Post by FWS on Aug 6, 2009 18:59:27 GMT -6
Interesting.
North Korea Rejects China Model Spurning Furs in Test
by Bomi Lim
Aug. 4 (Bloomberg) -- The closing of Kim Yong Gu’s fur clothing factory in North Korea may be the beginning of the end for the communist country’s only cross-border business center with the South, the last symbol of reconciliation between the former wartime foes.
As the North makes documentaries about leader Kim Jong Il following reports he has terminal cancer, businessman Kim pulled out after his managers were stranded in a government protest of military drills by the U.S. and the South. Other manufacturers may follow because of demands they quadruple factory wages and pay 31 times more for land leases, according to Lee Im Dong, who heads a group representing companies at the park in Gaeseong.
South Korean companies at the complex employ more than 40,000 North Koreans and helped increase trade between the countries to a record $1.8 billion last year from $222 million in 1998. The dispute may mark the end of the North’s experiment with a Chinese-style market economy, said Derek Scissors, a research fellow at the Heritage Foundation’s Asian Studies Center in Washington.
“This is North Korea’s way of saying, ‘We looked at the Chinese economic model, and now we’re rejecting that,’” he said. “This would be the last nail in the coffin of the direction they were going.”
China’s former leader Deng Xiaoping started opening its economy to the West in 1977 while maintaining the Communist Party’s monopoly on power. The country’s economy grew 82 times from 1978 to 2008.
Clinton Visit
Tensions between the two Koreas, which fought a civil war from 1950-53, have mounted over the North’s testing of a nuclear weapon and 18 missiles since April 5. North Korea said July 27 it may be open to new negotiations on its nuclear program if they take place outside of six-party talks involving the U.S., China, Russia, South Korea and Japan. The U.S. says any talks must involve the parties.
Former U.S. President Bill Clinton arrived in Pyongyang on a surprise visit today, North Korea’s state-run Korea Central News Agency reported, without giving a reason for the trip. Andy Laine, a spokesman for the State Department in Washington, earlier told journalists he had “no information” after reports of the visit.
Clinton may defuse tension and secure the release of two U.S. journalists imprisoned in June, said Yu Ho Yeol, a professor of North Korean studies at Korea University. Euna Lee and Laura Ling were sentenced to 12 years of “reform through labor” for charges including an illegal border crossing from China.
Sunshine Policy
South Korean President Lee Myung Bak has taken a harder line against the North since he took office in February last year. He pledged to change the so-called Sunshine Policy of the previous decade, which was intended to open up the communist country. The South’s cash support of the past administrations may have helped Kim Jong Il make nuclear arms, he said in a July 7 interview with Euronews television.
Three meetings between the two governments to resolve the June 11 demands for more money from Gaeseong companies have ended without agreement.
“The Gaeseong complex is the last symbol of reconciliation and cooperation,” said Paik Hak Soon, director of inter-Korean relations at the Seongnam, South Korea-based Sejong Institute, a research center. “Without it, we will be left with nothing but confrontation and armed conflict.”
‘Big Bucks’
Kim, 41, president of closely held Skin Net, was lured to Gaeseong by tax exemptions and labor costs less than a third of what he pays his Beijing workers. He opened his factory at the park, an hour’s drive north from Seoul across the fortified border, in September 2007.
He had an 825-square-meter (8,880-square-foot) room with 103 North Korean workers in light-blue uniforms seated in rows, some behind sewing machines, others cutting fur and fabric or ironing finished clothing.
“I thought, ‘This is where I’ll make big bucks,’” Kim said, puffing on a cigarette inside his Seoul office. To obtain a travel pass to North Korea, he took a four-hour class that included learning how to avoid offending the regime. “I thought Gaeseong was where unification will sprout,” he said.
Exports to Spain
Some of the coats, vests and scarves made in Gaeseong from imported mink, muskrat, fox and rabbit fur were exported to China and Spain, Kim said. Goods made at Gaeseong are usually labeled “Made in North Korea” and are “virtually impossible to be exported to the U.S., which levies higher tariffs on North Korean products,” the South’s Unification Ministry, which handles cross-border issues, says on its Web site.
Skin Net’s North Korean workers each earned about $65 a month, compared with $220 for his employees in Beijing, Kim said. They were paid through the government in Pyongyang, which sought to increase wages to $300 while asking companies to pay $500 million for using the land.
Kim’s two South Korean supervisors couldn’t give direct orders to workers, he said. His complaints to the North Korean middle manager that the workers were lazy and stole soap and chocolate snacks were ignored, Kim said.
After the supervisors were stuck across the border for two days in March, Kim said he feared for their safety. His concern escalated later that month after a worker with Hyundai Asan Corp. was arrested at the complex on charges including enticing a North Korean female to defect. Roh Jee Hwan, a Hyundai Asan spokesman based in Seoul, confirmed the arrest and said the firm hadn’t been allowed to see the employee since.
Production Lines Closed
“I couldn’t put up my workers’ lives as collateral to make money,” said Kim, who withdrew in June.
