into the sports marketing industry that evolved in its absence.

Ahead of the June 11 start of the tournament, the soccer team of Kim Jong Il’s regime has snared a 4 million-euro ($4.9 million) jersey contract over four years, according to Daniele Nastro, marketing director of Pompeii, Italy-based sports apparel maker Legea s.r.l. North Korean soccer association assistant general secretary Ri Kang Hong confirmed the deal with Legea, without giving financial details.

“Perhaps it’s a sign of incipient capitalism,” Jim Hoare, a retired British diplomat who served in Pyongyang, said from London. Although western sports leagues aren’t covered by the media in North Korea, officials “would be aware of the value of sports sponsorship,” Hoare said.

The deal is timely as North Korea faces trade restrictions. South Korea halted business last month after blaming the communist nation for a torpedo attack on a warship that killed 46 sailors in March. Japan has tightened controls on sending money to the North, which was already under United Nations sanctions for nuclear testing.

Kim’s regime is “hungry” for foreign cash, according to Scott Snyder, director of the Center for U.S.-Korea Policy at The Asia Foundation in Washington. “The economy is in a very difficult situation,” he added.

1,000-to-1 Chance

Ranked No. 105 in the world, North Korea takes on the Nike Inc.-clad Brazil, the record five-time world champion, in its opening game on June 15 in Johannesburg. Ladbrokes Plc, a U.K. oddsmaker, rates North Korea a 16-to-1 chance to defeat Brazil, meaning a $1 bet would yield $16 in profit.

The communist state is given a 1,000-to-1 chance of winning the tournament, according to Ladbrokes.

At the 1966 World Cup in England, when brand names were absent from even European team uniforms, North Korea wore plain red shirts when it upset Italy 1-0 to reach the quarterfinals and won the affection of the English, who “probably felt sorry for them,” Hoare said. England now commands about 34 million euros a year from Nike Inc.’s Umbro brand, making it the top earner of the 32 teams that will play at the World Cup in South Africa, according to Sport + Markt AG.

No Apparel Market

North Korea’s team is getting an amount similar to what might be paid to a low-ranking team in the English Premier League, the world’s richest soccer league, according to Simon Chadwick, a sports business professor at the U.K.’s Coventry University. Ri, in an interview in Tokyo last week, said it was hard to find a jersey sponsor as there’s “no market” for sports apparel in North Korea.

“If it doesn’t result in sales, there’s no point” for some sporting-goods companies, Ri said.

Legea will provide North Korea with branded World Cup jerseys and training gear, Nastro said. That will help raise the Italian brand’s international profile, although the marketing bet could backfire, Chadwick said.

Legea “will be working overtime to put clear blue water between the team and the regime,” Chadwick said. “It could get to the stage when people stop buying the brand if they’re being seen as propping up a dictatorship.”

While not breaking trade sanctions, Legea is “swimming against the tide” with its sponsorship because of the perception of North Korea, Snyder said. “It’s a bit like sponsoring Tiger Woods at the moment,” he said.

Nastro said he isn’t worried. “In the World Cup, politics will be out,” he said by telephone from Pompeii.

Rival Chinese Bid

North Korea received other bids. It declined an offer by China Hongxing Sports Ltd., the Singapore-listed company that provided its jerseys for qualifying games, according to Kelvin Yeung, chief financial officer of the Chinese company.

European brands might have bid more, Yeung said, without saying how much China Hongxing offered. Ri said the agreement with the Quanzhou, China-based company had expired and declined to comment on why it wasn’t renewed.

North Korea rejected Legea’s first design for its shirts as too modern, frowning upon a white line across a red shirt, Nastro said.

“As a people, we don’t like flashy designs,” Ri said. “For home games, the jerseys are white, which we regard as noble, and it reflects our spirit. For away games, we go with red, which is used in our national flag. It also symbolizes our passion and heart. A simple design expresses that more purely.”

As part of the shirt deal agreed in March, there is a kicker for North Korea: it will get a 10 million euro bonus if it wins the World Cup, Nastro said.

“That’s probably not going to happen,” he added.

UPDATE 3 (Date N/A): You can see the DPRK men’s 2010 football kit here.

UPDATE 2(2010-6-3): Apprarently Italian sports apparel firm Legea snagged the DPRK men’s and women’s football contracts. According to the Economist:

Bloomberg reports that North Korea has signed a four year – 4 million-euro Legea kit deal, according to Daniele Nastro, marketing director of Pompeii, Italy-based sports apparel maker Legea.

North Korean football association assistant general secretary Ri Kang Hong confirmed the deal with Legea, without giving financial details.

North Korea received other bids. It declined an offer by China Hongxing Sports Ltd., the Singapore-listed company that provided its jerseys for qualifying games, according to Kelvin Yeung, chief financial officer of the Chinese company.

European brands might have bid more, Yeung said, without saying how much China Hongxing offered. Ri said the agreement with the Quanzhou, China-based company had expired and declined to comment on why it wasn’t renewed.

