Archive for the ‘International trade’ Category

Rungra 88 Trading Company

Thursday, October 16th, 2014

According to the Daily NK:

Neungna 88 [Rungra 88],  Trading Company, located in Suncheon, South Pyongan Province, has been a popular workplace for women, offering jobs in clothes manufacturing. It is one of the companies tasked with earning foreign currency for the North, but recently, with the wages standing at a mere 10th of individually employed workers, more people are leaving their posts, the Daily NK has learned.

“Workers employed by breweries or bakeries receive roughly 200,000 KPW a month,” a source in South Pyongan Province reported to Daily NK on Tuesday. “But at Neungna 88, workers on the clothing line only make 20,000 KPW even though they work in unsatisfactory environments.”

The trade company falls under the Chosun Workers’ Party’s Finance and Accounting Department and exports to China everything from coal and iron ore to medicine, alcohol, clothing, and health supplements, earning back foreign currency. The profits are offered up to the Department or are used to procure holiday gifts for Party cadres under Kim Jong Eun’s name.

Neungna 88 in Suncheon is a branch of the headquarters in Pyongyang, and focuses on exporting clothes in collaboration with China, meaning the company brings in the yarn, fabric, and designs from China, and then exports the final products back. It also runs a restaurant serving pizza to procure additional funds. Increasing foreign food availability is the latest method employed by these foreign-currency organizations to encourage resident spending, encouraged by the increased demand. For foreign currency-earning enterprises to extend their activities domestically is indicative of the increasing purchasing power of the middle-class.

“If you get to Daedong River in Sunchon, you’ll see a big sign on a three-story building that reads Neungna 88 Trading Company,” the source explained. “The first floor is a pizza place, and on the second and third stories, there are some 150 women making clothes.”

Their monthly wages are 20,000 KPW [2.3 USD], which is almost seven times higher than other state-run companies, but the lowest among trading companies.There are no standards as to how much these trading companies have to pay their employees, and each company decides based on the profits and amount of work allocated.

Unlike men, it is very rare for women in their teens or 20s to work for a trading company. Despite this fact, some women work on garment manufacturing lines because of the regular food rations and extra benefits offered on national holidays, regardless of the low wages.

However, recently more people have been quitting their jobs, as those who are hired by private businesses are able to receive up to a ten-fold increase in wages and work in a more pleasant environment, the source explained. This portends a growing number of women who are seeking more than a low wage with rations and instead looking for better employment opportunities.

With this trend, the company has been trying to hire more women with experience at state-run apparel factories, but not many are willing to due to the low salary. “Because of this, unless Neungna 88 raises its wages it will create obstacles for exports, not only due to technical difficulties, but also low morale,” she concluded.

Read the full story here:
Women Leaving Low Paying Trade Co. Jobs
Daily NK
Seol Song Ah
2014-10-16

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3rd North Korea-China Economic, Trade, Culture and Tourism Expo held

Thursday, October 16th, 2014

UPDATE 4 (2014-10-23): Here is coverage in the Choson Ilbo:

North Korea signed US$1.3 billion worth of investment deals with Chinese businesses at a trade fair in the Chinese border city of Dandong last week.

China’s Xinhua news agency on Monday quoted one of the organizers of the trade fair as saying, “North Korean and Chinese businesses signed letters of intent covering 60 trade and investment pacts amounting to $1.26 billion.

“Another eight letters of intent were signed between North Korea and businesses in other countries involving $11.6 million worth of trade and $100 million worth of investments.”

Around 500 North Korean officials attended the trade fair, including those in charge of economic development.

But the amount of deals struck was smaller than last year (93 deals worth $1.6 billion), due to deteriorating relations between Beijing and Pyongyang.

Skeptics also point out there is no guarantee that the letters of intent will materialize into concrete investments.

UPDATE 3 (2014-10-20): Here is additional coverage by Yonhap:

In an apparent bid to lure Chinese investors, North Korea has publicized somewhat detailed information about its workforce during an annual trade with China, boasting of a well-educated pool of labor.

