The land route between Hunchun in China and Najin-Sonbong in North Korea was not too long ago reopened after being closed for shut to 3 years because of the COVID-19 pandemic. The reopening has enabled Chinese language enterprise house owners who constructed factories in Najin-Sonbong – however couldn’t function them because of the pandemic – to as soon as once more begin enterprise.
Earlier this month, Day by day NK interviewed a Chinese language businessman who constructed a manufacturing facility in North Korea to provide completed items for export to China. The businessman employed low-cost North Korean labor and manufactured items utilizing uncooked supplies imported from China. The person’s identification can’t be disclosed as a result of safety considerations.
In keeping with this businessman, Chinese language cargo vans enter North Korea carrying uncooked supplies after which re-enter China stuffed up numerous completed merchandise, akin to clothes, baggage, footwear, and wigs.
The U.N. Safety Council fully banned the export of textiles and completed clothes from North Korea by way of Decision 2375, which slapped sanctions on Pyongyang following its sixth nuclear check in 2017.
But, primarily based on the Chinese language businessman’s account, textile merchandise produced in North Korea seem like overtly exported to China.
Even packaged items that had been held up in North Korea because of the pandemic-related border closure are actually being exported to China by way of the overland route. The businessman mentioned Chinese language businesspeople are at present specializing in recouping the losses they suffered through the course of North Korea’s border closure.
The next is Day by day NK’s full interview with the Chinese language businessman.
U.N. Safety Council Decision 2375 fully banned textile exports from North Korea. Why are you persevering with to run a enterprise that imports textile merchandise made in North Korea utilizing uncooked supplies from China?
It’s not simple for me to vary what I manufacture as a result of I already took tools for making outerwear, footwear, baggage and different objects into North Korea and constructed a manufacturing facility. I introduced 10 million RMB [around $1.4 million] into North Korea to construct the manufacturing facility and began the enterprise by lobbying North Korean cadres. That makes it troublesome to instantly shut down the manufacturing facility or change to a different product. I feel it’s pure for any businessperson to recoup the cash that has already been invested.
North Korea doesn’t have a steady political setting for foreigners to do enterprise in, however as a result of wages are so low, doing enterprise there’s value a attempt, even when you must face dangers like sanctions. After all, we had no alternative however to droop enterprise because of the surprising COVID subject, however even now, it’s much more worthwhile to construct a manufacturing facility in North Korea and make objects there than to run a manufacturing facility in China.
Are there many Chinese language businesspeople who need to spend money on North Korea these days?
There are far fewer Chinese language excited by investing in North Korea than there have been earlier than COVID-19. Chinese language merchants suffered loads of losses when North Korea fully sealed its border and unilaterally banned personal commerce [over the past three years]. People who find themselves conscious of [North Korea’s actions] are unfavourable about investing instantly in North Korea, however businesspeople who’ve by no means performed enterprise with North Korea or who’re unaware of the within story are nonetheless excited by investing there.
Lately, for instance, an individual who runs a clothes manufacturing facility in Guangzhou visited me to ask about constructing a manufacturing facility in North Korea. I advised him individuals who have already constructed a manufacturing facility in North Korea and invested need to preserve their enterprise going, however it’s very dangerous to carry new tools into North Korea and construct and function a manufacturing facility. You by no means know what trade-related measures North Korea will enact, and if China restricts enterprise exercise with North Korea, there’s actually nothing you are able to do. [The business environment in North Korea] just isn’t steady.
Have there been instances the place Chinese language businesspeople who’ve invested in North Korea have been unilaterally kicked overseas with out having the ability to recoup their investments?
After all. There was an individual from Dandong who invested in a North Korean mine. He invested virtually 30 million RMB [$4.3 million], after which they discovered uncommon earth metals on the mine. Abruptly, as a result of there was cash to be made, the North Korean authorities mentioned the land was initially a army facility and that foreigners couldn’t do enterprise within the space, so he [had to] depart every little thing there.
These sorts of unfair conditions typically occur, however as a result of establishing a producing plant utilizing North Korean labor is each useful to North Korea and worthwhile to international businesspeople, these sorts of companies are typically extra issue-free than [investment] in specialised industries.”
How a lot do you pay your North Korean staff? And have you ever put aside prices that you should commonly pay the North Korean authorities?
Once I first constructed the manufacturing facility, I spent some huge cash, however since then, I’ve not made common funds to North Korea. The individuals who handle the manufacturing facility actually watch my again, so I give them numerous presents. I commonly give them presents of 10,000 or 20,000 RMB [around $1,456 to $2,913].
I pay the employees about 700 to 800 RMB [around $101 to $116] a month. Individuals who have run factories in China would know, however that’s a extremely low wage. If you happen to rent a Chinese language particular person to make an merchandise, the top of the corporate has to pay social insurance coverage, however with North Koreans, you solely need to pay the month-to-month wage, so it can save you on payroll. If North Korean authorities would enable international businesspeople to do enterprise in a steady method, I feel there can be a line of individuals in China who would need to construct factories in North Korea.
This text first appeared in Day by day NK, which contacts a number of sources inside and out of doors North Korea to confirm data. The Diplomat was not capable of confirm the claims independently.