While relations between North Korea and China seem to be improving, things aren’t quite back to normal. The Chinese government is now restricting North Korean businesses and organizations from entering or expanding in the Chinese market.
A source in China told Daily NK recently that it’s become unusual for North Korean enterprises, organizations, or individuals to operate businesses independently in China.
Before COVID-19, North Korean businesses in China typically ran their own operations. Now, the source explained, the only ones still operating are joint ventures with Chinese companies or business partners.
North Korean restaurants offer a clear example of this shift. Previously, these restaurants operated independently—North Korean organizations would rent buildings in China and keep all the profits. You won’t find restaurants like that anymore.
The change comes down to Chinese local governments no longer permitting North Korean businesses or individuals to operate independently.
Now, if a North Korean enterprise wants to open a restaurant in China, they need a business permit for a joint venture with a Chinese investor or guarantor. Having a Chinese partner provide guarantees for the business makes it much easier to convince local governments to issue permits.
“There isn’t a single North Korean restaurant in Liaoning province currently operating independently,” the source said.
Even Songwondo, the most famous North Korean restaurant in Dandong, Liaoning province, now survives through a joint venture with a Chinese investor—despite previously operating on its own.
Most North Korean restaurants in Liaoning province closed during the pandemic due to financial difficulties. Only a small number remain open, all through joint ventures with Chinese investors.
Beyond restaurants: Broader impact on N. Korean business
Under these arrangements, Chinese partners naturally take a larger share of profits, putting North Korean businesses at a disadvantage. The result is that North Korean operations in China are far less profitable than before.
The restaurant industry isn’t alone in facing these challenges. North Korean IT companies, tourism agencies, and trading companies are also struggling to maintain independent operations in China.
Many workers at North Korean IT companies in Shenyang and Dandong returned home in the first half of the year after the Chinese government refused to renew their residency visas.
Companies under Paeksol Trading Corporation (linked to North Korea’s Reconnaissance General Bureau) and Solbongsan Trading Company (connected to North Korea’s Ministry of State Security) have also sent many workers back home, according to the source.
The Chinese government’s reasoning behind these measures remains unclear.
Chinese businesspeople involved in joint ventures with North Korea believe Beijing is restricting North Korea’s independent economic activities to prevent potential sanctions violations.
“China keeps trying to control North Korea,” said one Chinese businessperson with years of experience in North Korean joint ventures. “It seems like they’re showing that North Korea can’t make foreign currency without China’s permission or help.”