Some of the 109 other South Korean manufacturers operating there have closed production lines and may also leave, said Lee, the director of the Corporate Association of Gaeseong Industrial Complex. It represents most of the businesses based there and their suppliers, totaling 125 companies. A shoemaker and six other operations have decided to close by the end of August, the Dong-A Ilbo newspaper reported on July 15.
Companies at the park lost a combined 31.3 billion won ($25.2 million) in the six months ended May 31, said Lee. Orders slumped more than 30 percent as buyers feared products wouldn’t be delivered on time, he said.
“Our companies are fighting just to stay afloat,” Lee said. “There is a growing likelihood that more companies will pull out.”
Demands ‘Unacceptable’
North Korea’s demands are unacceptable as they would hamper South Korean companies’ operations at the park, said Lee Jong Joo, deputy spokeswoman at the Unification Ministry.
“We remain committed to maintaining and developing the Gaeseong Industrial Complex in a stable manner,” she said.
The industrial park was intended to help North Korea emerge from isolation while earning much-needed cash, said the Sejong Institute’s Paik. South Korean companies have produced at least $617 million of goods since Incheon-based Livingart Co. first made pots and pans at the site in December 2004.
The complex added $28 million to North Korea’s income last year, mostly in workers’ wages, according to the Unification Ministry. North Korea’s gross national income stood at 27.3 trillion won ($22.1 billion) in 2008, less than 3 percent of South Korea’s, according to the Bank of Korea in Seoul.
‘Hard Currency’
“This is probably the largest legitimate source of hard currency for North Korea, since they are banned from selling arms,” said Troy Stangarone, director of congressional affairs and trade at the Korea Economic Institute in Washington. “It will be difficult to replace that.” The United Nations Security Council toughened sanctions on North Korea on June 12, expanding an embargo to cover the trade of all arms.
South Korea suspended a tourist resort at the North’s Mount Geumgang, known as Diamond Mountain, in July last year after a tourist was shot dead by a North Korean soldier. Some 2 million people had visited since 1998.
The dispute has stoked concerns about the unpredictability of 67-year-old Kim Jong Il, who is suffering from pancreatic cancer and has less than five years to live, South Korea’s YTN television reported on July 13. He has tapped Kim Jong Un, 26, the youngest of his three known sons, as his political heir, which may spark a power struggle, a South Korean official said June 24. He declined to be identified because of the sensitivity of the issue.
“Kim Jong Il is getting fidgety as time runs out,” said Yang Moo Jin, a professor at the University of North Korean Studies in Seoul. “If the U.S. and others push him into a corner, he will only build up the nuclear arsenal.”
North Korea Rejects China Model Spurning Furs in Test
by Bomi Lim
Aug. 4 (Bloomberg) -- The closing of Kim Yong Gu’s fur clothing factory in North Korea may be the beginning of the end for the communist country’s only cross-border business center with the South, the last symbol of reconciliation between the former wartime foes.
As the North makes documentaries about leader Kim Jong Il following reports he has terminal cancer, businessman Kim pulled out after his managers were stranded in a government protest of military drills by the U.S. and the South. Other manufacturers may follow because of demands they quadruple factory wages and pay 31 times more for land leases, according to Lee Im Dong, who heads a group representing companies at the park in Gaeseong.
South Korean companies at the complex employ more than 40,000 North Koreans and helped increase trade between the countries to a record $1.8 billion last year from $222 million in 1998. The dispute may mark the end of the North’s experiment with a Chinese-style market economy, said Derek Scissors, a research fellow at the Heritage Foundation’s Asian Studies Center in Washington.
“This is North Korea’s way of saying, ‘We looked at the Chinese economic model, and now we’re rejecting that,’” he said. “This would be the last nail in the coffin of the direction they were going.”
China’s former leader Deng Xiaoping started opening its economy to the West in 1977 while maintaining the Communist Party’s monopoly on power. The country’s economy grew 82 times from 1978 to 2008.
Clinton Visit
Tensions between the two Koreas, which fought a civil war from 1950-53, have mounted over the North’s testing of a nuclear weapon and 18 missiles since April 5. North Korea said July 27 it may be open to new negotiations on its nuclear program if they take place outside of six-party talks involving the U.S., China, Russia, South Korea and Japan. The U.S. says any talks must involve the parties.
Former U.S. President Bill Clinton arrived in Pyongyang on a surprise visit today, North Korea’s state-run Korea Central News Agency reported, without giving a reason for the trip. Andy Laine, a spokesman for the State Department in Washington, earlier told journalists he had “no information” after reports of the visit.
Clinton may defuse tension and secure the release of two U.S. journalists imprisoned in June, said Yu Ho Yeol, a professor of North Korean studies at Korea University. Euna Lee and Laura Ling were sentenced to 12 years of “reform through labor” for charges including an illegal border crossing from China.
Sunshine Policy
South Korean President Lee Myung Bak has taken a harder line against the North since he took office in February last year. He pledged to change the so-called Sunshine Policy of the previous decade, which was intended to open up the communist country. The South’s cash support of the past administrations may have helped Kim Jong Il make nuclear arms, he said in a July 7 interview with Euronews television.
