Archive for the ‘International trade’ Category

Taiwan firm raided after DPRK sale

Tuesday, September 7th, 2010

According to the Associated Press:

Taiwanese investigators raided a local company after it shipped banned machinery to North Korea via a Chinese firm with ties to Pyongyang’s military, a Taiwanese official said Tuesday.

The owner of the Taiwanese company, Ho Li Enterprises, said that two computer-controlled machine tools used in the manufacture of engines were shipped to North Korea earlier this year, but said he was unaware he had broken the law. Huang Ting-chou said that his company’s premises were raided in July by Taiwanese law enforcement officials acting on a tip from the U.S. government.

A Taiwanese law enforcement official confirmed the shipment and raid had taken place but did not discuss U.S. involvement. The de facto American Embassy in Taiwan declined to comment on the claim.

The raid took place as the Obama administration was working on a new set of sanctions against North Korea that were unveiled last month, targeting the assets of individuals, companies and organizations allegedly linked to support for its nuclear program.

North Korea has repeatedly tried to circumvent international strictures designed to stymie its production of missiles and nuclear material and other weapons of mass destruction.

Taiwanese companies are no strangers to sanction-busting attempts. In early 2009, Shanghai’s Roc-Master Manufacture & Supply Company ordered pressure gauges with possible nuclear weapons applications from Taiwan’s Heli-Ocean Technology Co. Ltd. Using backdated purchase orders, the Chinese company had Heli-Ocean ship them to Iran. The transaction violated international sanctions on exporting sensitive equipment to Tehran, which many in the international community suspect is trying to make nuclear weapons.

In an interview with The Associated Press, Huang said the machine tools were originally ordered “more than a year ago” but were shipped only after Ho Li’s Chinese client, Dandong Fang Lian Trading Co. Ltd. in northeastern China’s Liaoning province, was able to pay for them. While acknowledging that the tools ended up in North Korea, he said he had no idea how they would be used or why they would appear on any list of sanctioned items.

The North Korean machine tool deal was first reported Tuesday in Taiwan’s Liberty Times newspaper.

A Taiwanese official, speaking on condition of anonymity because he is not authorized to deal with the press, said that the machine tool shipment violated international sanctions and Taiwanese trade laws. He did not identify the items in question or specify why they violated sanctions.

The official works for the Taipei branch of the Ministry of Justice’s Investigation Bureau — roughly equivalent to the Federal Bureau of Investigation in the United States.

He said that Dandong Fang Lian is managed by a North Korean national with an unspecified connection to the North Korean military, and that the machine tools had ended up in the country’s Sinuiju region, across the Yalu River from Dandong. Sinuiju is the funnel for most Chinese goods entering North Korea.

“Ho Li sold two machine tools … without reporting to the authorities that the equipment was really going to North Korea,” the official said. “We became aware of the violation and when we raided Ho Li in late July we found e-mails and money transfer documents to prove our case.”

Huang said that Dandong Fang Lian specializes in diesel engines and power generators, and that while he had done business with the company before, this was his first venture with them in the machine tool sector.

“I am cooperating with the government in its investigations,” he said.

Neither Ho Li nor Dandong Fang Lian appears on an American list of sanctioned companies.

The Taiwanese official declined to confirm Huang’s assertion that an American tip led to the raid on Ho Li’s premises. The American Institute in Taiwan — the de facto U.S. Embassy on the island — said it would not comment on specific cases but emphasized it cooperates closely with the island on enforcing export controls and stemming the proliferation of weapons of mass destruction.

Read the full story here:
Taiwan firm raided after illicit sale to NKorea
Associated Press
Debby Wu
9/7/2010

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DPRK software exports

Monday, September 6th, 2010

According to Bloomberg:

North Korean leader Kim Jong Il has found an unlikely ally to help raise cash for his impoverished regime: The Dude, the pot-smoking underachiever played by Jeff Bridges in the movie “The Big Lebowski.”

Programmers from North Korea’s General Federation of Science and Technology developed a 2007 mobile-phone bowling game based on the 1998 film, as well as “Men in Black: Alien Assault,” according to two executives at Nosotek Joint Venture Company, which markets software from North Korea for foreign clients. Both games were published by a unit of News Corp., the New York-based media company, a spokeswoman for the unit said.

