Chinese clothing and textile firms are increasingly relying on North Korean factories to take advantage of cheaper labor across the border, traders and businesses in the border city of Dandong told Reuters. The clothes made in North Korea are labeled "Made in China" and exported across the world, they said.
Using factories in North Korea to produce cheap clothes for sale around the globe sheds light on the fact that despite the ever-tightening sanctions imposed by the United Nations, which have been introduced to punish North Korea for its missile and nuclear programs, do not include any bans on clothing or textile exports.
"We take orders from all over the world," one Korean-Chinese businessman in Dandong told Reuters, speaking anonymously. Dozens of clothing agents operate in Dandong, acting as go-betweens for Chinese clothing suppliers and buyers from the United States, Europe, Japan, South Korea, Canada and Russia, the businessman said. "We will ask the Chinese suppliers who work with us if they plan on being open with their client – sometimes the final buyer won't realize their clothes are being made in North Korea. It's extremely sensitive," he said.
Textiles were North Korea's second-biggest export after coal and other minerals in 2016, totaling $752 million, according to data from the Korea Trade-Investment Promotion Agency. Total exports from North Korea in 2016 rose 4.6 percent to $2.82 billion.
Chinese exports to North Korea rose almost 30 percent to $1.67 billion in the first half of the year, largely driven by textile materials and other traditional labor-intensive goods not included on the United Nations embargo list, Chinese customs spokesman Huang Songping told reporters. Chinese suppliers send fabrics and other raw materials required for manufacturing clothing to North Korean factories across the border where garments are assembled and exported.
North Korea has about 15 large garment exporting enterprises, each operating several factories spread around the country, and dozens of medium sized companies, according to GPI Consultancy of the Netherlands, which helps foreign companies do business in North Korea. All factories in North Korea are state-owned. And the textile ones appear to be humming, traders and agents say.
"We've been trying to get some of our clothes made in North Korea but the factories are fully booked at the moment," said a Korean-Chinese businesswoman at a factory in Dalian, a Chinese port city two hours away from Dandong by train. "North Korean workers can produce 30 percent more clothes each day than a Chinese worker," said the Korean-Chinese businessman.
"In North Korea, factory workers can't just go to the toilet whenever they feel like, otherwise they think it slows down the whole assembly line. They aren't like Chinese factory workers who just work for the money. North Koreans have a different attitude – they believe they are working for their country, for their leader."