Changbai County’s reputation as a base for investment in North Korea is growing. Daily NK has learned that a group of Chinese officials recently visited Yangkang Province, which lies across the border from Changbai County, to forge an agreement with local cadres for a joint venture in Hyesan utilizing Chinese capital and North Korean labor.

Under plans to develop the Changbai County region as a sort of ‘special economic zone’ in partnership with North Korea, the speed of industrial, commercial and manufacturing development is quickening. On June 14th, a delegation led by China’s consul general in Chongjin, Tian Baozhen, visited Changbai County to host a meeting introducing the notion of investing in North Korea to local entrepreneurs and industrialists. The planned joint investment in Hyesan is also a symbol of Changbai County developing as a stronghold for Chinese money flowing south.

A local Yangkang Province source told Daily NK on the 22nd, “Following on from the development of Rasun and Shinuiju, North Korea is dispatching economic officials from Hyesan to China to encourage joint ventures. They have been having wide-ranging discussions with Changbai-based investors to establish joint ventures in Hyesan.”

“For the planned joint venture in Hyesan, which is to be a wig factory employing 2,500 local women, the authorities are preparing for a visit from Chinese economic sector bureaucrats to conclude the joint venture deal and select the location for the development,” the source added.

However, while discussion of the deal is reportedly in its final stages, the possibility of it falling through cannot be ruled out. Faced with the risks posed by North Korea’s irregular power supplies, poor transport infrastructure and low-skilled workers, the Chinese side is said to be strongly demanding the right to deal with human resources directly and the simplification of formalities covering the movement of goods.

Nevertheless, it is thought to be likely that North Korea, which is increasingly keen to obtain foreign investment, will soon conclude the deal.

The most notable thing about the planned development is that it will be directly run by the Chinese investors that effectively own it, unlike some past examples that have been run by North Korean managers with the Chinese side frozen out of decision-making.

Naturally, local Hyesan people are excited about the possibility of the wig factory moving in. According to the source, “North Korean people have a bit of a fantasy about the Kaesong Industrial Complex. They hope that if a Chinese company moves in and they can get a job there, they can live like Kaesong Complex employees, getting treated well and being given good supplies.”

Speaking about the development of northern North Korea yesterday, Yoon Duk Ryong of the Korea Institute for International Economic Policy sounded a positive note, saying, “Because they are either getting sent to China or Chinese industrial systems are coming in, North Korean people are getting affected by the outside world.”