They represent a growing software industry championed by Kim that is boosting the economy of one of the poorest countries in the world and raising the technological skills of workers. Contracting with North Korean companies is legal under United Nations sanctions unless they are linked to the arms trade.

“From the government’s point of view, foreign currency is the main reason to nurture and support these activities,” said Andrei Lankov, an academic specializing in North Korea at Seoul- based Kookmin University. “These activities help to fund the regime, but at the same time they bring knowledge of the outside world to people who could effect change.”

The technological education of graduates from North Korean universities has “become significantly better,” Volker Eloesser, a founder of Pyongyang-based Nosotek, said in an e- mail. Companies with “hundreds or even thousands of staff each” operate in North Korea, he said.

Double-Edged Sword

Better trained programmers may also bolster the regime’s cyberwarfare capabilities, said Kim Heung Kwang, who taught computer science at universities in the north for 19 years before defecting to South Korea in 2004. South Korea’s presidential office said July 28 the nation had received intelligence that North Korea may plan an Internet-based attack.

Won Sei Hoon, director of South Korea’s National Intelligence Service, told lawmakers last October that North Korea’s postal ministry was responsible for cyber attacks in July 2009 on dozens of websites in South Korea and the U.S.

President Barack Obama widened U.S. financial sanctions on North Korea on Aug. 30, freezing assets of North Korean officials, companies and government agencies suspected of “illicit and deceptive activities” that support the regime’s weapons industry.

Seeking Capability

“Any sort of transaction that gives cash to the North Korean government works against U.S. policy,” said James Lewis, a senior fellow at the Center for Strategic and International Studies, a Washington-based policy group. “The coding skills people would acquire in outsourcing activities could easily strengthen cyberwar cyber-espionage capabilities. Mobile devices are the new frontier of hacking.”

North Korea’s information technology push began in the 1980s as the government sought to bolster the faltering economy, said defector Kim. That drive also led to the creation of a cyber-military unit in the late 1990s, he said. He runs North Korea Intellectuals Solidarity, a group composed of defectors who have graduated from North Korean universities.

Nosotek’s Eloesser disputed any connection between programming for games and cyber-espionage.

“Who could train them, as neither me nor the Chinese engineers who are cooperating with the Koreans have those skills ourselves?” he asked in an e-mail. “Training them to do games can’t bring any harm.”

Joint Venture

Nosotek is a joint venture between the science and technology federation and foreign investors, company vice president Ju Jong Chol said in an e-mail. He said federation members developed both “Big Lebowski Bowling,” set in a rendition of the bowling alley where The Dude spent much of the movie drinking White Russians, and “Men in Black,” in which players battle invading aliens. Eloesser confirmed his comments.

Both games were published by Ojom GmbH, a unit of a company called Jamba that was bought by News Corp. and later renamed Fox Mobile, according to Fox Mobile spokeswoman Juliane Walther in Berlin. They came out after News Corp. took a controlling interest in Jamba in January 2007 and before it bought the remainder in October 2008. Ojom was eliminated in a May 2008 reorganization, Walther said.

When asked whether Fox Mobile distributes games developed in North Korea, Walther said that the unit “has extensive partnerships with content producers in all areas, with operators, and with the biggest media companies worldwide, including various Asian companies.”

No More Details

She said the company could not provide more details on where partners are based or confirm “if and how” North Korean companies were involved in development for Ojom. Dan Berger, a News Corp. spokesman in Los Angeles, declined to comment further. News Corp. is controlled by Chairman and Chief Executive Officer Rupert Murdoch, 79.

Eloesser founded Elocom Mobile Entertainment GmbH in 2003, which later became a subsidiary of Ojom. He said he first visited North Korea in 2005 and helped found Nosotek in 2007.

Nosotek offers clients billing through either a Hong Kong or Chinese company, according to its website, which promises “skills, secrecy, dedication.”

Such practices allow the funds to flow to North Korea, said Paul Tjia, director of Rotterdam, Netherlands-based GPI Consultancy, which helps companies outsource overseas, including to North Korea. Other companies contract with Chinese firms that then subcontract to North Korean companies, he said.

