North wooing Chinese companies to Kaesong

The Kaesong Industrial Complex in North Korea as seen from Paju, northern Gyeonggi on the South Korean side of the border on March 13 [YONHAP]

North Korea is trying to attract Chinese investment to keep the lights on at the Kaesong Industrial Complex, replacing the South Korean companies that previously operated factories in the zone, a presidential official said Thursday.

“North Korea aims to expand operations in the zone and is looking for Chinese investment and product orders to this end,” said a presidential official who spoke to reporters on condition of anonymity.

The official added that the North is also “dismantling and removing equipment and assets built with South Korean investment and running operations at the Kaesong Industrial Complex to manufacture products according to North Korea’s own internal needs and export demand.”

South Korean intelligence had previously estimated that the North is running some 30 factories inside the zone without permission from South Korean companies, whose staff departed Kaesong when it closed indefinitely amid high inter-Korean tensions in 2016.

An unnamed source familiar with the Kaesong Industrial Complex told the JoongAng Ilbo on Wednesday that the North “has also sent photos of facilities and product prototypes from the zone to Chinese businessmen,” especially those based in regions bordering the North, to lure investment and manufacturing orders.

The JoongAng Ilbo has also reviewed documents that support suspicions of planned Chinese involvement in the Kaesong Industrial Complex, including commemorative group photos of North Korean officials and potential Chinese investors, photos of Chinese companies’ offices festooned with the flags of both countries and details of cargo vehicles that can carry materials needed to manufacture products in Kaesong from Dandong, China via the North Korean border town of Sinuiju.

Regarding the North’s alleged plans to attract Chinese investment in the zone, a South Korean Unification Ministry official told reporters Thursday that the ministry is discussing the matter with relevant government agencies.

However, he vowed that the ministry would undertake strong legal countermeasures against “anyone who unlawfully uses our companies’ assets without authorization.”

When asked if Chinese business engagement in Kaesong would constitute violations of current United Nations Security Council sanctions resolutions against North Korea, the Unification Ministry official said such a conclusion would be premature, adding that the matter should be discussed at the United Nations “when a specific situation arises.”

Unification Minister Kwon Young-se condemned the North’s unauthorized use of the Kaesong Industrial Complex on April 11, after the ministry issued a statement on April 6 asking North Korea to stop using South Korean assets at the Kaesong Industrial Complex, including buses, which have been spotted being used for public transportation in Pyongyang.

The Unification Ministry has said such actions infringe on South Korean companies’ property rights and prior inter-Korean agreements governing the zone.

The industrial complex, located only 10 kilometers (6 miles) north of the demilitarized zone, was one of the main projects realized under the so-called “Sunshine Policy” pursued by liberal presidents Kim Dae-jung and Roh Moo-hyun. It opened in 2004.

The zone matched South Korean manufacturing prowess with skilled but inexpensive North Korean labor and was intended to demonstrate the benefits of capitalism and democracy to the North.

South Korean companies and their staff withdrew from the zone in 2016, but factories, equipment and raw materials were left behind.

Products currently being made by the North in the Kaesong Industrial Complex are primarily consumer electronics and household appliances, including a North Korean knockoff version of South Korea’s popular Cuckoo rice cooker, which several anonymous South Korean officials previously told the JoongAng Ilbo are being manufactured at Cuckoo Electronics’ Kaesong plant and sold at a Pyongyang department store.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]