Three meetings between the two governments to resolve the June 11 demands for more money from Gaeseong companies have ended without agreement.
“The Gaeseong complex is the last symbol of reconciliation and cooperation,” said Paik Hak Soon, director of inter-Korean relations at the Seongnam, South Korea-based Sejong Institute, a research center. “Without it, we will be left with nothing but confrontation and armed conflict.”
‘Big Bucks’
Kim, 41, president of closely held Skin Net, was lured to Gaeseong by tax exemptions and labor costs less than a third of what he pays his Beijing workers. He opened his factory at the park, an hour’s drive north from Seoul across the fortified border, in September 2007.
He had an 825-square-meter (8,880-square-foot) room with 103 North Korean workers in light-blue uniforms seated in rows, some behind sewing machines, others cutting fur and fabric or ironing finished clothing.
“I thought, ‘This is where I’ll make big bucks,’” Kim said, puffing on a cigarette inside his Seoul office. To obtain a travel pass to North Korea, he took a four-hour class that included learning how to avoid offending the regime. “I thought Gaeseong was where unification will sprout,” he said.
Exports to Spain
Some of the coats, vests and scarves made in Gaeseong from imported mink, muskrat, fox and rabbit fur were exported to China and Spain, Kim said. Goods made at Gaeseong are usually labeled “Made in North Korea” and are “virtually impossible to be exported to the U.S., which levies higher tariffs on North Korean products,” the South’s Unification Ministry, which handles cross-border issues, says on its Web site.
Skin Net’s North Korean workers each earned about $65 a month, compared with $220 for his employees in Beijing, Kim said. They were paid through the government in Pyongyang, which sought to increase wages to $300 while asking companies to pay $500 million for using the land.
Kim’s two South Korean supervisors couldn’t give direct orders to workers, he said. His complaints to the North Korean middle manager that the workers were lazy and stole soap and chocolate snacks were ignored, Kim said.
After the supervisors were stuck across the border for two days in March, Kim said he feared for their safety. His concern escalated later that month after a worker with Hyundai Asan Corp. was arrested at the complex on charges including enticing a North Korean female to defect. Roh Jee Hwan, a Hyundai Asan spokesman based in Seoul, confirmed the arrest and said the firm hadn’t been allowed to see the employee since.
Production Lines Closed
“I couldn’t put up my workers’ lives as collateral to make money,” said Kim, who withdrew in June.
Some of the 109 other South Korean manufacturers operating there have closed production lines and may also leave, said Lee, the director of the Corporate Association of Gaeseong Industrial Complex. It represents most of the businesses based there and their suppliers, totaling 125 companies. A shoemaker and six other operations have decided to close by the end of August, the Dong-A Ilbo newspaper reported on July 15.
Companies at the park lost a combined 31.3 billion won ($25.2 million) in the six months ended May 31, said Lee. Orders slumped more than 30 percent as buyers feared products wouldn’t be delivered on time, he said.
“Our companies are fighting just to stay afloat,” Lee said. “There is a growing likelihood that more companies will pull out.”
Demands ‘Unacceptable’
North Korea’s demands are unacceptable as they would hamper South Korean companies’ operations at the park, said Lee Jong Joo, deputy spokeswoman at the Unification Ministry.
“We remain committed to maintaining and developing the Gaeseong Industrial Complex in a stable manner,” she said.
The industrial park was intended to help North Korea emerge from isolation while earning much-needed cash, said the Sejong Institute’s Paik. South Korean companies have produced at least $617 million of goods since Incheon-based Livingart Co. first made pots and pans at the site in December 2004.
The complex added $28 million to North Korea’s income last year, mostly in workers’ wages, according to the Unification Ministry. North Korea’s gross national income stood at 27.3 trillion won ($22.1 billion) in 2008, less than 3 percent of South Korea’s, according to the Bank of Korea in Seoul.
‘Hard Currency’
“This is probably the largest legitimate source of hard currency for North Korea, since they are banned from selling arms,” said Troy Stangarone, director of congressional affairs and trade at the Korea Economic Institute in Washington. “It will be difficult to replace that.” The United Nations Security Council toughened sanctions on North Korea on June 12, expanding an embargo to cover the trade of all arms.
South Korea suspended a tourist resort at the North’s Mount Geumgang, known as Diamond Mountain, in July last year after a tourist was shot dead by a North Korean soldier. Some 2 million people had visited since 1998.
The dispute has stoked concerns about the unpredictability of 67-year-old Kim Jong Il, who is suffering from pancreatic cancer and has less than five years to live, South Korea’s YTN television reported on July 13. He has tapped Kim Jong Un, 26, the youngest of his three known sons, as his political heir, which may spark a power struggle, a South Korean official said June 24. He declined to be identified because of the sensitivity of the issue.
“Kim Jong Il is getting fidgety as time runs out,” said Yang Moo Jin, a professor at the University of North Korean Studies in Seoul. “If the U.S. and others push him into a corner, he will only build up the nuclear arsenal.”