It is “impossible to estimate” how much revenue North Korea earns through software development, he said.

Nosotek’s wares are “of similar good quality to those from other companies in Europe or America,” according to Marc Busse, digital distribution manager at Potsdam, Germany-based Exozet Games GmbH, which has distributed games for Nosotek.

Foreign companies that are reluctant to do business in North Korea need to understand that investment there can help the country modernize and reduce its isolation, Tjia said.

“Most companies are still reluctant, which we think is unfortunate,” he said. North Koreans “need investment, like China in the 1970s.”

Read the full story here
Kim Jong Il Bowls for Murdoch’s Dollars With Korean Video Games
Bloomberg
Matthew Campbell and Bomi Lim
9/6/2010

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DPRK-PRC promote business in border area

Monday, September 6th, 2010

According to the Choson Ilbo:

North Korea and China are already starting economic cooperation projects in the border area across China’s northeast and the North’s Rajin-Sonbong region.

The Chinese Ministry of Transport recently designated Jilin Province as a pilot region for international trade and logistics encompassing the three northeastern provinces of China and the Duman (or Tumen) River area, the China Shipping Gazette reported last Friday.

The decision is aimed at facilitating transport of goods from China’s northeast to Shanghai and the south via customs points in the Chinese city of Hunchun and the North’s Rajin-Sonbong Port, the weekly added.

A representative of the Yanbian Korean Autonomous Prefecture in Jilin also signed an agreement on bilateral economic cooperation with Kim Su-yol, the chairman of the Rajin-Sonbong special city people’s committee, at the sixth Northeast Asia Trade Expo in Changchun last Thursday.

Read the full story here:
N.Korea, China Promote Business in Border Area\
Choson Ilbo
9/6/2010

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RoK traders with DPRK apply for government loans

Saturday, September 4th, 2010

According to Yonhap:

South Korean companies hampered by Seoul’s ban on their trade with North Korea have signed up for government loans amounting to 17.4 billion won (US$14.8 million), the unification ministry here said Saturday.

According to a ministry official, a total of 66 companies have asked to borrow government money on a 2 percent interest rate. The ministry began reviewing 155 applications on Aug. 2, the official added.

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Banned S. Korean traders with N. Korea apply for government loans
Yonhap
9/4/2010

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PRC tells DPRK its time for reform

Thursday, September 2nd, 2010

According to the Choson Ilbo:

Chinese President Hu Jintao told North Korean leader Kim Jong-il in strong terms to reform the North’s failed socialist economy and open up the country, a senior South Korean government official said Wednesday.

He made the call during a meeting when Kim visited China last week, using rather more direct terms than Chinese Premier Wen Jiabao had used during Kim’s last visit in May, according to the official. Wen told Kim, “I’d like to introduce to you China’s experience in the reform and opening drive.”

But the official quoted Hu as saying, “Socialist modernization is based on China’s three-decade-long experience in reform and opening. Although self-reliance is important, economic development is inseparable from external cooperation.”

According to a Chinese official, Kim too directly used the terms “reform and opening”  this time. He reportedly told Hu, “Since its launch of the reform and opening drive, China has achieved rapid development.”

Up until recently, top Chinese leaders had regarded the terms as taboo words at bilateral summits for fear of upsetting North Korea’s delicate feelings, but Wen first broke the taboo in May, and Hu in his advice to Kim even used language such as “enterprise,” “market mechanism” and “external cooperation.”

A diplomatic source in Beijing said China’s insistence on talking about reform shows how concerned China is with the North’s mismanagement of the economy.

China’s business media made upbeat observations about the North turning toward reform, quoting Kim as saying he was “deeply impressed” after touring major cities in China’s northeastern region such as Changchun, Harbin and Jilin.

In an editorial Tuesday, the Global Times, a sister newspaper of China’s official People’s Daily, wrote, “Living in the shadows of South Korea, Japan and the U.S., North Korea has to wrap itself up tighter in order to fend off military threats, and threats of political and cultural infiltration. North Korea’s opening-up will help relieve tensions in Northeast Asia. But, the knot does not only lie on the North’s side. Other countries in this region must redouble their efforts to untangle the knot.”

