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North Korea’s textile business flourishes with a little help from China

"North Korean apparel factories have been attracting Chinese textile firms owing to low labour cost. Interestingly, the tag says, ‘Made in China’ for the clothes produced in North Korea. Chinese suppliers send fabrics and other raw materials required for manufacturing clothing to North Korean factories across the border where garments are assembled and exported. Manufacturers can save up to 75 per cent by making clothes in North Korea. While they receive orders from all over the world but owing to the sensitivity of UN Sanctions, they need to route through clothing agents to hide their identity."

 

 

North Koreas textile business flourishes with a little help from China

 

North Korean apparel factories have been attracting Chinese textile firms owing to low labour cost. Interestingly, the tag says, ‘Made in China’ for the clothes produced in North Korea. Chinese suppliers send fabrics and other raw materials required for manufacturing clothing to North Korean factories across the border where garments are assembled and exported. Manufacturers can save up to 75 per cent by making clothes in North Korea. While they receive orders from all over the world but owing to the sensitivity of UN Sanctions, they need to route through clothing agents to hide their identity. Dozens of clothing agents operate in Dandong, acting as go-betweens for Chinese clothing suppliers and buyers from the United States, Europe, Japan, South Korea, Canada and Russia.

North Koreas textile business flourishes with a little help

 

Statistics from Korea Trade-Investment Promotion Agency (KOTRA) show, textiles have been North Korea’s second-biggest export after coal and other minerals in 2016, totaling $752 million. Total exports from North Korea in 2016 rose 4.6 percent to $2.82 billion. Chinese exports to North Korea grew almost 30 per cent to $1.67 billion in the first half of the year, largely driven by textile materials and other traditional labor-intensive goods not included on the United Nations embargo list.

A growing business proposition

North Korea has about 15 large garment exporting enterprises, each operating several factories spread around the country, and dozens of medium sized companies, according to Netherlands’ GPI Consultancy, which helps foreign companies do business in North Korea. Some North Korean factories are located in Siniuju city just across the border from Dandong. Other factories are located outside Pyongyang. Finished clothing is often directly shipped from North Korea to Chinese ports before being sent onto the rest of the world, as informed by some of the Chinese traders.

All factories in North Korea are state-owned and textile units are overbooked with work. North Korean workers can produce 30 per cent more clothes each day than a Chinese worker, say Korean-Chinese businessman. North Koreans don’t work for money; they believe they are working for their country, for their leader. Their daily wages are significantly lower than many other Asian countries. North Korean workers at the now closed Kaesong industrial zone just across the border from South Korea received wages ranging from a minimum of around $75 a month to an average of around $160, compared to average factory wages of $450-$750 a month in China.

UN Sanctions

The new UN sanctions imposed on North Korea recently ban countries from increasing the current numbers of North Korean laborers working abroad. China does not disclose official figures for the number of North Koreans working in factories and restaurants in China, although numbers are down from peak period two to three years ago, according to Cheng Xiaohe, a North Korea specialist at Beijing's Renmin University. North Korean factory workers in China earn about 2,000 yuan ($300.25), about half of the average for Chinese workers. They are allowed to keep around a third of their wages, with the rest going to their North Korean government handlers, according to a factory owner in China.

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