Chinese police recently seized a large amount of clothing produced in a North Korean textile factory and smuggled into China’s Liaoning Province, Daily NK has learned.
“Early last month, clothing produced in the Unha Textile Factory was delivered to a trader in China’s Liaoning Province,” a source based in China told Daily NK on June 18. “The trader who received the clothing was arrested by the police and all of the clothing was confiscated.”
North Korea is prohibited from exporting textile products (any fabric or clothing, including partial or finished goods) under United Nations Security Council Resolution 2375. The seizure of the clothing may be part of China’s attempts to adhere to the UN resolution.
According to the source, the total value of the seized clothing was approximately RMB 20 million (around USD 2,816,749).
The Unha Textile Factory was likely desperate to sell off its stock and recklessly attempted to smuggle the clothes into China, the source speculated.
In fact, Daily NK reported on June 4 that factories manufacturing clothing for export under the umbrella of the Unha Trading Bureau – which mainly fulfill clothing orders consigned from China – were experiencing financial difficulties because they were unable move goods across the Sino-North Korean border.
Unha Textile Factory has not yet received money from its Chinese client for the clothes, the source said.
“The ultimate client for the seized clothing was actually a South Korean company,” the source told Daily NK. “South Korean companies typically pay after they check the condition of the goods they have received.”
Indeed, some Chinese factories maximize their profits by covertly subcontracting their work to North Korean companies to save on labor costs. Some of these Chinese companies sign contract manufacturing deals with South Korean clothing companies.
The source explained that the clothing recently seized by the Chinese police had been manufactured by a Chinese firm for an unspecified South Korean clothing company. The South Korean company had reportedly planned to sell the clothes during the upcoming winter season.
“The Chinese company agreed to pay a portion of the money [they received from South Korean clothing company] to the Unha Textile Factory to help pay for labor costs,” the source continued. “The factory no longer will receive that money because all the clothes were seized.”
The source further reported that the North Korean manager in charge of supplying the clothes to the Chinese trader had vanished after the seizure.
“The Unha Textile Factory earns foreign currency for the Workers’ Party of Korea, which means that if any issues arise he would face harsh punishment,” he said.
North Korean exports to China have fallen drastically since the Sino-North Korean border was closed in late January. According to a paper released by the IBK North Korea Economic Research Center last month, North Korean trade with China fell by 66.6% year on year in the first four months of 2020, with exports and imports declining by 90.3% and 90% in April, respectively.
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