It is unclear whether Kim will listen. The North Korean leadership is afraid of any reform that could weaken its stranglehold, and at the moment tight control is essential if the regime is to officially establish Kim Jong-il’s son Jong-un as his father’s heir.

Kim has paid lip-service to the Chinese economic development model before. After returning from a trip in the early 2000s, he introduced some timid elements of the market economy but swiftly clamped down when markets became too brisk and a new class of successful businesspeople began to look like a threat to his regime.

Han Ki-bum, a former deputy director of the National Intelligence Service in charge of North Korean affairs, in his doctoral thesis quotes Kim as telling economic officials in June 2008, “If you think I’m talking about reform and opening as if I were going to introduce the market economy you’re completely mistaken.”

At the moment, Kim apparently wishes to stick it out, but the North’s dire straits amid international sanctions will make it difficult to ignore Chinese demands.

At the meeting, Hu pointed out that economic cooperation between the two countries would be a “win-win strategy” where “the government takes the initiative, enterprises play a leading role, and the market mechanism is set in motion,” according to the South Korean official.

“That means that if China gives the North something, it should also pay in return,” a South Korean security official speculated.

Read the full story here:
Hu ‘Told Kim Jong-il It’s Time for Economic Reform’
Choson Ilbo
9/2/2010

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DPRK forges trade documents to dodge sanctions

Wednesday, September 1st, 2010

According to the AFP:

North Korea is forging trade documents and changing the names of its trading firms to try to dodge international sanctions, a Seoul intelligence official and a media report said Wednesday.

Pyongyang changed the name of the Korea Mining and Development Corp to Kapmun Tosong Trade after the UN Security Council blacklisted the firm following the North’s missile test in April 2009, Dong-A Ilbo newspaper reported.

The communist state also renamed weapons trader Tangun Trade as Chasongdang Trade when the company was put on the sanctions list after the North’s second nuclear test in May 2009.

The tests prompted the Security Council to impose tougher sanctions targeting Pyongyang’s weapons exports and blacklisting companies suspected of such dealings.

The sanctions also called on UN member states to inspect ships and planes suspected of carrying banned cargo to or from the North.

Since then, the North has mostly used China to transport its arms exports, Dong-A said.

It had forged trade invoices on military products, for instance by labelling torpedoes as fish processing equipment and anti-tank rockets as oil boring machinery, the paper added.

A spokesman for Seoul’s National Intelligence Service confirmed the report but declined to give details.

“Intelligence authorities in South Korea and the United States are trying to crack down on the North’s forging of company names and export invoices, but it is becoming increasingly difficult since the North keeps coming up with new schemes,” the paper quoted one South Korean official as saying.

The impoverished North faces multiple sanctions imposed by the UN and the United States and targeting its illegal trade in arms, drugs and luxury goods.

The US Treasury Department announced Monday it was imposing sanctions on four people and eight organisations accused of aiding the communist government through illicit trade.

Of course these games are nothing new. About this time last year DPRK sanctions enforcement was in the news.  Marcus Noland referred to the task as “Whac-a-mole”.

Read the full stories here:
N.Korea forges trade documents to dodge sanctions
AFP
9/1/2010

N. Korea Fakes Trade Documents to Export WMDs 
Donga Ilbo
9/1/2010

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Kimchaek (Songjin) seeks trade fair

Monday, August 30th, 2010

According to the People’s Daily (PR China):

The local government of Kimchuk, North Korea, may plan a trade fair next year, and all countries will be welcome to participate, said Yi Bok-il, the head of the Kimchuk Municipal People’s Committee of North Korea, after the opening ceremony of the 6th China Yanji Tumen River Area International Fair for Investment & Trade 2010, held Saturday in Yanji, Jilin Province.

Yi told the Global Times that it is the first time that Kimchuk has taken part in such economic activities, and the city aims to promote economic communication with China and other countries in Northeast Asia.

However, experts had reservations about the extent of North Korea’s involvement in the economic development of Northeast Asia.

“Given the uncertainties of North Korea’s domestic political and economic orientation in the future, it is still hard to project an overly optimistic estimate of the country’s contribution to the economic cooperation to the pan-Northeast Asian area,” said Yu Xiao, deputy director of the Center for Northeast Asia Studies at Jilin University.

