Western businesses tour Kaesong complex

From Joong Ang Daily:
June 26, 2006

KAESONG ― Even in the sweltering heat of a June afternoon, hundreds of hands were moving diligently, cutting and pasting on production lines of a factory floor that seemed just like any other.

But this plant was no ordinary capitalist factory: Workers here wore Kim Il Sung buttons and were laboring in the workers’ paradise of North Korea, one of the few remaining militant communist countries in the world.

Last week about 100 foreigners representing some 70 companies got a first-hand look at the Kaesong Industrial Complex, a North Korean industrial park fueled by South Korean capital and mostly North Korean labor.

As Kim Dong-keun put it, Kaesong was a hot battlefield during the Korean War but is now a symbol of inter-Korean reconciliation. Mr. Kim is the head of the complex’s management committee.

The Korea Trade-Investment Promotion Agency and Hyundai Asan organized the investment program. According to officials from the South Korean organizers, this was the first opportunity for a large group of potential foreign investors to get a look at what was there.

The group toured three South Korean factories; Taesung Hata, a cosmetic package manufacturer; Samduk Stafild, a shoe manufacturer; and ShinWon, a fashion outerwear manufacturer.

The Kaesong Industrial Complex is amazingly close to the Demilitarized Zone, a 60-year-old relic of wars hot and cold. The complex, which is still far from completion, is visible from the immigration office at the North Korean edge of the DMZ.

The mountains surrounding the complex were almost naked. “The trees were cut as a military strategy to observe enemy movements,” a South Korean blue-collar worker for Hyundai Asan said. “But it also seems that the North Korean people cut trees to use as firewood.”

The modern industrial site was a stark contrast to its surroundings, where farmers were plowing paddy fields with oxen, a sight that has vanished from rural areas south of the DMZ. The complex was fenced off with barbed wire. “It was necessary to separate the industrial complex from the general population because many North Koreans could sneak in and take away raw materials,” a Hyundai Asan official said.

The new plants were well air-conditioned. As many foreign investors on the tour commented, the workers were well-organized. The only sound to be heard in the factories was that of the machinery. The workers did not even glance at the unusual visitors, and trying to get a hint of a smile or a friendly nod was impossible. Even the South Korean workers at Kaesong were very careful in their actions. Some advised journalists against taking pictures of North Korean workers, because it might cause problems.

The only North Korean who spoke to the visitors, other than the inteperter, was a man who criticized U.S. intervention in North Korean human rights issues.

“If the United States keeps raising the issue of human rights,” he said, “there is a huge chance that we might not let their companies such as Pentium enter the Kaesong Industrial Complex.” He evidently was referring to Intel, which makes Pentium computer central processor chips.

An official of Taesung Hata, who said he had been living in Kaesong for a year, noted that the most challenging part of his job was that the workers in North Korea have no concept of factory work. Living in a non-capitalist society, he said, they were untrained to use machinery.

The South Korean said it took some time to train the North Koreans even to use western-style bathrooms. “They were squatting on top of the seats,” he said.

The trip came during a time when tension was rising in the global community over North Korea’s missile launch preparation.

But most of the touring businessmen said security issues didn’t bother them. Business was business, they said, and should be dealt with differently than politics. “Investors tend to take the longer view,” said Charles Henry of Tupperware.

John Boynton, Doran Capital Partners’ chief executive officer, said cooperation was better than distrust and that he didn’t think Kaesong had any serious security concerns to worry about, but he was speaking of physical security at the site. “Look around the world,” Mr. Boynton continued, “the World Trade Center, London ― Spain is as dangerous as Kaesong is.”

Jean-Daniel Rolinet of Samsung Thales, a defense contractor, said he had been worried that the missile tensions would cause the trip to be canceled. “I’m glad we’re here,” he said; the tour made him realize the quality of the work being done there.

“I would recommend Kaesong to the French community,” Mr. Rolinet said.

Whether for the ears of journalists and the tour organizers or out of real conviction, many other foreigners in the group said they were positive about Kaesong and would invest there. Labor costs seemed to be the biggest attraction. North Korean workers at the site receive $57.50 per month on average, pay that can rise to $70 per month with overtime. But those wages, a Hyundai Asan official explained, are paid to the central government, not to the workers.

Pressed about when those investments might arrive, however, most said it would be far in the future. “Kaesong Industrial Complex is surely impressive,” said Gordana Hulina, a risk manager at ING Bank, “but it is clear that Kaesong is for the most part a Korean-based project.”

One foreign investor said she thought most of her companions were there just out of curiosity, to see a country that is for the most part closed off to them.

Most of the visitors refused to comment on the U.S.-Korea free trade negotiations, where Korea is pushing to have goods produced in Kaesong treated as South Korean goods. The United States says it cannot accept that proposal.

Several visitors seemed hesitant, however, about the project’s future, citing policy inconsistencies in North Korea and the dearth of information about the nation. 


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