North Korean trading companies burdened with excessive loyalty demands

Kang Mi Jin  |  2017-02-07 21:22
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A number of North Korean trading companies have reportedly begun to export agricultural products, art pieces and health supplements following orders from the regime to contribute exorbitant amounts of foreign currency this year. It appears that the companies are selecting items for export that arent subject to sanctions in order to pay the loyalty contributions.

"As sanctions against North Korea have strengthened, trading companies are turning to products that are not included in the sanctions list. The recent activity comes from a decision by the Ministry of Foreign Trade demanding that trading companies double their contributions, a source in Pyongyang told Daily NK on February 1.

The North Korean authorities are increasing the amount of loyalty contributions to compensate for dwindling exports of weaponry, which had previously been a significant source of revenue. As a result, the companies have no choice but to explore alternative items for export.

The most prominent new category among these items is health food. Many of the companies seem to have realized that health foods are becoming very popular in other countries, and that aquatic and agricultural products from areas deemed clean are in high demand.

"The 'Korean Pugang Pharmaceutical Company' operated by the Ministry of Public Health is exporting unprocessed products including wild ginseng as well as the Royal Blood-Fresh product, a health supplement manufactured by the Korea Myongsung Health Food Pharmaceutical Factory," the source said.

"Of particular note, even organizations unrelated to trading have become involved. The Rungra Science and Technology Center belonging to the Ministry of Education normally exports only Chaga mushrooms, honey fungus, and pine mushrooms, but the center has been dealing with other health supplements in recent days."

In the areas of marine produce and art, the companies are making attempts to diversify their products.

"The Taehung Trading Company under the Ministry of Fisheries used to mainly export shellfish, but it has recently been selling a wide variety of marine products including premium quality fish. Meanwhile, the Samcholli General Corporation (a North Korean software animation subunit within the Mansudae Art Studio), has been forced to make private deals with companies overseas, and has been selling pieces from private artists in order to fulfill its quota for the loyalty contributions," a separate source in the capital said.

The undercurrents of desperation amongst the trading companies is largely due to Kim Jong Un's use of fearpolitik. Some officials returning from abroad for the end-of-the-year review, he said, were dismissed for not completing their assignments, sparking fierce competition to complete the trade assignments set at the beginning of each new year.

"Some traders are complaining, 'If you pull a rubber band too much, it will snap. This is why there are growing number of defections among dispatched workers,'" he added.

The executives in charge of North Koreas international trading companies are expected to come under intense pressure. It remains to be seen whether this will spark an increase in high-level defections to South Korea or other countries this year.

*Translated by Yejie Kim
*Edited by Lee Farrand

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