“It will be a long process and be subject to further observation,” he added.

I believe that “Kimchuck” is “Kimchaek”.  A crew of South Korean and Chinese fishermen are being held there now.

Pyongyang already hosts a  semi-annual trade fair.

Read the full sotry here:
North Korea may host int’l trade fair
People’s Daily
8/30/2010

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First half of 2010 sees record inter-Korean trade

Thursday, August 19th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No 10-08-19-1
8/19/2010

Despite the ongoing inter-Korean tensions, and the stand-off over the Cheonan incident in particular, the first two quarters of 2010 saw an all-time record of 980 million USD-worth of inter-Korean exchange. However, with the South Korean government ceasing all inter-Korean trade outside of the Kaesong Industrial Complex in reaction to the investigation results finding North Korea responsible for the sinking of the South Korean naval corvette Cheonan, cross-border trade between the North and South has fallen and is expected to remain approximately 30 percent lower during the second half of the year.

According to South Korean customs officials, inter-Korean trade in the first half of the year was worth 983.23 million USD, with ROK imports worth 430.48 million USD and exports worth 552.75 million USD; a 122.27 million USD trade surplus. This is a 52.4 percent rise over last year’s first two quarters of trade, worth 645 million USD. In the first six months of 2009, South Korea exported 259.91 million USD (66%)-worth of product, and imported 385.1 million USD (44%) in goods. This year’s trade volume was nearly 100 million USD higher than the previous record, set in 2008, of 884.97 million USD. It was also around six times more than the 161.63 million USD recorded in 1999, when inter-Korean trade first became significant.

In 1999, North-South trade totaled 328.65 million USD. Despite rocky inter-Korean relations at the time, cross-border trade continued to grow, and with the expansion of the Kaesong Industrial Complex and other projects, first topped one billion USD in 2005, squeezing above the marker at 1.08872 billion USD. This growth continued in the latter half of the decade, hitting nearly 1.38 billion USD in 2006, 1.795 billion USD in 2007, and 1.82 billion USD in 2008. Repercussions from the North’s second nuclear test in 2009 caused trade to fall off to 1.666 billion USD in 2009.

On May 24, the South Korean government announced that all inter-Korean trade outside of the Kaesong Industrial Complex would be halted due to North Korea’s sinking of the Cheonan. If this trade ban continues, cross-border trade during the second half of the year is expected to be down 30 percent. The inter-Korean project in Kaesong makes up 70 percent of inter-Korean trade, so that other individual projects add up to only about one third. It is the suspension of these projects that is lowering North-South exchanges by 30 percent.

Actually, there was a decline in trade during the first six months of the year. In June, exports totaled 56.88 million USD, while imports were worth 66.18 million USD (total: 123.06 USD). This is 21 percent (33.31 million USD) less than in May. Exports were down 4 percent and imports dropped by 32 percent. Compared to trade prior to the ROK government’s measures, the trade of electric and electronic goods, transportation, and other capital goods actually raised from 19.31 million USD to 21.21 million USD, while mined goods and other consumables dropped from 76.81 million USD to 36.86 million USD.

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Dandong launches DPRK trade program

Thursday, August 19th, 2010

According to Reuters:

A northeast Chinese border city that is a key portal with isolated neighbour North Korea has launched a pilot scheme to settle export deals in China’s yuan currency, the city’s official newspaper said on Thursday.

North Korea’s struggling economy has come under greater strain after a chaotic attempt to re-denominate its currency last year hurt private traders and alarmed Chinese merchants.

The yuan’s trial use appears intended to boost Chinese exporters’ confidence in doing more above-the-table deals with the North, often a perilous gamble even in smoother times.

Many Chinese traders doing business with the North already use the yuan, dollar, euro in cash or even barter to settle export of food, clothes, appliances and other cheap goods in often informal or convoluted transactions. Smuggling and illicit deals are common along the border, marked by the Yalu River, a few dozen metres (feet) wide in many parts.

The Dandong Daily reported that approved exporters in Dandong will be able officially to carry out business in yuan.

