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1st annual China-DPRK Economic, Trade, Culture and Tourism Expo

Sunday, October 14th, 2012

UPDATE 5 (2012-11-7): The China Daily’s English-language Dandong page offers additional details of the expo:

Despite the global economic slowdown, more than 6,000 business representatives from 20 countries signed agreements on more than 200 cooperative projects. Some 72 of the largest projects have a total combined value of $1.26 billion.

…

During the 11th Five-Year Plan period (2006-2010), total trade value between Dandong and DPRK amounted to $3 billion. Imports and exports between Dandong and the DPRK reached $1.86 billion in 2011.

So far, trade between Dandong and DPRK accounts for 40 percent of total China-DPRK trade, and the volume of the cross-border cargo trade via Dandong port makes up 80 percent of the total Sino-DPRK trade volume.

UPDATE 4 (2012-10-16): Xinhua reports on the closing of the expo:

The five-day 2012 China-DPRK Economic, Trade, Culture and Tourism Expo, held in the border city of Dandong, concluded on Tuesday with 72 agreements of cooperation intent signed. They have a combined value of 1.26 billion US dollars.

Pan Shuang, vice mayor of Dandong, said more than 6,000 Chinese and overseas people from over 20 countries and regions exhibited at and attended the expo. There were talks on 200 projects.

He said the projects related to industries ranging from aquaculture, clothes manufacturing, chemical production, wind power generation equipment, iron steel production to hotel construction.

AT THE EXPO

At the exhibition, the DPRK delegation exhibited ginseng products, food specialties, hand-made Hanbok, a traditional Korean costume, as well as mining and machinery equipment.

Ri Yong Chol, sales manager of Korea Roksan General Trading Corp., which is a ginseng supplier, said “I came to look for Chinese friends and potential business partners. Our company is also seeking opportunities to set up a subsidiary in China to get better access to the Chinese market.”

A Korean girl wearing brightly-colored Hanbok and traditional ornaments was selling costumes. “Our factory can make 20 such hand-made Hanboks a day. The clothes are for important occasions with exquisite workmanship and high-quality material,” she said.

Liu Songyu, chairman of a Korean garment firm from Yanbian Korean Autonomous Prefecture of Jilin Province, was interested in the business.

“Chinese labor costs have been rising fast. In Yanbian, a garment-factory worker’s salary has risen to 2,000 yuan (319 US dollars) a month. While, if the company had a factory in DPRK, it would save a considerable amount on labor costs. I would give a serious thought to that,” he said.

Yanbian is a heavily Korean ethnic populated region in China, where people also wear Hanbok during important occasions.

Elsewhere, Huang Zijun, an authorized dealer of Total Petrochemcial, was overwhelmed to obtain 20 orders from the DPRK delegation during the expo.

“I felt their enthusiasm in promoting business at the expo. I believe the DPRK is a big market for petrochemical products like lubricating oil,” he said.

Here is coverage of the closing in the Daily NK.

UPDATE 3 (2012-10-14): Martyn Williams pointed out this video to me which readers may also find interesting:

Click image to see video at CCTV web page

UPDATE 2 (2012-10-14): According to Xinhua:

An economic, trade, culture and tourism expo jointly initiated by China and the Democratic People’s Republic of Korea (DPRK) opened Friday in the border city of Dandong in northeast China’s Liaoning Province.

A delegation of 500 members from the DPRK is attending the 2012 China-DPRK Economic, Trade, Culture and Tourism Expo, which is scheduled to run from Friday to Tuesday, the event’s organizers said.

Over 400 Chinese companies from 12 industries are also attending the expo.

With the theme of “friendship, cooperation and development,” the expo consists of commodity exhibitions, trade fairs, DPRK art performances, craftwork exhibitions, a border trip to the Yalu River and an exhibition for the tourism resources of the two countries.

Supported by the China Council for the Promotion of International Trade, the event is being organized by the Liaoning Provincial Government.

China is DPRK’s biggest trade partner. Statistics show that bilateral trade volume went up 62.4 percent year on year to 5.64 billion U.S. dollars last year.

Xinhua posted these official photos.

CCTV also covered the expo. Here is their English-language report:

Here is KCNA coverage of the expo:

The Daily NK also reported on the expo:

A source from Dandong described the unusually vibrant scene to Daily NK yesterday, saying, “The North Korean authorities have mobilized companies from Pyongyang and from here in China to sell goods and pitch for joint venture opportunities. There are loads of people; it’s standing room only.”

The source added that North Korean companies attending the event are pushing very hard to attract investment; notably, by distributing their own promotional literature expounding upon the given company’s superior virtues and providing exact contact details for follow-up inquiries. It is not hard to find meetings continuing in local North Korean eateries, as the North Korean side tries to woo potential sources of capital.

Chinese companies are keen to hear about the joint venture opportunities available, the source also said; and with most of the larger enterprises from China’s three northeastern provinces sending representatives to Dandong for the event, which runs until the 16th, most of the city’s hotels are apparently full to bursting.