North Korea rejected Legea’s first design for its shirts as too modern, frowning upon a white line across a red shirt, Nastro said.

“As a people, we don’t like flashy designs,” Ri said. “For home games, the jerseys are white, which we regard as noble, and it reflects our spirit. For away games, we go with red, which is used in our national flag. It also symbolizes our passion and heart. A simple design expresses that more purely.”

It should be pointed out that Italy is a World Cup football rival with both Koreas following the DPRK’s victory over Itlay in 1966 and the ROK’s victory over Italy in 2002.

UPDATE 1 (2009-6-21): The Western media has picked up on this story and added a few details.  According to the Los Angeles Times:

Since sponsorship for North Korean teams began, Hongxing’s domestic presence has grown to nearly 3,800 retail outlets across China from about 100 in 2000. And with the World Cup qualification, Erke is confident its investment in an overseas market versus competing for domestic sponsorships with Adidas and Nike will pay off.

“Football is one of the areas which we feel have a lot of potential for development and we hope to be able to raise our brand visibility … in major events, such as the World Cup,” Yeo said.

In 2008, the company expanded its scope of international sponsorships to include the International Table Tennis Federation Pro Tour and its tournaments in Qatar, Austria, Germany and France.

Read the additional stories here:
North Korean Soccer Unfazed by Sanctions
Radio Free Asia
Borah Jung

North Korea Profits From Brazil World Cup Game With Jersey Deal
Alex Duff and Makiko Kitamura

North Korean soccer brings success to Chinese apparel company
Los Angeles Times
Chi-Chi Zha

ORIGINAL POST (2010-4-4): Chinese sportswear firm to sponsor DPRK team at football World Cup, by Michael Rank

The Chinese sporting goods company Hongxing, which sponsored the North Korean Olympics team in Beijing (here and here), will do the same for the North Korean squad at the football World Cup in South Africa in June, a Chinese website reported.

The Singapore-listed company, which markets its products under the brand Erke , sponsored the North Koreans to the tune of $3 million at the Olympics, which resulted in “very good publicity results”, the website added. The company has over 3,000 shops in China, it said.

The firm will kit the team out in clothes, boots and luggage as well as providing training, but the report did not give a value for the World Cup sponsorship.

A company official was quoted as saying: “Ever since [North] Korea qualified for the World Cup in South Africa, the fame of the brand on the Chinese mainland has gradually reached a peak. We expect the publicity results of the [North] Korean team will help promote a rise in sales.”

The Wall Street Journal reported in 2008 that the North Koreans refused to wear Erke’s logo at the Olympic Opening Ceremonies for fear it would compete with their country’s flag.

It quoted Wu Rongzhao, deputy chief executive of China Hongxing Sports, as saying sponsorship of the North Korean team was “a very painful process.” Erke had to scrub plans for a marketing event timed to the Games’ opening because of red tape and bureaucracy. For instance, Pyongyang’s Olympic officials would communicate only by email, not by phone, the paper added.

Wu said sponsorship of the North Korean team was aimed at the domestic Chinese market. It “will allow us to capture a bigger share of the growing PRC sporting goods market in the run-up to the Beijing 2008 Olympics.”

Asked to comment on the latest report, an Erke spokesman told North Korean Economy Watch in an email that “we are unable to confirm the content from the link provided by you at this moment. Please check our official press release regarding all sponsorship issues.” Hongxing is based in the coastal city of Quanzhou in Fujian province.

Apart from sponsoring the North Korean Olympics team, Hongxing also sponsored the country’s women’s football team in the FIFA Women’s World Cup held in China in 2007. North Korea were knocked out in the quarterfinals to Germany, who went on the win the tournament.

North Korea will be making their second-ever appearance at the World Cup this summer, after unexpectedly making it into the tournament in Britain in 1966, when it shocked the world by defeating Italy en route to the quarterfinals.

Drawn in a fearsome-looking Group G in South Africa alongside five-time world champions Brazil, European heavyweights Portugal and African powerhouses Côte d’Ivoire, the North Korean Chollima  squad kick off their campaign against Brazil on 15 June in Johannesburg.

Assistant coach Jo Tong-Sop said in January after winning the International Friendship Football Tournament in Qatar: “Given the teams we’ve been drawn against, we face a difficult task at South Africa 2010, though I hope that this win will boost our confidence.”

“Our group will be very tough as it includes some of the highest-ranked teams in the world. They have some fantastic individual players, not to mention their teamwork and tactical ability, all of which will make life very hard for us in South Africa,” Jo told

There’s a North Korea World Cup blog here and football kit fetishists may enjoy the discussion of the North Korean World Cup shirts here .

North Korea’s chances in the World Cup seem slim and it is a footballing minnow compared with the South. South Korea is the only Asian team to have qualified for the World Cup for seven times consecutively and currently holds the best FIFA World Cup record in Asia, according to Wikipedia.

South Korea and Japan co-hosted the World Cup in 2002, the first time the championships had been held in Asia and the first time the tournament had been hosted by more than one country.