The North’s National Economic Development General Bureau released a booklet to show off its labor force at the five-day trade fair, which ended on Monday in the Chinese border city of Dandong.

According to the booklet, North Korea’s total population stood at 24.34 million as of last year. About 12.17 million people constituted a “prepared labor force that can adapt to randomly-chosen professions,” according to the booklet.

North Korea also boasted that it extended compulsory education by one year to 12 years from this year.

“In our country, the level of education is high and the potential of intellectual capability is solidly prepared,” the booklet said. “There is no unemployment, labor striking or sabotage in our country.”

North Korea sent 68 business entities to this year’s North Korea-China Economic, Trade, Culture and Tourism Expo, the third of its kind, down about 30 percent from last year.

The decline in North Korea’s participation at this year’s show underscored the continued strain in bilateral relations, particularly since the North’s third nuclear test in February last year and the execution of the North Korean leader Kim Jong-un’s once-powerful uncle, Jang Song-thaek, who had close ties with Beijing.

UPDATE 2 (2014-10-20): Here is coverage from Xinhua:

A 500-strong trade delegation from the Democratic People’s Republic of Korea (DPRK) is promoting the country’s investment opportunities at a four-day expo in China’s border city of Dandong, Liaoning Province.

The third China-DPRK Economic, Culture and Tourism Expo, closing on Tuesday, has seen 70 million yuan (about 11.6 million U.S. dollars) of trading, agreements on eight investment contracts worth 100 million U.S. dollars, and 60 trade agreements worth 1.26 billion U.S. dollars in total.

Shi Guang, mayor of Dandong, said the expo has drawn 100 DPRK exhibitors, 96 companies from Russia, India, China’s Taiwan and Hong Kong, as well 210 companies from the Chinese mainland. About 250,000 visitors from 20 countries and regions have attended.

The DPRK is developing a Special Economic Zone to help implement its opening-up policy.

Kim Jong Sik, an official with the DPRK Economic Development Association,ssaid the zone is open up to any countries interested in establishing economic and trade relations with the DPRK.

The zone will be dedicated to external trade, assimilating foreign investment and improving the country’s economy, he said.

According to the official, the DPRK has clinched bilateral trade and investment protection agreements with more than 30 countries and mapped out an economic structure including metallurgy, mining, production of construction materials, machinery, garment making, shipbuilding, agriculture and aquaculture.

Kim said the country’s human resources, environment and tourist resources are key factors to appeal to foreign investment. It has been working to optimize investment laws.

The city of Dandong faces the DPRK across the Yalu River. Construction of a bridge linking both sides has been basically completed. It is expected to help facilitate the DPRK’s exchanges with the outside world.

UPDATE 1 (2014-10-18): According to Yonhap:

North Korea is still showing off its products at an annual trade fair with China, but the number of North Korean business entities attending the event this year was about 30 percent less than last year.

The mood is subdued at the five-day trade fair in the Chinese border city of Dandong, reflecting strained political ties between North Korea and China amid Beijing’s signals of displeasure with Pyongyang’s nuclear ambition.

Organizers had said that about 100 North Korean business entities would attend the annual exhibition, but only 68 of them actually attended this year’s event. About 100 North Korean business entities attended last year’s exhibition.

The crowd was also noticeably smaller than it was last year.

“This year, we didn’t bring many products. Instead of selling products, we come here with hopes to meet with Chinese people who want to invest in our factory,” said an official at a North Korean trading firm who spoke on the condition of anonymity.

The decline in North Korea’s participation at the North Korea-China Economic, Trade, Culture and Tourism Expo, which began its five-day run Thursday, underscored the continued strain in bilateral relations, particularly after the North’s third nuclear test in February last year and the execution of the North Korean leader Kim Jong-un’s once-powerful uncle, Jang Song-thaek, who had close ties with Beijing.

In what many analysts believe was a message to North Korea, Chinese President Xi Jinping paid a two-day visit to South Korea in July this year, breaking a long-standing tradition by Chinese heads of state of visiting Pyongyang before Seoul.