However, due to past and present cases of lip service being paid to contractual obligations by North Korean companies whose only goal has been to attract funding rather than build business, Chinese representatives are still very cautious about actually signing on the dotted line.

One such representative from a Dandong-based company with a 10-year history of doing business with North Korea pointed out to Daily NK, “We have seen countless examples of companies making contracts and then there being little contact between the partners thereafter. Unbelievably, one manager I tried some minerals business with last year just changed the name of the company and came back again this year.”

Additional Information:

1. Here is IFES coverage of the expo.

2. The DPRK also held investment seminars back in late September.

UPDATE 1 (2012-6-7): The expo appears to have been pushed back to October 2012. According to KBS:

North Korea and China will jointly hold a fair on economy, trade, culture and tourism in the Chinese border city of Dandong for five days from October 12th.

A Dandong-based newspaper reports that this will be the first comprehensive fair covering several fields that the two countries hold. The paper said the fair will exhibit products, offer trade consultations, hold cultural and art performances and introduce both nations’ tourist attractions.

Roughly 400 Chinese companies exporting to North Korea will participate in the event. About 100 North Korean companies and cultural troupes will partake.

Dandong is China’s largest base for trade with North Korea, with 70 percent of its trade with North Korea running through the border city.

Read the full story here:
N.Korea, China to Hold Joint Industrial Fair in October
KBS
2012-6-7

ORIGINAL POST (2011-12-3): Dandong to host Sino-DPRK economic and cultural expo. According to Xinhua:

The northeastern Chinese city of Dandong, which borders the Democratic People’s Republic of Korea (DPRK), will host a Sino-DPRK economic, trade and cultural exposition in June next year, a local Chinese official said Saturday.

A series of activities, including a commodity fair, investment and trade talks, tourism exhibition and arts exhibition, will be staged during the exposition, said a spokesman with the Publicity Department of the Dandong Municipal Committee of the Communist Party of China.

The Phibada Opera Troupe of the DPRK, an artists group well known to Chinese people, will give performances during the event, he said.

Adam Cathcart took the time to send me this interesting link to the official Dandong web page. It contains some videos (in Chinese) in which local officials promote the changes they expect to come to this city as it transitions into a regional trade hub.

Below I have added some links to recent blog posts that a re related to Dandong:

1. Dandong customs house is busy, busy, busy (2011-9-13)

2. Chinese foreign ministry publication frank on Rason and Hwanggumphyong (2011-8-31)

3. New Yalu River bridge in south-west Dandong (2011-6-25)

4. Some alleged guidelines for the Hwanggumphyong SEZ (2011-6-24)

5. DPRK and PRC launch joint Yalu patrols (2011-6-15)

6. Sinuiju SEZ Version 5: Hwanggumphyong-ri and Wihwa Island (2011-6-14)

7. Dandong-DPRK trade and growth (2010-12-2)

8. Future Sinuiju development affecting Dandong today (2010-10-19)

9. DPRK-China trade and investment growing (2010-10-1)

10. Dandong launches DPRK trade program (2010-8-19)

Posted in China, China-DPRK Trade Expo, Economic reform, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), International trade, Special Economic Zones (Established before 2013), Statistics, Trade Statistics | Comments Closed

North Korea-China economic, trade, culture, and tourism expo to be held

Tuesday, October 9th, 2012

Institute for Far Eastern Studies (IFES)
2012-10-4

North Korea-China Economic, Trade, Cultural, and Trade Expo is scheduled to be held from October 12 to 16, 2012 at Dandong City, Liaoning Province. The expo will be jointly hosted by the China Council for the Promotion of International Trade, Liaoning Provincial Committee, Liaoning People’s Friendship Association, and Dandong Municipal People’s Government.

China accounts for 90 percent of North Korea’s foreign trade. Approximately 70 percent of this trade comes through Dandong. Currently, Dandong is gaining both domestic and international attention as the construction of the New Yalu River Bridge is nearing completion and progress on the Hwanggumpyong and Wihwa Islands Special Economic Zone is advancing.

North Korea-China Economic, Trade, Cultural, and Trade Expo will provide a place for not only product exhibits but will provide consultation for economic and trade cooperation, cultural exchanges and tourism. From the North Korean side, the largest trade investment company and government agency in charge of overseas labor export will be in attendance.

Over 500 booths and sections are ready for the expo and over 5,000 participants from foreign buyers are expected to attend. Over 100 companies and a 300-member economic-and-trade delegation will be coming from North Korea.

North Korea has recently held briefing sessions in Beijing for North Korean SEZs in Rajin and Hwangumpyong and Wihwa Islands from September 26 to 27. This two-day event was organized by the North Korean Committee for the Promotion of Economic Cooperation and China’s private GBD Public Diplomacy and Culture Exchange Center.

