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North Korea authorities “Stop Operating Chinese Motorcycles for Commercial Use”

Monday, November 12th, 2007

Daily NK
Kwon Jeong Hyun
11/12/2007

North Korean authorities recently started regulating motorcycle operation in order to control private market.

Motorcycle is most preferred means of transportation especially for North Korean salespersons. And in North Korea, everybody must get a license from the government to operate cars, motorcycles or even bicycles.

North Korean authorities now give license to only Made in DPRK “Bugang Motorcycle,” which is considerably more expensive than those imported from China.

Choi, a 33 years old resident of Sinuiju visiting his relative in Dandong, China, said on last Thursday “getting operator’s license for Made in China motorcycles has become ridiculously difficult.” According to Choi, only domestic motorcycle owners receive license and popular dissatisfaction increased.

It seems that North Korean authorities want to stop growing of private market by making it impossible to operate motorcycle, a vital part of transportation of goods.

Choi added “even before, someone had to bribe police officer to get a license, but now, bribery doesn’t work for Chinese-built motorcycles at all.”

Why people prefer Made in China? “Korean motorcycles manufactured in Pyongyang cost 1,500 US dollars and often break down. However, Chinese ones cost only 600 dollars while perform far better.”

Choi complained that “some people who operated Chinese motorcycle without license got their bikes confiscated.”

The loots were sent to the Army troops on DMZ.

Chinese motorcycle has become prevalent since 2002 when North Korean residents whose relatives lived in China received it as gift and operated for commercial purpose.

According to Choi, “Motorcycle can carry a certain amount of goods to inlands and it is so convenient. Even if motorcycle is expensive, everybody wants to own one. People buy seafood on the coast and bring them to the cities or sell small commodities.”

For alluvial gold, price differs among regions, so transporting it fast with motorcycle is lucrative business.

Lee, defected Pyongyang last year, said “In the past, a few rich people bought used Japanese motorcycles like Honda or Yamaha, but now many people operate Chinese ones for commercial purpose.”

Posted in Automobiles, Bicycles, Black markets, China, Civil society, Economic reform, International trade, Manufacturing, Transportation | Comments Closed

North Korean Economy Does Not Have a Basis for Development

Wednesday, November 7th, 2007

Daily NK
Yang Jung A
11/7/2007

Although the North Korean economy has been growing since late 1990s, it is hard to say that the economy has growth on its own.

A senior researcher at the Korea Institute for National Unification, Choi Su Young, released a paper titled “the Latest Tendency of the North Korean Economy” in the October “Finance,” which is issued by Korea Federation of Banks. He pointed out in the paper that “North Korea’s economic reliance on China is getting serious and cited the state’s 1.7 billion dollars in trade with China.”

He explained “On one hand, North Korea exports to China in 2006 increased to 72.7% compared with exports in 2002; on the other hand, imports from China increased to 163.8%. This resulted in a recorded deficit of 760 million dollars. The rate of North Korean trade reliance on China was 48.5% in 2004, and it reached 60% last year.”

He relayed that “In the production industry, North Korea has to rely systematically on China’s raw materials, energy, facilities and parts. North Korea is importing its entire amount of petroleum for transportation and production. Chinese influence on the North Korean economy is so absolute that 70-80% of consumer products are made in China.

Mr. Choi insists that “Although foreign aid and South-North economic cooperation were expanding and its reliance on the influx of foreign currency was great, North Korea was staying in low-growth status, which means North Korea does not have the economic foundation for development.

According to the report, the scale of exchange between the South and the North was rapidly increasing through the annual provision of South Korean rice and free fertilizer supporting and South Korean enterprises’ activities at the Kaesung Industrial Complex.

With the exception of South Korea and China, there are no countries willing to invest in North Korea. Most developed countries turn away from North Korea because the standard and environment related to North Korean investment are significantly inferior to the norm.

He explained that “The North Korean investment environment is inconvenient for foreign investors due to obsolete infra-structures, high distribution costs and limited markets. It is unnecessary to mention the international policies related to North Korea.”

Mr. Choi added that “The scale of North Korean foreign trade was 2 billion dollars in 2000 and reached 3 billion dollars in 2006. Exports amounted to 950 million dollars and imports came to a total of 2.05 billion dollars.”