North Korea’s bilateral trade with China stood at US$4.05 billion in the first eight months of this year, down 1.1 percent from the same period last year, according to Chinese customs data.

Economic development, along with the expansion of its nuclear capability, has been a new focus of North Korea’s policy under young leader Kim Jong-un, who took over in late 2011 after his father, Kim Jong-il, died.

North Korea, beset by poor infrastructure and international sanctions over its nuclear and missile programs, has announced plans to set up an economic development zone in each of its provinces.

Despite sanctions that discourage foreign investment, Kim Jong-sik, an official at the North’s National Economic Development General Bureau, told an audience at the exhibition that Pyongyang would set up a “one-stop service” that makes it easier for foreigners to invest in the country.

“With regard to economic development zones, we will simplify immigration procedures and build a one-stop service, which has been widely introduced around the world, to try to fully guarantee conveniences of foreign investors,” Kim said.

ORIGINAL POST (2014-10-16): According to Yonhap:

North Korea and China kicked off an annual trade exhibition on Thursday, with about 2,000 Chinese companies attending, organizers said.

The five-day trade fair in the Chinese border city of Dandong, where more than 70 percent of bilateral trade between the two nations is conducted, suggests economic ties between Beijing and Pyongyang remain largely unaffected despite the North’s nuclear and missile programs.

About 100 North Korean business entities will attend the North Korea-China Economic, Trade, Culture and Tourism Expo, the third of its kind.

At last year’s exhibition, North Korea and China signed 93 preliminary deals worth US$1.6 billion. It has not been confirmed whether the deals usually lead to actual shipments.

Besides North Korea and China, companies from Hong Kong, Russia, Thailand and Taiwan will join this year’s exhibition, organizers said.

North Korea’s bilateral trade with China stood at US$4.05 billion in the first eight months of this year, down 1.1 percent from the same period last year, according to Chinese customs data.

North Korea’s exports to China declined 0.8 percent on-year to $1.84 billion during the eight-month period, while imports fell 1.2 percent to $2.21 billion, the data showed.

Here is coverage of the first and second expo.

Read the full story here:
N. Korea, China kick off annual trade fair
Yonhap
2014-10-16

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Sharp increase in grain imports from China in second half of 2014

Thursday, October 16th, 2014

Institute for Far Eastern Studies (IFES)

It appears that North Korea has drastically increased Chinese grain imports in the months of July and August compared to the first half of 2014. Up until June, North Korea had imported a total of 58,387 tons of grain from China at nearly 10,000 tons per month. However, in July and August, North Korea imported 19,559 tons and 25,217 tons of grain, respectively. August showed the largest amount of grains imported per month so far this year, and the combined figures of July and August are equal to an astonishing 77 percent of the total amount of grains imported in the first six months of 2014.

The large increase in grain imports beginning in July is interpreted as an early move by North Korea to secure grain supplies for the winter after a double-crop harvest in June which failed to reach expected quantities, and a lackluster fall harvest compared to the previous year.

The grains North Korea has imported so far this year consist of flour (46.6 percent), rice (42.3 percent), and corn (8.9 percent), with flour and rice being the main imports. Compared to 2013, corn imports are down, but have been replaced by an increase in rice imports. Despite the sharp increase in grain imports during recent months, it appears that the overall food situation in North Korea has actually improved. North Korea imported a total of 103,163 tons of grain from January to August of 2014, a mere 59 percent of the 174,020 tons of grain imported during the same time period last year.

Chemical fertilizer imported from China up until August of this year has also decreased by an estimated 37 percent compared to the previous year, from 183,639 tons to 115,337 tons. This decrease in imported fertilizer is thought to be due to improvements made in fertilization equipment, leading to an overall higher rate of operation. It appears that the total amount of fertilizer used by North Korea this year should not differ greatly from the amount used last year, and fertilizer shortage is not expected to cause a major decrease in grain production.