This event was an exclusive, invitation-only event, inviting major Chinese companies with investment interest in North Korea. There were over 100 officials from 30 different state-run corporations from North Korea present at the session to provide detailed information about 50 investment projects. The participants were required to pay an entrance fee and news media were prohibited from the event.

China’s Overseas Investment Federation (COIF) and North Korea Investment Office (NKIO) signed an agreementon September 22 to jointly launch the “Special Fund for Investment in North Korea.” NKIO is an overseas investment body subordinate to the Joint Venture and Investment Committee of North Korea (JVIC).

According to a Chinese media source, both states have set 3 billion RMB (476 million USD) as the goal for the fund; but in the initial stage, 1 billion RMB (159 million USD) will be utilized first to develop urgently needed urban infrastructure facilities focusing on mining, real estate, and port industries.

Posted in China, Institute for Far Eastern Studies, International trade | Comments Closed

Russia-Korea gas pipeline compendium

Thursday, October 4th, 2012

UPDATE 43 (2015-6-17): Gazprom official claims pipeline not feasible. According to NK News:

The deputy CEO of Russia’s Gazprom told reporters that connecting South Korea to Russian gas supplies is economically attractive but politically infeasible on Tuesday.

The long-gestating pipeline project would extend through the DPRK and provide natural gas to energy-hungry South Korea.

But Alexander Medvedev, speaking from a press conference in Moscow yesterday, said the project was too difficult in the current climate.

“The level of communications, the level of cooperation is not that which would make it possible to speak of advancing to the feasibility study stage, let alone implementing a project to supply gas via North Korea.”

Despite the political hurdles, the project is still interesting from an economic standpoint.

“From the economic standpoint, this would probably be the most efficient option for supplying gas to Korea … There is demand for pipeline gas,” Medvedev added.

…

Despite the numerous roadblocks, the deputy CEO of the world’s largest gas producer remained hopeful that political changes could move the project forward.

“The opportunity remains all the same, but it depends on a resolution of the political issues between the DPRK and the Republic of Korea. There are certain positive signals, but there are negative signals too,” Medvedev said at the press conference.

Post 42 (2014-6-18): According to Leonid Petrov, “Russian GAZPROM postpones Trans-Korean gas pipeline construction project ‘due to unstable political situation in South Korea'”. Here is the source (in Russian).

Post 41 (2014-3-29): According to Yonhap, the Russians and the North Koreans held talks on a number of issues including the Kaesong Industrial Complex, Iron Silk Road, and the gas pipeline. No information on the pipeline was made public.

Post 40 (2013-11-13): The Russians and South Koreans most recently discussed the Russia – South Korea gas pipeline at a presidential meeting in Seoul. No decisions were made. Read more here.

Post 39 (2012-10-4): The Choson Ilbo reports that the pipeline talks are delayed because DPRK is asking for transit rates above the international norm:

A South Korean government source said talks have dragged on because the North is demanding a transit fee that is two to three times more than international rates.

Based on a method of calculation used by Ukraine — about $2 per 1,000 cubic meters of natural gas for 1 km of pipeline — a reasonable fee would be about US$150 million a year given the estimated amount of gas South Korea would import from Russia and the 700-800 km of the gas pipeline running through the North. But the North reportedly demanded $300-500 million a year.

“It’s likely that the North asked for such a high price in the first place to gain the upper hand in future talks,” the source added. “There have been no full-fledged talks yet. At the moment, Pyongyang, Seoul and Moscow are just trying to read each other’s minds.”

Post 38 (2012-2-27): The Daily NK reports on details being discussed in the pipeline talks:

The Republic of Korea Ambassador to Russia, former chief nuclear negotiator Wi Sung Lac, says there has been progress on a gas pipeline connecting Russia, North Korea and South Korea.

“At the moment it is at the stage of enterprises discussing commercial conditions, and I am aware that there has been progress. North Korea and Russia are also discussing issues of transit and transit fees via working-level consultations,” he explained to reporters on a visit to Seoul today.

Wi would not be drawn on what kind of progress has been achieved, saying, “It’s about commercial details and so is hard to explain, but it appears there has been progress on supply quantities and supply conditions.”

Post 37 (2012-2-20): Gazprom reports “progress” in talks with North Korean government. According to Bloomberg:

OAO Gazprom, Russia’s natural gas exporter, said it made progress in talks to supply Korea Gas Corp. (036460) through a pipeline across North Korea, the Moscow-based company said today in an e-mailed statement.

Gazprom and Kogas, as the Korean company is called, plan to meet again in Moscow next month to continue talks, Gazprom said.

(more…)

Posted in China, Economic reform, Energy, Foreign direct investment, Natural Gas, Russia, Russian Pipeline | Comments Closed

Yanbian Haihua Group inks Chongjin port deal (and others)

Monday, September 17th, 2012

Pictured above (Google Earth): Chongjin’s two ports and shipyard

The PRC’s Global Times reports that in addition to use of the Rason Port, another Chinese SOE has taken out a lease/investment deal on the Chongjin Port. According to the article:

The official news website of the Yanbian Korean Autonomous Prefecture in Jilin Province reported on Thursday that the Yanbian Haihua Group inked a deal in Pyongyang on September 1 and established with its counterpart a $7.83 million joint venture company.