Posted in China, Economic reform, Foreign direct investment, International Aid, International trade, Manufacturing, Trade Statistics | Comments Closed

No More Old-fashioned Chinese Stuff. We like South Korean Culture

Wednesday, November 7th, 2007

Daily NK
Moon Sung Hwee
11/7/2007

A source inside North Korea reported on November 5th that the North Korean Ministry of Education lately directed every school to stress the importance of the Korean language education and to encourage the use of the mother tongue.

In a phone interview with DailyNK, the source said, “At workplace, there are those who read out to the workers a handbook titled ‘Let’s maintain our superior morals and actively promote the use of our mother tongue!’”

In the March 2007 edition of “Learning Culture & Language,” Jong Soon Ki, the most well-known linguist in North Korea and a professor at the Institute of Linguistics of Social Science Center, urged the public to stop admiring English and Chinese language, saying, “The difference of our mother tongue between North and South Korea has been getting larger since the division of Korean.”

The source said that the North Korean authorities started to place high importance on the native tongue in an attempt to stop the surge in the use of the Chinese and foreign languages which have been spread to the country through the circulation of South Korean soap operas since 2000.

After the food crisis in the mid-1990s, the number of defectors, border traders, and Chinese businessmen investing in North Korea have increased, which helped the Chinese culture spread into the country. Many young North Korean began to display interest in Chinese movies, Chinese products and the Chinese language. It became popular among them to read out the brand names of Chinese products in Chinese.

In North Korea, people use the Chinese words “yaoyunji (搖運機)” or “yaoyun (搖運)” for a remote control. They do not use its Korean name “wonkyuk-jojonggi,” translated and adopted by the North Korean authorities.

As for a cell phone, people use its Chinese name “Dakeda (大可大)” or “Souji (手機)” rather than its North Korean name “Sonjeonhwa (literally meaning a handphone).” Blue jeans are called “Niuzaiku,” in the border areas, a refrigerator is called its Chinese name “Bingxiang (冰箱)” and VCD “Woicidie.” Indeed, many products or medical supplies are called their Chinese names such as “Kouhong” for a lipstick.

The use of foreign languages has become more prevalent across the country especially since 2003 when the frenzy over Chinese culture was replaced by its South Korean counterpart. It is particularly noticeable that North Korean people no longer call South Korea “South Chosun” as they used to but call it “Hankuk (meaning the Republic of Korea).” In these days, the young people in Pyongyang look down on those who still use the old name, “South Chosun.”

The source said, “South Korean culture is taking over the Chinese one, and the demand for the South Korean films and products is increasing. People learn new words from South Korean soap operas and these words are becoming popular.”
The source added, “I guess this is because South Korea is better off than China, and people have a sense of homogeneity towards South Korean people.”

“Nowadays, when people go to restaurants, they do not use the words “siksa annae” or “siksa pyo,” a Korean name for a menu. Instead, many people just call it “menu” as it is pronounced in English and widely called so in South Korea,” said the source.

The source continued, “We can see how rapidly the South Korean culture has spread into the country by the fact that many people no longer use the Chinese name for a cell phone, Shouji (手機) and instead use the name ‘Hyudaephone’ as it is called in South Korea.” The source said, “At Jangmadang (markets), people casually say the names of South Korean products as they are such as “Cuckoo (rice cooker)” or “Color TV.”

When asked about the popular words adopted from South Korean culture, he listed following words: “diet,” “wellbeing,” “music video,” “sausage,” “single,” “wife,” “dress,” “pop song,” and “fast food.” (See that all of them are English words. In South Korea, people use many English words like the one listed here in everyday life)

32-year old Kim Kyung Wuk (pseudonym), who defected from Kyungsung county of North Hamkyung Province and recently came to South, also confirmed this phenomenon.

Kim said, “In the past when people feel distressed, they expressed their feeling using the word, ‘uljukhada’. But now many young people use the words ‘jajeong’ or ‘stress’ as South Korean people do.” Kim added, “The North Korean people did not know the word ‘stress’ when they first heard it from South Korean movies they watched only three years ago. But now even the old people know the new word.”

Many defectors say that many new words adopted from South Korean TV dramas are being spread into the country especially among the young people such as “miss-Korea (a beautiful woman),” “show (fake),” “ssonda (I will treat you),” “hwakeun (passionate),” “single” and “wife.”

Kim said, “Those who watch South Korean dramas and listen to its music take a great interest in everyday language of the South, and try to adopt it as long as they could escape the state’s regulation.”

Defectors said that the current phenomenon illustrates that North Korean people admire the South Korea and greatly hope for reforms and open-door policy.