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DPRK imports from Switzerland in 2014

Wednesday, October 15th, 2014

According to Yonhap:

The communist country’s imports of Swiss tobacco machinery components reached US$180,000 in the January-June period, far more than the $24,000 worth of imports recorded for all of 2013, according to the report by the Korea Trade-Investment Promotion Agency (KOTRA).

The latest spike is seen as indicating North Korea’s growing interest in investing in the country’s cigarette industry.

According to a previous KOTRA report, North Korea’s cigarette imports far exceeded its exports last year.

The country imported $65.28 million of tobacco in 2013, about 77.8 times what the country sold overseas, the report showed.

Another academic report showed that the smoking rate among North Korean men aged 15 or more stood at 45.8 percent, while the global average was 31.1 percent.

Meanwhile, the latest KOTRA report said North Korea’s imports of Swiss watches and related watch components fell to zero in the first six months of this year. The country imported $116,000 worth of Swiss watches and related goods for the whole of 2013.

Read the full story here:
N. Korean imports of Swiss tobacco machinery parts jump in H1
Yonhap
2014-10-15

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DPRK imports US$644m of luxury goods in 2013

Tuesday, October 7th, 2014

According to Yonhap:

North Korea imported US$644 million worth of luxury goods last year despite U.N. sanctions banning the transfer of such goods to the country, a South Korean lawmaker claimed Tuesday, citing Chinese customs data.

Luxury goods, including certain kinds of jewelry, precious stones, yachts, luxury automobiles and racing cars, have been banned from transfer to North Korea under a U.N. Security Council resolution adopted in response to the North’s nuclear test in February 2013.

Still, North Korea continues to buy luxury items from China, Europe and Southeast Asia, Rep. Yoon Sang-hyun of the ruling Saenuri Party said, citing Chinese customs data on two-way trade with North Korea and studies on North Korean trade patterns.

“(North Korea) is increasing the supply of goods at department stores for Pyongyang’s elite, while also increasing the import of goods to be used as gifts for senior party and military officials who form the core class that preserves the regime,” Yoon said.

In recent years, the communist country has especially bought more liquor, watches, handbags, cosmetics, jewelry and carpets, leading to a doubling of imports of luxury goods under the current leader, Kim Jong-un, from an average of $300 million under his father and former leader Kim Jong-il, who died in December 2011.

North Korea also spends about $200,000 annually on imports of purebred pet dogs, such as shih tzus and German shepherds — which are not classified as luxury goods — and related care products from Europe, Yoon said.

With the money spent on importing luxury goods last year, North Korea could buy more than 3.66 million tons of corn or 1.52 million tons of rice, far more than the country’s food shortage of 340,000 tons estimated by the U.N. Food and Agriculture Organization and World Food Program for the year 2013-2014, he added.

Here is coverage in the Daily NK.

Read the full story here:
N. Korea imports US$644 mln worth of luxury goods in 2013: lawmaker
Yonhap
2014-10-7

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Recent CRS reports on the DPRK

Tuesday, October 7th, 2014

The Congressional Research Service “recently” published two reports which relate to the DPRK:

The U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implementation
September 16, 2014: 2014-9-16-KORUS-Kaesong
June 2, 2011: Imports-from-North-Korea-2011

(Although this report focuses mostly on US-ROK issues, there is detailed discussion of the complex negotiations around the Kaesong Industrial Complex (KIC).)

Iran-North Korea-Syria Ballistic Missile and Nuclear Cooperation 
April 16, 2014: 2014-4-16-Iran-Syria-Missile

You can download most former CRS reports dealing with the DPRK here.

 

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DPRK animators join industry fair in China

Wednesday, October 1st, 2014

SEK-studio-2014-9-21

Pictured Above (Google Earth): SEK Studios in Pyongyang

According to Yonhap:

North Korean animation films have been put on display at an international animation fair in China, with a North Korean official admitting that the country’s animators have been increasingly sub-contracted by foreign studios, according to a Chinese state media report on Wednesday.