Under the deal, Haihua Group holds a 60.46 percent stake while the North Korean side owns the rest, to operate the Chongjin port’s No.3 and 4 wharves for 30 years.

The ports will be capable of processing 7 million tons of cargo a year and be put into use this year.

…

The prefecture’s public relations department and the Yanbian Haihua Group did not comment on the joint venture when contacted by the Global Times yesterday.

Although the Global Times reports a $7.83m price tag, the actual size of the deal appears much larger. According to the Donga Ilbo:

The North Korean regime has received 6.12 million euros ($7.82 million) of rental charges for the 3,180 square-meter (34,229 square-feet) piers and a 4,000 square-meter cargo yard from the Chinese company and paid the money to fund the newly-built joint venture, the newspaper said.

The Chinese company will invest a total of 13 billion won (USD $12m) on developing the port, such as building new equipment and facilities, which accounts for about 60 percent of the entire capital spent on the project.

According to the daily, they have already set up a series of detailed regulations on employment management, profit distribution and the formation of a new board with a goal to raise cargo traffic to one million tons by 2015.

The Yanbian group already spent 60 million yuan ($9.47 million) on manufacturing cranes and building necessary equipment, the newspaper said, and also completed work on stabilizing the 36,000-square meter grounds of the construction site.

They are scheduled to finish manufacturing cranes within the year to begin a full-fledged plan for domestic and international transportation through the port.

Yonhap and the Daily NK reported back in 2010 that this very same Chinese firm had leased the Chongjin Port for exports to South Korea and other parts of China:

The report, citing an anonymous government official from Tumen in China’s far northeast, across the Tumen River from Namyang in North Hamkyung Province, said that the usage rights have been sold to a “Chinese state company, Yanbian Haihua Import-Export Trade Company.”

He predicted, “Yanbian Haihua Import-Export Trade Company will start shipping between Chongjin port and Busan by container ship in September, and will start shipments to southern regions of China soon.”

The anonymous official also revealed that North Korea has agreed to allow the Chinese company to use the railroad between Tumen and Chongjin as part of the deal. The deal, the official said, will “facilitate trade from Tumen,” and added that the Chinese company which inked it is planning to use it to fulfill shipping contracts with three other Chinese companies.

The Chinese company is reportedly investing 10 million Yuan ($1.48 million approx.) in shipping cranes and other construction at Chongjin, and is having 150 freight cars produced to add to 50 already sent.

It would be interesting to know if the fiasco surrounding the Xiyang contract let to a renegotiation of terms of this deal in any way: Either by altering the ownership shares, time horizon, or if greater assurances against ex post expropriation were added. Since the contract is not ever likely to be made public, we may never know.

UPDATE 1 (2012-9-18): The Hankyoreh reports that quite a few ports on the DPRK’s eastern shore are being renovated by the Chinese. According to the article:

North Korea and China will develop 4 or 5 ports in the eastern coastal area of North Korea.
A source in Beijing said on Sept. 17 that it was confirmed through a Chinese government official that “4 to 5 ports in the eastern coastal area of North Korea in locations such as Seon-bong, Rajin, Cheong-jin, Gim-chaek, Dan-cheon, Heung-nam and Won-san are being jointly developed by North Korean and Chinese companies.” The source added that in addition to the two ports that are being developed in Rajin and Chongjin currently, businesses in the two countries are discussing specific conditions for development in the other areas. This is the first time that this information has been confirmed by a Chinese government official.

The Tanchon Port has been featured prominently in the DPRK media. Learn more about it here.

Posted in China, Foreign direct investment, International trade, Sea shipping, Transportation, Yanbian Haihua | Comments Closed

Groundbreaking for HGP EZ management board

Saturday, September 15th, 2012

KCNA reports that a groundbreaking ceremony for a new management board building at the Hwanggumphyong Economic Zone (HGP EZ) took place on 2012-9-15:

Ground-breaking Ceremony for Hwanggumphyong EZ Management Board Building Held

Pyongyang, September 15 (KCNA) — A ground-breaking ceremony for a building of the management board for the Hwanggumphyong Economic Zone to be jointly developed and run by the Democratic People’s Republic of Korea and China, took place on Hwanggumphyong Islet on Saturday.

Present there were Hong Kil Nam, vice-chairman of the North Phyongan Provincial People’s Committee, and officials concerned in the province and Sinuiju City from the DPRK side and Bing Zhigang, vice-governor of the Liaoning Provincial People’s Government of China and officials concerned in the province and Dandong City from the Chinese side.

Speeches were made at the ceremony.

