Photo/IllutrationAn advertisement that publicizes false eyelashes in Korean language is shown in Dandong, China. (Yoshikazu Hirai)

  • Photo/Illustraion
  • Photo/Illustraion

Advertisement signboards in Hangul for wigs and false eyelashes have popped up in Dandong, a Chinese city near the border with North Korea.

The price of each product is cheap, and the profit margins are slim. But sales of these hair pieces are now a key part in North Korea’s drive to gain foreign currency in the face of economic sanctions.

“At present, we have no other ways,” a North Korean business operator told a potential Chinese business partner.

North Korea is resorting to unorthodox measures that do not violate the sanctions to gain foreign currency, no matter how small the amount.

A lifting of the sanctions is nowhere in sight as Pyongyang’s negotiations with Washington on denuclearizing the Korean Peninsula have not moved forward.

China accounts for about 90 percent of North Korea’s external trade. But Beijing is respecting United Nations resolutions that strengthened the sanctions against North Korea from 2016 over its missile launches and nuclear tests.

According to statistics of the General Administration of Customs of China, North Korea’s exports to China in 2018 plummeted by 88 percent from the previous year.

The sanctions have reduced trade in North Korea’s major export products, such as coal and textiles, to almost zero. They also prohibit U.N. member countries from newly accepting North Korean workers.

However, products that are not subject to the sanctions include craft works. And this has made hair-processed products, such as false eyelashes, an even bigger part of North Korea’s efforts to gain foreign currencies.

“We have become unable to do the job we were engaged in,” the North Korean operator of an electronic parts factory told a person related to trades between China and North Korea in autumn 2018. “As a result, several thousands of workers have become excess personnel.”

The factory now produces wigs and fake eyelashes, and the operator was seeking an introduction to Chinese companies that could place orders for such products.

Some North Korean companies show sample hair products with Japanese language explanations attached because the potential Chinese clients may have sales routes to Japan.

North Korean hair products are considered high quality because of the delicate and patient work put in.

Of North Korea’s total export amount of about $17.96 million (2 billion yen) in February this year, hair processed products accounted for $2.4 million, or more than 10 percent.

The hair-related amount was about double that of the same month in 2018.

LESSONS FOR CURRENCY

North Korea is also using cultural exchanges with China to earn foreign currency.

Pyongyang and Beijing have supported cultural exchanges since North Korean leader Kim Jong Un and Chinese President Xi Jinping held a summit in China in spring 2018.

In March this year, an association of North Koreans living in China held its first exchange meeting in Shenyang. Those invited included the principal of a school for ethnic Koreans, a minority group in China.

Members of a North Korean art group known for its traditional music performances also joined the exchange meeting and publicized its music and dance lessons that it gives in the city. The fee of about 50 yuan (800 yen) per hour was mentioned, and group members asked participants at the meeting to introduce the classes to their children.

North Korean restaurants in Shenyang are also promoting sales of “kimchi.” North Korean efforts to gain foreign currency through this side dish were not seen in the past.

INFLUENCES FROM SANCTIONS

“The pain North Korea is receiving from the economic sanctions is likely bigger than what we think,” said a South Korean government official in Seoul, who has been involved in economic exchanges with North Korea for many years.

So far, the country is showing no outward signs of an imminent economic collapse.

For several years, high-rise condominium buildings and convenience stores have been set up in Pyongyang where those in elite circles who support the Kim regime are living.

Domestically made products, including food, have also increased.

Government-approved markets in about 460 places throughout the country are also active.

The market activity was apparently made possible because the foreign currency that flowed into the country provided good circulation for the economy.

Foreign currency reserves have long been seen as a gauge for North Korea’s economic conditions as well as an indispensable source for governance and the daily lives of the people.

That explains North Korea’s drive for foreign currency in China from businesses that are not subject to U.N. sanctions.

Two years have passed since the sanctions were strengthened.

“The influence (from the sanctions) will become full scale from now,” said a South Korean expert on North Korea.

If North Korea’s foreign currency reserves decrease, the exchange rate between the dollar and the North Korean won should fluctuate wildly. In reality, however, it is currently stable at about 8,100 won to the dollar.

“The North Korean regime is managing to maintain stability in its currency probably by providing funds it has accumulated for its governance,” said a researcher of the Industrial Bank of Korea (IBK) who is an expert on the North Korean economy.

(This article was written by Yoshikazu Hirai in Shenyang and Takeshi Kamiya in Seoul.)