Lee Chul Min, the operating manager at the Association of the North Korean defectors said, “For those who live in a closed society, exposure to foreign cultures can be a really fresh experience. It is natural of them to admire more advanced societies and cultures.” Lee added, “The current frenzy over South Korean culture will help bring a change into North Korea and overcome the differences between two Koreas.”

Posted in Black markets, Cell phones, China, Civil society, Clothing, Communications, Cosmetics, South Korea, Television | Comments Closed

It Costs about $300 for a Visa to China

Monday, November 5th, 2007

Daily NK
Yang Jung A
11/5/2007

Forty-year old Park Sung Jin (pseudonym), a cloth merchant in Chongjin lately went to Tumun in Jilin Province, China under the pretext that he would visit his relatives there. He looked for Chinese business partners and tried to find items he can sell.

It took guts for Mr. Park to venture a trip to China. However, his efforts might turn out to be fruitless.

Mr. Park needed to get a border pass to go to China, and it costs him a great fortune. The pass allowed Mr. Park to visit his pre-determined destination only once. He paid 1 million North Korean won (approx. US$340) for the pass which he applied for in February, 2006 and received in August, 2007. If he wanted to have it within six months, he had to pay about 4,000 Yuan (approx. USD560).

Applicants for the pass also need to bribe the officials of People’s Committee and Security Agency because they are in charge of issuing visas to China. In fact, Mr. Park had to spend extra money on bribery to go to China for business.

Since it was Mr. Park’s first time to apply for the visa, he went through a relatively simple visa procedure. As for those who apply for the visa more than once, more complicated procedure is waiting. They are asked to state what they had done during their first visit to China.

If Mr. Park is issued a passport by any chance, he can go to many places for long periods of time. Unfortunately those over the age of 45 are more likely to get a passport (Mr. Park is forty). Moreover, the eligibility for the issue of a passport is much more complicated and it costs big fortune to get one. For instance, those who apply for the issue of a passport are supposed to pay $40 for application fee. However, the applicants need to spend extra money on bribes and other things, and for the most time end up spending more than $500 to get a passport.

Mr. Park is now busy visiting relatives and business partners. He is determined to make money as much as possible during his stay in China so that he can get his money’s worth upon his return home.

There are more theft incidents in Hoiryeong than ever

Lately, 45-year old An Myong Sook, a resident in Hoiryeong city, never hangs out the wash to dry outside. She tells her 15-year daughter not to forget to lock the doors when she leaves home because there are so many thieves in her neighborhood.

Since last year, the construction of apartments and roads has been underway around her area in order to commemorate the 90th birthday of Kim Jong Suk (the late mother of Kim Jong Il). For the construction, many outside workers came to her area, and some of them have broken into neighboring houses.

After having repaired the road laid behind the statue of Kim Jong Suk, the workers have started building the road between Hoiryeong and Chongjin since June. Many workers came to Hoiryeong from Rajin, Chongjin, Kilju, and Hamheung.

However, ever since the outside workers came to Hoiryeong in June, the number of households which lost their belongings or livestock has increased. The local people of Hoiryeong are increasingly complaining that the increase in rice price and theft has to with the presence of the outside workers.

Accordingly, the North Korean authorities have strengthened the punishment for theft. In the past, stealing was considered as a petty misdemeanor. Nowadays, that guilt of theft is sent to labor training facilities. The authorities confiscate all stolen items sold to the third person.

However, it is difficult to get back basic supplies such as clothes once they are stolen, and therefore every household in Hoiryeong is on the alert for theft.

Posted in China, Civil society, International trade, Labor conditions/wages, Political economy, Transportation | Comments Closed

Yanbian: Korea-in-China

Sunday, October 21st, 2007

Korea Times
Andrei Lankov
10/21/2007

When I was preparing for a trip to Yanbian, people told me that I would not have any difficulties in communicating with the locals: “They all speak Korean there.” It seems like an exaggeration, but it was not.

Every time my poor and broken Chinese was not up to the task, I asked if somebody around could speak Korean and such a person was found in seconds. Indeed, Yanbian is officially known as the Korean Autonomous Prefecture.

From the 1880s the Koreans began to move to the area in large numbers, and by 1949 when the Communists took power in China, they formed a majority in the borderland areas. In 1945 about 1.7 million Koreans lived in China. About 500,000 of those chose to move back to Korea in the late 1940s, but a million or so decided to stay.

