North Korean exports of products contract manufactured for Chinese companies may restart in earnest beginning next year. In fact, Daily NK understands that some government agencies have already imported supplies from China and have begun contract manufacturing activities.
According to a Daily NK source in North Korea last Thursday, the corrections bureau of the Ministry of Social Security recently received a contract manufacturing order from China and imported materials required for the production process.
Officials from the Ministry of Social Security reportedly went to Sinuiju to load textiles, thread, needles, box cutters, beads and other items imported from China and delivered them to forced labor camps throughout the country.
The materials were imported by freight trains running between Dandong and Sinuiju.
The Ministry of Social Security received a production order for 10 items, including knitted and crochet items, wigs, artificial eyelashes, beadwork and magnets.
However, calibres (watch movements) for wristwatches, which accounted for a significant share of North Korea’s contract manufacturing-based trade prior to the closure of the border due to COVID-19, were not included in the latest order.
North Korea plans to ship the completed products back to China in January.
PRISONERS MANUFACTURE PRODUCTS FOR EXPORT INTO CHINA
Prisoners at the Ministry of Social Security’s forced labor camps are reportedly conducting the manufacturing of the products with materials the ministry recently imported.
In such cases where the Ministry of Social Security uses prisoners at forced labor camps to manufacture products for export to China, all the foreign currency income goes to the ministry and the government because prisoners receive no wages.
With this latest order, the Ministry of Social Security will reportedly contribute 85% of the income to the central government and keep the remaining 15%.
If the North Korean authorities start full-scale contract manufacturing activities using prisoners at forced labor camps, the scheme will likely earn a great deal of foreign currency for the government.
The country’s Ministry of State Security also operates a system of political prison camps, but these facilities do not conduct contract manufacturing-related activities for China due to their poor sanitation conditions, which are reportedly much worse than those at forced labor camps.
In fact, there was reportedly an incident in which an entire contract manufacturing order was canceled because lice and nits emerged from crochet items processed at a Ministry of State Security political prison camp.
FULL-FLEDGED CONTRACT MANUFACTURING ACTIVITIES TO START NEXT YEAR
Meanwhile, North Korean trading companies and clothing factories that accepted contract manufacturing orders from China prior to the closure of the border are reportedly sounding out Chinese traders about potential business opportunities.
The source said the companies are negotiating with Chinese interlocutors following permission from the government to conduct such transactions.
Once negotiations regarding the size of the contract manufacturing orders are completed with the Chinese, the companies will set their production targets and report themto the government prior to the end-of-the-year reviews, the source explained.
“[North Korea’s] contract manufacturing activities will likely start in earnest next year,” he added.
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