The speakers noted that after leader Kim Jong Il and President Hu Jintao reached an agreement on jointly developing and managing the two economic zones, a series of issues have been settled for the development of the Hwanggumphyong Economic Zone, with a substantial progress made.

They stressed that the joint development and operation of the zone would be conducive to furthering the DPRK-China friendly relations sealed in blood and attaining co-prosperity.

A ground-breaking milestone was erected there.

The Daily NK adds the following:

North Korea hopes that the groundbreaking ceremony will mark the beginning of serious SEZ development at Hwanggeumpyong, which remained a sleepy agricultural backwater even after last June’s launching ceremony, a fact that led to rampant speculation about problems related to the legal framework for the development of the area.

However, development began to accelerate once again after Jang Sung Taek, the director of the Chosun Workers’ Party Department of Administration, concluded the establishment of the management committee during his visit to China last month.

Rhetoric emerging from the Chinese side is also more positive than it has been for some time. In a recent media interview, the deputy mayor of Dandong, which borders Shinuiju, commented, “Now that the Hwanggeumpyong Management Committee has been established, construction has begun on basic infrastructure including roads. From the 15th, the business of developing Hwanggeumpyong will formally begin.”

“Both governments have decided to develop Hwanggeumpyong first then go on to discuss the development of Wihwa Island,” he added. “When the construction of the New Yalu River Bridge and bridges to Hwanggeumpyong and Wihwado are complete, China-North Korea trade, culture, travel and other exchanges will become more active and the two countries will grow closer.”

Additional Information:

1. Chinese working to attract investment (2012-9-14)

2. On Jang Song-thaek’s recent visit to China (2012-8-23)

3. Yalu River Bridge (2011-6-25)

4. HGP Announced (2011-6-14)

5. Laws governing HGP (2012-3-19)

6. Previous posts on Hwanggumphyong Economic Zone

Posted in China, Economic reform, Foreign direct investment, Hwanggumphyong and Wihwado Economic Zones (Sinuiju), Special Economic Zones (Established before 2013) | Comments Closed

DPRK mining investment woes (Musan)

Thursday, September 13th, 2012

UPDATE 2 (2013-1-17): The latest issue of Digital Globe’s World View magazine contains information on the Musan Mine (page 7):

[…]In a New Year’s message, North Korea’s leader, Kim Jong-un, urged North Korea to become an economic powerhouse by improving productivity. He specifically mentioned the Musan Mine, as it is one of the largest iron ore mines in the region with a reserve of approximately three billion tonnes of ore. This announcement comes after a Chinese investment firm, Tianchi Industry and Trade, pulled out of the mine in the early fall of 2012. North Korea demanded a price increase of 20%, on top of the 50-year lease that had been in place since 2005. With the price increase, Tianchi did not feel the location could remain profitable, and North Korea refused to renegotiate. As a result, the associated smelter in China was shut down in September 2012. The presents a loss for the Jilin provincial government in China, which had extended a rail line 42 kilometers to the border to transport ore north after it was processed at the smelter. With the departure of the Chinese investment firm, the Musan Iron Ore Mine is currently operated by North Korea’s Ministry of Mines. The mine has the potential to produce 1.5 million tonnes of ore a year if the North Koreans can operate it at its former capacity under Tainchi.

UPDATE 1 (2012-10-17): The Choson Ilbo has picked up on this story first reported in the Hankyoreh last month, yet they have a different English name for the Chinese company. According to the article:

The Chinese apparently baulked at a price increase of more than 20 percent demanded by the North, although international iron ore prices are plummeting in the wake of the global recession. They won 50-year extraction rights for the mine in 2005.

A smelter in the Chinese province of Jilin near the border with North Korea and operated by Tianchi Industry and Trade, the Chinese partner to the Musan Mine, closed down in September, according to a source in Yanbian on Tuesday. The smelter used to process iron ore extracted at the mine.

The source added, “There’s been no progress in the implementation of plans to lay a railway line and a slurry pipeline between Nanping and Musan.”

Tianchi Industry and Trade turned down the North’s demand, saying it makes hardly any profit as is given wages for North Korean workers and transportation costs.

Tianchi, a private trading company based in Yanbian, has served as a conduit for iron ore produced at the Musan Mine to the Chinese market since the early 1990s. It obtained the extraction rights to the mine in 2005 after concluding a trilateral joint-venture contract with Tonghua Iron and Steel, a Chinese state-run iron and steel mill, and [North] Korea Ferrous Metals Export and Import Corporation.

Tianchi hired North Korean workers and extracted 1 to 1.5 million tons of iron ore at Musan every year, which it supplied to Tonghua and other companies.

But the first cracks in the deal appeared in 2009, and iron ore production had been intermittent since then and stopped completely this year.

The Jilin provincial government has also been hit because it already laid a 41.68 km railway line leading to the border town of Nanping since November last year.