Nowadays, the Korean population has reached two million, so some Korean nationalists even describe this part of China as “Third Korea,” together with the North and South Communist China emulated the Soviet approach to ethnic minorities. Ideally, each minority had to be given some kind of autonomous quasi-statehood.

Within such statehood, the ethnic minority would be provided with the education in their native language, the media in this language and some token representation of the minority in the government agencies. This scheme was applied to Yanbian as well, and in spite of all problems this policy has worked so far. On the one hand, Koreans of the area, unlike Koreans in the former USSR, Japan or U.S., have managed to keep their language.

On the other hand, their loyalties seem to remain firmly with Beijing. The Korean language is widely used in the area. Lively talks in Korean can be overheard during walks through the city of Yanji, the capital of the Prefecture. It is remarkable that the language is used not only by elderly people, but often by youngsters as well.

As stipulated by the law, all shops and government agencies have to display signs in two languages, and it is explicitly stated that the Korean text should not be smaller than its Chinese equivalent. The local newsstands sell a number of Korean language publications, ranging from pulp fiction periodicals with semi-nude beauties on the cover to a solid quarterly which publishes the work of local Korean-language writers (such a quarterly seems to be run on a government subsidy).

The ethnic flavor has even become a tourist attraction. The dog meat restaurants are everywhere, and unlike South Korea, they are not hidden but openly advertise themselves. The images of the hanbok-clad ladies are another feature of local advertisements. The promotion of ethnic features seemingly targets both South Koreans and visitors from other parts of China. It is remarkable that until recently the local Koreans overwhelmingly sent their kids to Korean language schools.

The curriculum at those schools was identical to the schools attended by the Han Chinese, but Korean was the major language of tuition. After graduating from high school, young Koreans can proceed to the local university where they are officially granted preferential treatment at the entrance exams, sort of “affirmative action,” Chinese style. Of course, the life of Koreans was not always easy.

There were periods of restrictions and even open persecution, especially in the crazy decade of Mao’s Cultural Revolution in the late 1960s. At those days, the relations between Beijing and Pyongyang went sour, and this influenced the local Korean community to some extent. A middle-aged ethnic-Korean businessman told me, “Back in the late 1960s, I seldom saw my parents. Because they were members of an ethnic minority, they had to go to ideologicalstruggle sessions every day and had to stay until very late.

”However, that period was an exception. The same person, who is buy no means a fan of the current Chinese system, still admitted when I asked him about discrimination: “Discrimination? Well, almost none, to be frank. They appoint some Han Chinese officials to supervise the administration, but basically I don’t think Korean people here have problems with promotions or business because of their ethnicity.

Sometimes being a minority even helps a bit — it’s easier to get to a university if you come from a minority group.” However, in recent years the situation in the area began top change fast. The Koreans began to switch from their native language to the Chinese (or, to be more precise, Chinese is increasingly seen as a native language by the children born in Korean-speaking families). Schooling in Korea faces a major crisis.

According to statistics, widely known and discussed, the number of children enrolled in Korean schools in 2000 was merely45.2 percent of the 1996 level. In the 1990-2000 period, 4,200 Korean teachers, or some 53 percent of the total, left their jobs because of school closures. It is remarkable that younger people with whom I could talk often have obvious problems with communicating in Korea, and whenever possible prefer to switch to Chinese. In families they still talk Korean to the elders, but Chinese is a natural choice between themselves.

In short, the assimilation began, and it might be unstoppable. Koreans leave their villages and go to the cities where they work and cooperate with Chinese. They often intermarry, and Chinese becomes the sole language of their kids. Like it or not, but the days of the “Third Korea” seems to be over.

Posted in China, Education, International trade, Political economy | Comments Closed

China halts rail freight to N Korea

Thursday, October 18th, 2007

Financial Times
Anna Fifield
Richard McGregor
10/18/2007

China suspended key rail freight services into North Korea last week after 1,800 wagons carrying food aid and tradeable goods crossed into Kim Jong-il’s hermit state but were never returned.

Absconding with Chinese wagons would be a strange move for North Korea because Beijing is Pyongyang’s closest political ally and biggest provider of food, goods and oil. Analysts monitoring North Korea said Chinese officials had privately complained to them that the North Koreans were dismantling Chinese wagons and selling them back as scrap metal.

The Chinese railway ministry suspended a number of rail freight services into North Korea on October 11, humanitarian agencies operating in North Korea told the Financial Times. The ministry told international aid agencies that it would not send any more wagons into North Korea until Pyongyang returned the 1,800 Chinese wagons.

