A number of North Korean trading companies operating in
China have been identified as collaborators with the Hongxiang Group of
companies – which is presently under investigation for allegations of smuggling
sanctioned materials to support the North’s nuclear weapons program. Daily NK’s
sources have reported that these same North Korean companies are now under increasing
pressure from Pyongyang to provide further supplies to the regime before the
Party’s Foundation Day holiday on October 10. These goods are to be presented
as gifts to elite cadres in order to shore up Kim Jong Un’s power base.
“The companies that have been suspected of colluding with
Hongxiang to smuggle banned nuclear materials are facing pressure on dual
fronts now. Their business activities have been almost cut in half due to the
ongoing investigations by the Chinese authorities. And now they’re required to
contribute goods to Pyongyang before Party Foundation Day,” a source close to
North Korean affairs in China reported.
Party Foundation Day is a major national holiday in North
Korea, ranking only behind Kim Il Sung and Kim Jong Il’s birthdays in terms of
importance. Each year, the regime seeks to reinforce loyalty from its power
base (composed of high-ranking cadres) by giving them special gifts.
When asked how the trading companies are coping with the
combined pressure, the source replied, “The heads of these trading companies
are being investigated by the Chinese authorities on a daily basis. So these
companies have resorted to hiring Chinese companies to procure gift items like
alcohol, fruit, and food products for them. After the North Korean managers are
released from the interviews, they load up the purchased items on trucks and
send them over the border into North Korea.”
Those who are unable to keep up with the pressure face dire
consequences. The Party Foundation Day holiday is understood to be a loyalty
competition among the foreign currency-earning operations. All enterprises are
required to provide ‘basic planning funds,’ loyalty funds, and gifts. Falling
short of these obligations is dangerous because those deemed responsible are
regarded as politically problematic. In North Korea, earning such a label can
result in extreme punishments, including execution.
Such conditions have only intensified during the Kim Jong Un
era, where even slight infractions have led to purging and punishment. The increasingly
severe consequences are well recognized by all overseas foreign currency
earning operations, explaining why they prioritize the submission of loyalty
funds over the safety of themselves and their employees.
The source added that, “North Korean trading companies in
China regard extra holiday payments as standard operating procedure. Only by
fulfilling their quotas for funds and products can the managers escape
punishment upon return to North Korea.”
According to another source in Dandong, the Chinese border
authorities originally planned to take a nine day break and suspend customs
services beginning on October 1 to celebrate their National Day. However,
that plan was changed following a direct request from Pyongyang to keep customs
open. Although the North Korean authorities reportedly explained that it was
essential to keep the border open to facilitate imports of flood relief
supplies, it can be observed that most of the products presently coming over
the border are gifts intended for cadres.
Asked about the specific efforts of these companies, she
said, “Because of Party Foundation Day (October 10), the
trading companies in China are more worried about sending loyalty donations
than they are about the investigations by the Chinese authorities. Until just a
short time ago, we saw many of these companies focus on flood relief supplies,
but now they’ve switched gears.”
“However, their attempts to purchase such items through
their partners in the Chinese companies are not as easy as they once were. The
current climate is one of suspicion and caution due to the ongoing
investigations. As a result, those North Korean companies that have been
associated with the Hongxiang Group are facing an increasingly difficult time,”
she concluded.