About 200 companies from South Korea, North Korea, Australia, Canada, Japan, Russia and other nations joined the five-day animation fair in Shijiazhuang, the provincial capital of Hebei, starting Tuesday, the China News Service said.

North Korea’s state-run SEK studio set up a special exhibition hall at the fair, according to the report.

Ho Yong-chol, head of SEK’s office in Beijing, told the Chinese media that the SEK studio employs more than 1,500 animators and has “an annual production of up to 8,000 minutes” of animated films.

“OEM (overseas export market) has become a main source of productions for North Korean animation studios,” Ho said, adding that the North can produce an animated film with “even less than half” of a European studio’s budget.

North Korea has quietly developed its animation industry. One of South Korea’s popular animation films, “Pororo the Little Penguin,” was produced jointly with North Korean cartoonists.

Read the full story here:

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DPRK textile exports to China surge in 2014

Tuesday, September 23rd, 2014

According to Yonhap:

North Korean textile exports to China are expected to surge four-fold to US$800 million this year compared to 2010, indicating a declining dependence on raw materials exports to earn foreign cash, a report said Tuesday.

The report by Korea International Trade Association (KITA)’s Beijing office showed shipments of textiles reached $410 million in the January-July period, up from just $190 million in 2010.

The international traders’ organization said textiles also accounted for 26.3 percent of all North Korean exports to China, up more than 10 percentage points from 16 percent reached four years earlier.

“Export growth reached 40 percent coming into this year, so it should not be too difficult to surpass the $800 million mark,” KITA said.

It said growth is being fueled primarily by the lower wages of North Korean workers compared to their Chinese counterparts.

On average, a North Korean worker earns $244 per month compared to $440 for a Chinese worker employed in Jilin province north of the border.

KITA said that, starting last year, some Chinese companies began shipping materials to North Korea to be made into finished products there.

In contrast, exports of raw materials, which made up 71.4 percent of all commodities shipped by North Korea to China in 2011, dropped to 60.7 percent of total exports in the January-July period. Trade data showed sharp drops in exports of coal, iron ore and pig iron.

The trade agency then said that with Chinese labor costs expected to rise steadily and the country suffering from a shortage of workers in certain sectors, North Korea may be able to capitalize on its advantage to build up its labor intensive sector.

You can read the whole story here:
N.Korean textile exports to China surge in 2014
Yonhap
2014-9-23

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10th Pyongyang Autumn International Trade Fair opens

Monday, September 22nd, 2014

According to KCNA:

10th Pyongyang Autumn Int’l Trade Fair Opens

Pyongyang, September 22, 2014 (KCNA) — The 10th Pyongyang Autumn International Trade Fair opened with due ceremony at the Three-Revolution Exhibition House on Monday.

Present at the opening ceremony were Vice-Premier Ro Tu Chol who doubles as chairman of the State Planning Commission, Ri Ryong Nam, minister of External Economic Relations, Kim Song Dok, vice-chairman of the Pyongyang City People’s Committee, Ri Hak Gwon, head of the DPRK Chamber of Commerce, officials in the field of foreign trade, delegations of different countries and regions, foreign diplomatic envoys and staff members of their embassies here.

Pak Ung Sik, director of the Korean International Exhibition Corporation, made an opening address which was followed by a congratulatory speech by Ri Myong San, vice-minister of External Economic Relations.

The speakers said the fair would offer a good opportunity to promote friendship and cooperation among countries and boost the wide-ranging economic and trade transactions and scientific and technological exchange.

They expressed the will to boost bilateral and multilateral cooperation with various countries and regions of the world in the fields of the economy and foreign trade on the principle of equality and mutual benefit in the days ahead.

The participants looked round products presented by companies of various countries and regions including the DPRK, Germany, Russia, Malaysia, Mongolia, Singapore, China, Cuba, Italy and Taipei of China.

The fair will run through Thursday.

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DPRK still owes Sweden for old Volvos

Friday, August 29th, 2014

According to Newsweek:

North Korea’s foremost trade debt to the western world is bizarre even by North Korean standards. Each time the administration misses a payment, as it has done every year for the past 40 years, we are reminded of one of the most unexpected political twists of the last century: Kim Il-sung scamming Sweden out of 1,000 Volvo 144 sedans.