Tony Banbury, Asia director for the UN World Food Programme, said that the curtailed service had held up the delivery of 8,000 tonnes of maize and wheat already stockpiled in Dandong, a Chinese border town. “We now have significant amounts of food but we can’t deliver it,” Mr Banbury said.

Reliefweb, a United Nations website for aid agencies, reported that the delivery of food stocks into North Korea had been “critically affected by the cessation of movement of railway wagons from China”.

An official with China’s railway ministry said yesterday that it was not aware of any suspension of freight services into North Korea.

But Fu Xue, of the Dandong Tianda International Freight and Forwarding Company, said there had been delays in the return of wagons but that North Korea had asked for permission from China.

North Korea has frequently failed to pay for goods or to pay back debt. It has also long been accused of relying on currency counterfeiting and drug smuggling to stay afloat.

But purloining Chinese wagons would be a brazen move. China is already thought to be disillusioned by Pyongyang’s refusal to embrace economic reform. It was also angered by North Korea’s decision last year to conduct a nuclear test despite Beijing’s objections.

North Korea has a history of not returning vehicles. In 1998, the late Chung Ju-yung, founder of South Korea’s Hyundai Group, donated 1,001 cows to North Korea to make amends for stealing a cow as he escaped from the north as a boy.

Pyongyang said the cows should be transported on Hyundai trucks. The trucks were never seen again.

Posted in China, International Aid, International trade, Railways, Transportation, UN World Food Program | Comments Closed

People Who Cross the River

Sunday, October 7th, 2007

Korea Times
Andrei Lankov
10/7/2007

The Chinese-Korean border is easy to cross, and it is clear that numbers of the defectors are kept small only by security measures undertaken by the North Korean side. However, the story of the region is essentially the story of the cross-border movement. Technically, the narrow Tumen and relatively broad Yalu divide the territories of two different countries. However, both banks of the Tumen are inhabited by the Koreans, and for large part of the last century neither state was either willing or able to control the border completely. It has been porous for decades, and in a sense it remains porous nowadays. The cross-border migration, legal or otherwise, has never stopped completely.

It might sound strange now, but until the late 1970s North Korea was seen by the Chinese as a land of relative prosperity, so the refugee flow moved from China to Korea. In the 1960s many ethnic Koreans fled the famine and the madness of the “cultural revolution,” looking for a refuge in Kim’s country. There, at least, people were certain to receive 700 grams of corn every day. Many of those early refugees eventually moved back, but only a handful were persecuted by the Chinese authorities. In most cases the returned migrants just resumed the work at the factories and people’s communes where they had worked before their escape. This movement was large, it involved few ten thousand people at least, and many of those people were saved by their sojourn in North Korea.

This episode, not widely known outside the area, is still well remembered by the Chinese. Many of my interlocutors explained their willingness to help the North Korean refugees in the following way: “When life was harsh here, they helped us. Now it is our turn.”

The Chinese border protection system has always been quite lax, but from the 1970s North Korean authorities have tried to the keep border tightly controlled. However, all their efforts could not prevent a massive exodus of the North Koreans, which began around 1995.

In those years North Korea was struck by a disastrous famine which led to massive deaths. The number of its victims has been estimated at between 250,000 and 3,000,000 with 600-900,000 being probably the most reliable figure so far. The northern parts of the country, adjacent to the border, were the hardest hit.

So it comes as no surprise that many North Koreans illegally moved across the border to find work and refuge in China. Around 1999 when the famine reached its height the number of such people reached an estimated 200-300,000.

This movement was not authorized, but from around 1996 Pyongyang authorities ceased to apply harsh penalties to the border-crossers. Until that time, an attempted escape to China would land you a prison for years. From the late 1990s, an escape to China was treated as a minor offence. It is even possible that the North Korean authorities deliberately turned a blind eye on the defectors: after all, people who moved to China were not to be fed, and also, being most active and adventurous those people would probably become trouble-makers had they been forced to stay in North Korea.

A vast majority of those refugees stayed in the borderland area where one can survive without any command of Chinese (the ethnic Koreans form some 35% of the population, and Korean villages are common). The refugees took up odd jobs, becoming construction workers, farm hands, waitresses and cooks in small restaurants. The authorities hunted them down and deported them back to North Korea, but generally without much enthusiasm, since both low-level officials and population by and large was sympathetic to the refugees’ plight. The older Chinese know only too well what it means to suffer from famine.