ORIGINAL POST (2012-9-13): We have already heard about Xiyang. Today the Hankyoreh tells us about problems with the Musan Mine…

Pictured Above (Google Earth): Musan Mine

According to the article:

However, not all business between North Korea and China is rosy. An iron-smelting factory in Helong City, Jilin, that was visited on Sept. 5, had to close its doors. It used to be a place where iron from across the Yalu River was brought from North Korea‘s Musan iron mine and processed. A railroad was expected to run from the two cities by October of last year in order to increase the amount of iron brought into China. But the construction was never completed. A Chinese company called the Yanbian Cheon-ji Industry Trading Company had rights to the Musan mine for fifty years starting in 2005.

There are many guesses as to why this happened: “North Korea was asking for a price increase of 20% while the price of iron has declined in the rest of the world;” “There was trouble between the Chinese government and the new Kim Jong-un regime on negotiating development rights;” “There was a downfall of development due to differences with foreign investors about investing in electrical power.” No one knows clearly what the reason was, and there are still busy trying to figure out what is the real situation.

Here is the original story:
China adjusts to influx of cheap North Korean labor
Hankyoreh
Song Kyung-hwa
2012-9-13

Posted in China, Economic reform, Foreign direct investment, Iron Ore, Mining/Minerals, Musan Mine | 1 Comment »

North Koreans working in China

Thursday, September 13th, 2012

The Hankyoreh posted another interesting story on North Korean workers in China:

In Dandong, where the inflow of North Korean labor is most active, there is a factory operated by a Singaporean company. The company makes men’s suits for export to Europe and used to operate a factory in Pyongyang. Due to problems with the electricity supply, they moved the factory to China where the situation is more stable. In this factory in Dandong, 400 factory workers in their 20s and 30s are North Korean. They work in the factory and live in a nearby company dormitory.

A Taiwanese businessman who used to operate a factory in Shanghai also has plans to move his operations to Dandong. His company has completed construction of facilities and plans to hire around 100 North Korean workers.

Another factory that produces sports apparel for export which used to be in Shandong province moved to a city close to the North Korea-China border. The factory was set up in Tumen and North Korean workers were dispatched for the first time last May. There are 300 North Korean women who work in this factory. A vinyl production factory about a kilometer away also employs North Korean women.

The activities of these North Korean workers are restricted. They live in dormitories or facilities provided by the factories. For lunch, they have been seen going in groups of 20 or 30 from the dormitory to the cafeteria, a 3-minute walk. Mr. Wang, a Han Chinese, 59, who works in a factory nearby said, “About two months ago, I began to notice young North Korean women in their 20s going to get water in groups of two or more. I only know which factory they are in, but I know nothing about their private lives. And the other companies or factories don’t know about them either.”

Some workers have come on one-month or three-month short-term training visas to set up under an official contract between the city and the North Korean government and extend their stay. They are dispatched with a male supervisor who is in charge of keeping an eye on them. It is said that the North Korean government would like to send more supervisors to watch over the female workers, but the factories have refused to allow them, which has been a source of some conflict.

The supply and demand of North Korean labor follows market fluctuations. It depends on the region, but the average wage of a Chinese factory worker is around 2000 to 3000 Yuan a month (between 355,000 and 535,000 won or US$315 to US$475). Meanwhile, the average wage of a North Korean worker is around 1500 Yuan a month (around 267,000 won or US$234). Because North Korean workers do not have the freedom to change workplaces, there is no reason to worry about a sudden outflow of labor.

North Koreans take the opportunity to work in China because wages are higher there than at the Kaesong Industrial Complex, the industrial complex set up by South Korea just north of the DMZ. The average minimum wage set at Kaesong last month is US$67 (about 76,000 won) and last year the monthly wage of a North Korean worker there was around US$110 (around 124,000 won)

Not all of that money goes to the factory workers. There are differences among regions and factories, but on average, the individual worker receives around 150 to 200 Yuan at the end of the month. On average, around 600 Yuan is provided for the individual worker. There are factories where this is then pooled together and redistributed to senior and ordinary workers. The rest of the money goes to the North Korean government. At times the money is used for insurance or a fund for common expenses.

It is estimated that more than 20,000 North Korean women are working in textile or food processing factories in the North Korea-China border region. There are also some North Korean workers who are in more skilled fields like IT or animation. Counting the undocumented workers, the number is much larger. An official from KOTRA’s (Korea Trade-Investment Promotion Agency) Shenyang office said on Sept. 12 that it has been confirmed recently that since Kim Jong-un took power, North Korea has agreed with the different Chinese border cities to dispatch 120 thousand workers, the largest number ever.

Chinese businessmen are watching closely the next move by North Korea as more and more young Chinese workers seek white-collar work instead of physical labor. Securing a work force that is secure and well managed is a great advantage. It costs between 400 and 500 Yuan to cover the expense of one worker including accommodation and meals. But the cheap labor makes up for this. And it is for this reason, more and more Chinese businesses prefer to hire North Korean workers.