Each fiscal year, the Swedish Export Credits Guarantee Board calculates interest on a single debt that accounts for more than half of all its political claims. It’s been a tradition since 1974, when the government agency was advised to insure Volvo, Atlas Copco, Kockum, and other Swedish companies’ exports to an entirely new buyer: Supreme Leader Kim Il-sung. For nearly half a century, the Board has been in charge of the Sisyphean task of coaxing €300m from a nation that thinks international law is an elaborate gambit designed by capitalist pig-dogs.

“We semi-annually advise when payments fall due,” Stefan Karlsson, the board’s head of risk advisory, tells Newsweek. “However, as is well known, North Korea does not fulfil their part of the agreement.” Sweden being Sweden and North Korea being North Korea, that’s about as hardball as it gets.

Small wonder that a regime so impressed with itself soon developed expensive taste. “Inside the 144 GL you sit on leather,” reads the unambiguous 1970s marketing material that Volvo likely sent its North Korean buyers. Together with contemporary industry giants Atlas Copco and Kockums, Volvo was one of the first European companies to foray into the North Korean market, and promptly received an order for 1,000 vehicles, the first of which were delivered in 1974. But less than a year later, the venture blew up at a Swedish-Korean industrial trade fair in Pyongyang, where it suddenly became clear that the Kim regime wasn’t actually paying for the goods it was importing – not even the machines it ordered for the expo. The bills were simply piling up.

Exporters realised that the venture had gone horribly wrong. But for the past few years, Sweden had had North Korea fever, with countless hours and funds spent on diplomatic and industrial ties. Acquiescing in a massive failure was not easy. “Many had been blinded by North Korea’s impressive economic growth – people had raced to get there first,” Lamm Nordenskiöld says. “Sweden was supposed to be the first country to unlock this new market.”

While many companies pressed on with payment negotiations in an effort to save face, Swedish media was having a blast unraveling one of the most bizarre trade debacles in recent memory. In an indignant spread featuring a photo of the supreme leader with the caption “Kim Il-sung – Broke Communist,” Åge Ramsby of the newspaper Expressen in 1976 went all out listing reports of other debts the Kim regime shirked, including a cool €5m to Swiss Rolex, from whom it had allegedly ordered 2,000 wristwatches with the engraving “donated by Kim Il-sung”.

“North Korea had expected to pay their foreign debts with deliveries of copper and zinc,” the Swedish newspaper Dagens Nyheter wrote in 1976, referring to the reserves the imported mining equipment was supposed to unlock. “But the North Korean economists had been too optimistic in their calculations, and the international market price for these ores had also dropped ­catastrophically.”

Fair enough – but two things suggest that botched calculations and sheer lack of funds only partially explain North Korea’s failure to pay up. First, it is widely accepted among biographers and manufacturers that the Kim regime conducted extensive industrial espionage during the trade fair. Colluding to cop specs from technology you’re paying for would be weird even by Kim’s standards.

More importantly, Erik Cornell, a diplomat and former Swedish ambassador to North Korea, recalls in his book North Korea: Emissary to Paradise a widespread local belief that the Western world had finally “seen the light” in the global struggle against the American imperialist – that Europe had recognised its duty to assist the brave People’s Republic, and that quibbles regarding who owed whom money would soon dissolve in grand efforts to crush capitalism as a whole.

Adjusted for interest and inflation, the debt to the Swedish state now exceeds three billion Swedish kronor, or €300m. It is an astronomical claim, particularly on capital that has depreciated to a fraction of its original value.

If Kim Jong-un and his officers rounded up all 1,000 vehicles and sold each of them at the current book value of about €2,000, they would raise 0.6% of the debt.

Read the full story here:
North Korea Owes Sweden €300m for 1,000 Volvos It Stole 40 Years Ago – And Is Still Using
Newsweek
John Ericson
2014-8-29

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