Most of the refugees were women, some of whom married the local farmers – usually those who would not find a wife otherwise. In most cases it means that they were paired with drunkards, drug addicts or gamblers, but in some cases their partners were merely dirt-poor farmers. These marriages were not usually recognized by Chinese law since these women, technically speaking, did not exist. In some cases, they saved enough money to bribe the officials and had a Chinese citizen ID issued. If this happened, a refugee woman changed her identity, becoming a Chinese national.

Nowadays, the refugees’ number has shrunk considerably, even though old figures are often uncritically cited by the world media. Nowadays, people in the know believed that between 30-50,000 North Koreans are hiding in China.

Why did their numbers go down recently? There are few reasons for that. To start with, a remarkable improvement of the domestic situation in North Korea played a role, but most people with whom I talked to in China in July agreed that the major reason for this change is the revival of the North Korean border security in recent few years. Until 2004 or so, North Korean authorities usually turned a blind eye to mass exodus of their people to China. Now their position has changed. They understand that the border serves as a major conduit for unauthorized information about the outside world, and now this information is becoming dangerous. They also believe that the famine is over, so people can be fed if they stay in North Korea. So, it seems that the era of large-scale illegal migration is over. Nonetheless, history of the region indicates that this movement is unlikely to ever be stopped completely.

Posted in China, Civil society, Dating/Courting, International trade, Political economy | Comments Closed

North Korean-China trade hotter than kimchi

Saturday, October 6th, 2007

Asia Times
Ting-I Tsai
10/6/2007

Business in Changbai county of Jilin province in northeast China is booming. The area, which faces North Korea’s Hyesan City across the Yalu River, has seen its exports rise 28.5% year-on-year in the first eight months of this year, the beneficiary of logjams created by China’s brisk trade with North Korea further downstream to Dandong – the busiest border city in northeast China bordering North Korea’s Shinuiju across the Yalu River.

As ice is melting between North Korea and the United States, more and more Chinese businessmen have been rushing to the border with the secretive communist country, looking to cash in on its trade and investment potential.

“Traffic across the river has been so busy,” said Han Lihsin, who founded a China-Korea trade website to promote business with China’s reclusive neighbor in April last year. “It is not only trucks from China that have to line up to go through customs, North Koreans have also sent their own trucks to pick up goods.”

According to statistics from Chinese Customs, bilateral trade between North Korea and China reached US$1.7 billion in 2006, a 7.58% increase over the previous year. It has grown another 16.7% in the first eight months of this year to $1.25 billion. Chinese investment in North Korea, meanwhile, had reached $38 million by the end of 2006.

China’s main exports include agricultural products, consumer electronics, textiles and fuel, but North Korean traders are taking advantage of the Internet to diversify their purchases. On China’s business promotion websites, buyers claiming to be from North Korea are asking for items as varied as wine coolers, necklaces, leather suitcases, soybean oil, pencil cases and “plastic containers for aromas or perfume”.

Whether North Koreans now have more money and are able to consume more remains a hotly debated issue among Chinese traders. But they agree that North Korean customers are now more sensitive to product quality and brands. “It’s not just about being cheap anymore. Products are required to be affordable with guaranteed quality,” said Tang Fuyou, manager of Dandong-based Tigereye62.com.

To overcome North Korean customers’ resistance to Chinese products, Tang says suppliers now market products with brand names and descriptions printed in English on the packaging. Small “Made in China” markings are placed in unobtrusive spots. “That way, goods can be sold for good prices,” he said, adding that South Korean and Japanese products are still too expensive for North Koreans.

Used televisions, washing machines, refrigerators and air conditioners are at the top of North Korean shopping lists. Hoping to ride the wave of this new demand for big-ticket household goods, China’s leading home appliance exporter Haier has reportedly been operating across the border since January of this year.

Traders aren’t the only ones looking to profit from North Korea. Burdened by soaring labor costs and high land prices, Chinese businessmen are finding this virgin territory to be a potential paradise.

Xu You, chairman of the Changbai-based China-North Korea investment association, suggested that his joint-venture wood factory pays 10 yuan (US$1.3) per month to its North Korean workers. Trader Wang Wei, whose Hsienhe pharmaceutical manufacturing company is planning to build a new factory in North Korea’s Nanpo, suggested that monthly salaries there average about 50 yuan.