A person involved in the export of North Korean labor said that at first the salary was given directly to the individual workers. “But when asked next morning, they all said that they were left with only 150 Yuan. After hearing this, we just gave the lump sum to the manager to be distributed to workers.” Even with this deductions, the money that North Koreans earn is far more than what they could make back home. Thus there is much competition and the selection process is quite thorough. The agent said, “They do a thorough investigation of three generations and if there is any problem, that person is excluded. And only one person per family can come.”

Read the full story here:
North Korean workers come to China as part of broad economic cooperation between two countries
Hankyoreh
Song Kyung-hwa
2012-9-13

Posted in China, Economic reform, Foreign direct investment, Labor conditions/wages | Comments Closed

KCNA gets another makeover

Sunday, September 9th, 2012

UPDATE 1 (2012-10-1): Martyn Williams reports that the Chinese funded the renovation of KCNA’s equipment and appearance.

ORIGINAL POST (2012-9-9): This weekend KCTV updated their news format to give it a more modern appearance. See the videos bleow.

In recent years, the appearance of the the DPRK evening news has changed several times (following decades of the same unchanging format). See here and here to learn more about past changes at KCTV.

Martyn Williams provides additional details at North Korea Tech. See here and here.

Posted in China, Domestic publication, Foreign direct investment, Television, Uncategorized | 2 Comments »

Chinese customs confiscate North Korean wildlife products

Monday, September 3rd, 2012

By Michael Rank

Pictured above: North Korean tiger bone wine in Rason tourist shop (Source here)

Chinese visitors to North Korea are increasingly bringing back endangered wildlife products, a Chinese website reports (http://www.#removed-for-malware-warning-external-site#idprkorea.com/news/news/view.asp?id=2446).

Between January and July this year Dandong customs have confiscated 137 bottles of tiger bone wine, five bears’ gall bladders weighing 172 grams and five boxes of powdered bears’ gall bladders weighing 50 grams.

It gave no further details but said such confiscations have increased with the growing numbers of Chinese tourists visiting North Korea. It noted that under China’s law on trade in endangered species traffickers can be fined or in more serious cases face criminal proceedings.

North Korea is known to have been involved in rhino horn smuggling in Africa and tiger bone wine is available in tourist shops in North Korea where it is popular with Chinese visitors on account of its alleged aphrodisiac properties. But it is not clear how much, if any, tiger bone the wine actually contains, or where it is derived from.

There is strong demand for bile from bears’ gall bladders throughout East Asia, with large numbers of bears being farmed for this purpose in China and South Korea, although the governments of both countries say the industry is coming under increasingly strict control. Little is known about bear farms in North Korea.

Posted in China, Environmental protection, Illicit activities, International trade, Tourism | Comments Closed

2nd Rason International Trade Fair (UPDATED)

Tuesday, August 28th, 2012

UPDATE 6 (2012-9-1): Over at Choson Exchange, Andray Abrahamian updates us on the current state of Rason’s new highway to China (completed: see here and here for more), Russian railway connection (completed), port construction (on hold), energy supply, tourism and investment.

Some additional areas of construction are available in this Yonhap report.

UPDATE 5 (2012-8-28): Thanks to a valued reader, I have posted a marketing flyer for the Rason International Commerce and Trade Center (AKA Rason International Business Trade Center) which is currently under construction in Rajin City (though it is too new to appear on satellite imagery). According to the front page of the flyer, caucasians will live in the complex, enjoying contemporary housing furnished by Pottery Barn and Oneida.

Below I have posted the marketing flyer featuring Pottery Barn on the cover. If a reader out there can translate Chinese, I would appreciate some assistance:

I hope that one day all North Koreans have the opportunity and the means to shop at Pottery Barn, but I am fairly confident that the company has no plans to open a branch in the DPRK for the foreseeable future.

On page 5 of the flyer, an artist impression is given of what the trade center will look like. It is slightly different from the model of the complex which appeared in KCNA yesterday and which was also on display at the second annual Rason International Trade Fair:

Here is what KCNA had to say about the complex:

Int′l Commerce and Trade Center to Be Built in Rason City

Pyongyang, August 28 (KCNA) — The development of the Rason Economic and Trade Zone is in full in the Democratic People’s Republic of Korea.

Among the development projects is the Rason International Commerce and Trade Center.

The construction, jointly funded by the Rason Paekho Trading Corporation of the DPRK and a real estate development company in Qin Huangdao, China, began in April this year.

It covers an area of some 40 000 square meters, with a total floor space of 88 000 square meters.

The first-stage construction will be finished in mid-October this year to cover seven buildings for storehouses and wholesale market.

The second stage, to be completed in October next year, will include nine buildings for shops, restaurants and hotel.

The construction is now under way as scheduled.

Song Ryang Dok, manager of the Rason Paekho Trading Corporation, told KCNA that the center is one of the big development projects in the zone.

Additional Information:

1. Here is Yonahp coverage of the story.

2. I hope Qin Huangdao has better luck than Xiyang.

3.Choson Exchange posted pictures of the Rason trade fair including a large poster of the Pottery Barn image!

