The Emperor's New UnderwearA project to provide large quantities of winter underwear to the people of North Korea has fallen through, giving us yet another look into the sorry state of our program for economic cooperation with the North. It''s an embarrassingly typical tale of the kind of poor preparation and backroom dealings that have marred our efforts so far.
Taechang, an underwear manufacturer, was to produce 10 million sets of long underwear to be sent to the North. The company farmed out 7.5 million set to various subcontractors during April to September. Now this vast quantity of clothing sits stacked to the ceilings in the subcontractors'' warehouses while those who allegedly initiated the deal deny that any such order was placed. The makers are naturally raising a ruckus and demanding payment. Taechang claims that it carried out the project under an agreement with the Federation of Korean Industries, but the FKI says that, though it did try to get member corporations to participate in a used-clothing drive or a donation of winter underwear, response was so weak that the project was dropped.
We can''t help wondering what the inside story is here: Why would Taechang subcontract such a large order without a firm commitment from the FKI? Are we to believe that Taechang actually produced 45billion won ($40 million) worth of garments without a written agreement or even a verbal commitment that anyone can be held to? At this point we are only guessing, because none of the inner workings of this fiasco have yet come to light. But based on the way previous trade deals with the North have been handled, a couple of possibilities come to mind: Either the manufacturer, wishing to score some early points in the development of business with North Korea went ahead with the order without any guarantees, or some behind-the-scenes agency or important official in charge of business with the North made promises that could not be kept. It''s also possible that some combination of factors was involved.
So far, all business dealings with North Korea have required government approval. Since such projects have generally been carried out in secret, they almost always involve under-the-table negotiations between the government and the participating companies, giving rise to suspicions about what political machinations must have gone on behind those closed doors and which government agencies and influential figures are pulling which strings.
Some recent incidents suggest that the government has been quietly pressuring, or at the very least trying to entice, a number of corporations to conduct business with North Korea, but as President Kim Dae-jung has said, if business with the North is not conducted through private initiative, it cannot develop into a permanent feature of our economy. Making sacrifices in our dealings with the North Korea for the sake of our "common ethnicity" not only goes against market principles but would do serious damage to our corporate and national economy. Ultimately, it would prove to be a loss to North Korea as well. We are already beginning to see what such an approach can do to the companies involved.
With this in mind, Taechang''s situation is a problem not just for Taechang alone but for the whole future of business with the North. Whatever forces were at play in the underwear deal need to be brought to light. If government agencies or others in authority prove to be at fault, they must be held accountable. The promotion of commerce with North Korea has to be carried out openly, in public view, if it is to get on course and stay there.
by Kwon Young-bin