Ambitious North Korean officials might not appreciate the intricacies of capitalist operations, but they have skillfully extended their networks for soliciting investment by touting the country’s advantages of cheap land and labor. North Korean websites based in China are advertising a broad range of investment opportunities, including in the areas of energy, restaurants and hotels, agriculture, mining, manufacturing and general infrastructure.

Among the approximately 100 projects circulating on these websites, hotels and electricity generation seem to be particular targets. One calls for a $30-45 million investment in Pyongyang’s yet finished tallest building, the Ryugyong Hotel, while another requires a $50-60 million investment for the Taedong-gang Hotel. Stakes in expansions of fuel-fired power plants are being offered for $100-200 million, and, hoping to take advantage of green energy, projects to develop wind and solar power also appear but minus a price tag.

As for manufacturing, projects to make elevators, freezers, electronic watches, shoes, sewing machines and even disposable diapers all require foreign investments in the form of machines, technology and raw materials.

At the urging of North Korean officials, investors Xu and Wang are now involved in pitching investments south of the Yalu to other Chinese prospects. According to Wang, Pearl River delta-based Chinese businessmen have expressed the most interest in relocating their factories, with 30 to 50 investment projects currently under negotiation.

Among those still concerned about the high uncertainty of operating in North Korea, some have chosen to set up an office in Pyongyang and bide their time until a timely opportunity emerges.

Aware of the growing significance of the bilateral commercial relationship, China’s central government and three provinces near the North Korean border – Liaoning, Jilin and Heilongjiang – have all made efforts to boost bilateral cooperation.

In March 2005, Chinese Premier Wen Jiabao signed an investment-protection agreement with his North Korean counterpart, and the two nations inked five bilateral economic cooperation agreements between 2002 and 2005. During North Korean leader Kim Jong-il’s visit to China in January 2006, Wen introduced new economic-cooperation guidelines.

In July of this year, Chinese Foreign Minister Yang Jiechi noted during his three-day visit to Pyongyang that economic cooperation was an important part of China’s relations with the North, and said China would continue to promote cooperation by following the previous agreements and guidelines.

Provincial governments, meanwhile, have been promoting cross-border trade by attending and holding trade shows and building new trade zones. Jilin’s Hunchun, Jian and Tumen are the cities along the North Korean border most aggressively pursuing free-trade zones that would allow visa-free access and offer duty-free facilities.

North Korea introduced economic reforms in 2002, but with embargoes imposed by the United States and Japan and Pyongyang’s economic conservatism, the reforms have accomplished little and the economy continues to struggle. In an acknowledgement of those problems, Dear Leader Kim Jong-il in January of reportedly vowed to make 2007 North Korea’s economic development year.

Tang, the Chinese businessman operating in Dandong, noted that his company is about to be appointed by North Korea’s trade authority to assist the operations of some 200 North Korean companies in China. He believes, however, that patience is required when dealing with the communist, reclusive nation.

“Even when North Korea and the US normalize their relationship, more time will be needed for economic reform,” he said, “Chaos would follow if the system is transformed too quickly.”

Posted in Agriculture, China, Communications, Energy, Foreign direct investment, International trade, Internet, Trade Statistics | Comments Closed

Control of North Korean Civilian Migration Begins for the Summit

Friday, September 28th, 2007

Daily NK
Kwon Jeong Hyun
9/28/2007

With the 2nd Inter-Korea Summit Talks coming up in five days in Pyongyang, the North Korean authorities have officially begun regulations of civilian migrations.

An inside source in North Korea said in a phone conversation on the 27th, “Control of civilians have become significantly toughened due to events of national importance, so the top (government) has completely limited travel permit approval numbers of average civilians to Pyongyang and the border regions.”

People’s Units’ chairs are in the midst of temporarily working on a reporting system which analyzes the data of civilian migrations and daily reports them to the security office.

North Korea still requires travel permits for moves to other regions from the place of residence. The inspection of permits becomes even more difficult when public transportation such as rails are used.

In particular, entry into Pyongyang, Yongbyun (nuclear power plants), Hwadaegun (Musoodan rocket launching site), and the northern border unit requires special travel permissions that are different from normal permits. For these special regions, an approval number, which signifies “special business,” is needed.

After the March of Tribulation, incidents of the Safety Agents issuing travel permits after receiving bribes were rampant, but recently, the regulation of such permits and travel restrictions on special regions have become more stringent. Restrictions on the issue of travel permits have significantly increased since the Local People’s Assembly representative elections on July 29th.