4. Yonhap also reports (via the Choson Sinbo) that housing in this facility would be sold to foreigners:

“There were cases in which North Korea allowed foreigners to invest in factories and commerce centers, but no official case of home sales has been reported,” said Im Eul-chul, a research professor at Far Eastern Studies at Kyungnam University. “It can be seen as (the North) making another step forward in its efforts to attract foreign investment.”

UPDATE 5 (2012-8-22): Here is a video of the investment forum that was held at the zone. It features another architectural vision for the city which differs from the previously released video:

UPDATE 4 (2012-8-21): What’s on offer at the Rason Trade fair? According to the Associated Press:

Some 110 companies from 11 countries have booths at the four-day event, Rason’s second international trade fair, organizers told The Associated Press. Chinese companies dominate the exhibition hall.

While the big goods are parked outside, exhibitors inside are showing off everything from toys to medicine, clothes to household appliances made in countries as far as the Czech Republic and France and as close as factories in Rason. One American is selling T-shirts not far from a North Korean clothing company.

“All these products you see are made or manufactured by our company. And they now are exported to more than 13 countries around the world,” said Pak Kyong Ok, a Rason Hyesong official. “Our products are popular.”

Bob Granger, a British entrepreneur, had something else in mind: a coffee shop in Rason.

“We would like to open in this area, not in the capital, Pyongyang,” said Granger, managing partner of the Green Apple cafe in Tumen, China, as North Koreans sampled his coffee. “We’d like to be bit out in the country meeting the people.”

UPDATE 3 (2012-8-20): Here is the official KCNA video of the opening of the Rason Trade Fair:

UPDATE 2 (2012-8-20): The Exhibition has opened. According to KCNA:

Second Rason International Trade Fair Opens

Pyongyang, August 20 (KCNA) — The Second Rason International Trade Fair opened with due ceremony in Rason on Monday.

The participants laid a floral basket before portraits of smiling President Kim Il Sung and leader Kim Jong Il in the venue and paid tribute to them.

Present there were Jo Jong Ho, chairman of the Rason City People’s Committee who is chairman of the organizing committee of the fair, officials concerned, officials in the city of Rason, scientists and technicians, representatives and exhibitors of different countries and regions, foreigners active in the Rason economic and trade zone and the consuls general of China and Russia in Chongjin.

An opening address and a congratulatory speech were made there.

The speakers referred to the fact that the fair would contribute to bringing about economic development and common prosperity of different countries of the world.

They expressed belief that the participants would conduct positive and wide-ranging dialogue and multi-faceted commercial and trade activities.

At the end of the ceremony the participants looked round electrical and electronic products, vehicles, light industry goods, medicaments and other commodities presented by more than 110 units of different countries and regions including the DPRK, China, Russia, Sweden, the Czech Republic and Taipei of China.

A reception was given on the same day in connection with the inauguration of the fair.

Here is coverage of the opening of the trade fair in Xinhua.

UPDATE 1 (2012-8-9): The Second Rason International Product Exhibition to be held this month (Institute for Far Eastern Studies):

The second Rajin-Sonbong (Rason) International Product Exhibition is scheduled to be held from August 20 to 23, 2012.

The Korean Central News Agency (KCNA) announced on Aug. 2 that participants from North Korea, China, Russia, France, Switzerland, Australia, Czech Republic, Taiwan and other nations will be attending this exhibition, with electronic, machineries, light industry, and medical products on display.

The KCNA also reported the exhibition will contribute toward trade, economic, and science and technological development and enhance cooperation and exchange with neighboring countries. During this period, North Korea is also planning to hold briefing sessions for investments and visits to Rason Special Economic Zone (SEZ) for companies.

The first international product exhibition at Rason was held last year in August. The Chinese and Russian consul generals of Chongjin attended the opening ceremony with products from over 110 companies from North Korea, China, Russia, Australia, Italy, the United States, and Taiwan.

North Korea continues to expand the joint development of Rason with China, although it is also attracting investments from other countries such as Russia, Australia, and Italy.

In addition to Rason SEZ, North Korea is also promoting tourism. International routes to Pyongyang have increased. From Shanghai, regular flights are scheduled for Tuesdays and Fridays. Since April, chartered flights have been running from Harbin, and since July, from Xian. Other international travelers are visiting Pyongyang via Beijing, Shenyang, and Kuala Lumpur.

The KCNA reported that tourists are visiting Pyongyang and Kaesong on four-to-five day tour packages, touring many historical and cultural attractions including Myohyang and Mt. Kumgang.

With the opening of the Arirang Mass Games from August 1, more foreign tourists are expected to visit.

ORIGINAL POST (2012-5-16): The Hanns Seidel Foundation has made available the marketing and information flyer for the second Rason International Trade Exhibition (RITE) which will take place from August 20 – 23, 2012.