Chinese textile firm making use of N.Korean factories

The clothes made in North Korea are labelled “Made in China” and exported across the world as Chinese textile firms are increasingly making use of North Korean factories even as they relocate their own factories offshore, including to Bangladesh, Vietnam and Cambodia to take advantage of cheaper labour across the border.

This helps the manufacturers to save up to 75 percent by making their clothes in North Korea, stated traders and businesses in the border city of Dandong. They take orders from all over the world.

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.

Textiles were North Korea’s second-biggest export in 2016, totalling $752 million, according to data from the Korea Trade-Investment Promotion Agency (KOTRA). Total exports from North Korea in 2016 rose 4.6 percent to $2.82 billion.

Its flourishing textiles industry shows how impoverished North Korea has adapted, with a limited embrace of market reforms, to sanctions since 2006 when it first tested a nuclear device. The industry also shows the extent to which North Korea relies on China as an economic lifeline.

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 labour-intensive goods not included on the United Nations embargo list, Chinese customs spokesman Huang Songping said.

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.

Australian sportswear brand Rip Curl publicly apologised last year when it was discovered that some of its ski gear, labelled “Made in China”, had been made in one of North Korea’s garment factories. Rip Curl blamed a rogue supplier for outsourcing to “an unauthorized subcontractor.

But traders and agents in Dandong said that it’s a widespread practice.

Some of the North Korean factories are located in Siniuju city just across the border from Dandong. Other factories are located outside Pyongyang. Finished clothing is often directly shipped from North Korea to Chinese ports before being sent onto the rest of the world, said Chinese traders and businesses.

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.

According to a Korean-Chinese businessman, North Korean workers can produce 30 percent more clothes each day than a Chinese worker.