The source said, “After Chuseok (fall holiday), the order restricting the issue of all border and Pyongyang-related permits was announced at the People’s Unit meeting. With the Summit talks several days ahead, meetings of key leaders have all been cancelled and all entry and exit prohibited.”

Further, he said, “The northern border region or other controlled areas are not exceptions. Money will not do anything when trying to attain travel permits. Due to the fact that the issue of permits, with the exception of deceased reports, has been completely disallowed in surrounding cities of Pyongyang, such as Pyongsung or Nampo, the discontents of merchants who are dependent on travelling are high.”

With restrictions on civilian migrations, the price of commodities at the Jangmadang (market) has also been raised. Chinese products have to be brought back from the North Korean-Chinese border region, but because travel permits have not been issued, the transport of goods is difficult.

For industrial products, if the border region lowers the price, then prices go up in inland regions such as Kangwong, South and North Hamkyung, etc., because Chinese products coming in from border cities Shinuiju and Hyesan, Yangkang are not able to move inland. The inland is the opposite. However, the amount of rice coming in from inland regions is high, so their prices end up hiking up.”

However, the source said, “This time, the management will probably end at one-time inspection because the South Korean President is visiting. The jangmadang price levels will not skyrocket.”

Regulations regarding private visits of Chinese through Chinese travel agencies have not occurred yet.

It appears that the North Korean authorities, in order to prevent accidents and events which could happen around the Summit talk period, have strengthened preventative means.

One source who is residing in Musan, North Hamkyung, said, “In order to ensure the success of national events, lectures for leaders, with the content of hindering behind-the-scenes maneuvering of enemies and accidents and events on a timely basis, are taking place. Strict disciplinary actions for those who divulge national secrets and illegal use of cell phone are being emphasized.”

The source relayed, “Border guards are telling smugglers, ‘Wait just a few more days. After the national event (the Summit Talks), regulations will be relaxed. The situation nowadays is that smuggling is self-restrained.”

Posted in Automobiles, China, Civil society, General markets (FMR: Farmers Market), International trade, Railways, Real estate, Transportation | Comments Closed

DPRK trade officials crack down on corruption

Friday, September 28th, 2007

Institute for Far Eastern Studies
NK Brief No. 07-9-28-1
9/28/2007

Since early this year, North Korean authorities have been systematically implementing a double-entry accounting system to keep track of cross border trade with China, and as of late have been cracking down on private sales of goods imported under state requisitions.

It has become common practice for most traders to keep two sets of books, a private accounting record, and a set of records for government use. As these traders exported state goods to China, they would conspire with Chinese counterparts and make huge profits by recording lower prices than goods were actually being sold for. In many cases, bribes are taken to turn officially imported and exported goods (minerals, seafood, etc.) over to private sellers. These facts came to light through Chinese traders in business with North Korea.

Recently, however, investigations by the Kangsung Trade Company, operated under the supervision of the People’s Armed Forces Bureau, led to the conviction and execution of a foreign currency trader in Kangwon Province, Wonsan City and another from South Hamkyung Province, Hamheung City on charges of funneling company funds for private use. The crackdown appears to be because embezzlement and other forms of corruption are on the rise.

It was also disclosed that the foreign currency trader in Hamheung was accepting money from private business operators and using the company’s name to lend import and export quota chits. Inspectors raided the homes of the suspects and found large amounts of U.S. currency and gold, as well as no small amount of Japanese yen.

The human rights NGO ‘Good Friends’ reported in last month’s newsletter, “ After Oh Moon-hyuk, foreign currency director for the Chosun Fabric 88 Trade Company in Yunsa County, North Hamkyung Province, built a private villa on a plot with a good view, and purchased a Mercedes out of pocket, he drew the attention of General [Kim Jong Il] and was exposed. He was publicly executed in the middle of last July.” The NGO went on to report, “Every day young girls were called to the villa for his enjoyment, and security forces and police made it a point not to stop by the area near the villa often.”

Trade authorities in the area report that the crackdown on these violators has had no effect on DPRK-PRC trade. High ranking officials are aware of the abuse of authority to earn money, but had to some extent turned a blind eye to the issue. The crackdown is a result of the recent considerable growth in the problem.

Posted in Black markets, China, Economic reform, Good Friends, International trade, Kangsung Trading Company, Military, Political economy | Comments Closed

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