The Chinese government announced in June that all of its trading partners would be able to invoice and settle imports and exports in yuan, but so far such transactions have been primarily confined to trade between China and Hong Kong.

“This means that state-designated export businesses in Dandong that engage in external trade can use the renminbi to settle transactions,” said the Chinese-language Dandong Daily (www.ddrb.cn) of the scheme, which began on Wednesday.

The renminbi is another name for the yuan.

“This will reduce exchange rate risks and the costs of doing business, and smooth out enjoying export tax rebate policies, as well as improving capital utilisation,” said the report.

The scheme will also cover approved small-scale exports passing through customs posts at Dandong, it said.

The new scheme will allow exporters to enjoy rebates and other benefits for trade, but will also depend on North Korean importers being allowed to deal legally in yuan.

Dandong lies on the Yalu, and at night its neon-lit riverfront faces the darkness of the electricity-starved North.

North Korea’s dependence on Chinese goods and aid has deepened as Pyongyang’s ties with South Korea have frayed.

According to Chinese customs data, in the first six months of 2010, China’s trade with North Korea was worth $1.3 billion (835.6 million pounds), a rise of 15.2 percent on the same time last year.

China’s exports to the North grew by a quarter, but its imports fell by 4.8 percent, the customs data show. As much as 70-80 percent of that trade passed through Dandong, according to earlier Chinese news reports, citing local customs officials.

Read the full story here:
China city launches yuan trade scheme with North Korea
Retuers
8/19/2010

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Kim’s expensive clothes

Wednesday, August 18th, 2010

According to the Choson Ilbo:

Kim Jong-il’s Mao suit is anything but affordable and utilitarian, according to a defector who used to supply luxury goods to the North Korean leader. “It should be called a luxury suit instead,” said the defector, who requested anonymity.

While working for the regime, his job was to tour the country’s embassies and consulates overseas and buy goods for Kim. “In the early 1990s, I was ordered to buy fabric for the dear leader and went to France to buy 60 yards of high-quality, cashmere and silk fabric produced by Scabal of London,” he said. “I paid US$300 per yard, which came to $18,000.”

About four yards of fabric are needed to make a suit, so the price of the cloth alone for Kim’s suit amounted to $1,200. The North Korean leader apparently hands out fabric as a gift to his closest aides. “Even in terms of South Korean standards, that would be quite a luxurious product,” the defector said. “But for the average North Korean it is unimaginable.”

But expensive price tags alone do not guarantee products a spot on Kim’s wish list. “There are plenty of other fabrics that are even more expensive than Scabal,” the defector said. “Kim Jong-il developed a liking for Scabal, because he heard foreign celebrities enjoy wearing clothes made using the fabric.”

Park Je-hyun, who owns a tailor shop in the trendy Cheongdam-dong neighborhood in Seoul, said, “Scabal is not a top-notch fabric, but it doesn’t wrinkle easily, which is why people on the move like it.” Fans include former U.S. President George W. Bush and movie star Will Smith.

At one time Kim apparently only wore shoes made by Italian cobbler Moreschi. “In early 2000, high-ranking North Korean government officials heard a rumor that the Dear Leader wears only Moreschi shoes, so they scoured Moreschi stores whenever they went on overseas trips,” the defector said.

Kim is picky about his luxury brands. According to the defector, he has a penchant for Perrier bottled water, Martell Cognac and imported menthol cigarettes. One foreign diplomat said, “During his visit to China in 2005, Kim Jong-il was delighted to see bottles of Perrier that Chinese officials had prepared for him and asked his aides how the Chinese knew he liked Perrier.”

The defector said, “I used to go to Switzerland a lot to buy large numbers of Omega watches. They weren’t all for Kim Jong-il, but as rewards for his staff. He added, “Kim Jong-il doesn’t need a watch. If he wants to know the time, he can just ask his underlings.”

Kim Jong-il rarely appears in a “Mao suit” any more (a “Mao suit” is known in the DPRK as a “Kim Il-sung suit” and in China as a Sun Yat-sin suit).  Kim Jong-il usually appears in public wearing a “soldier-worker jumper.

Read the full story here:
Kim Jong-il’s Label Addiction Revealed
Choson Ilbo
8/18/2010

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