Diplomacy Lab Exhibitions
Chapter 2: Kaesong
Kaesong Industrial Complex
Background
The Kaesong industrial complex is an industrial center inside North Korea just a bit over the DMZ border. It was financially funded through South Korea with the purpose of building a bridge between the both sides.
It embodied a hope for a union between the North and South, as it was viewed as the first step towards collaboration.
Map of North Korea, Industrial zone highlighted.
North Korean workers assemble jackets in a factory belonging to a South Korean-owned company, at the Kaesong Industrial Complex in North Korea, Dec. 19, 2013. (Kim Hong-Ji/Pool via AP)
North Korean workers assemble Western-style suits at the South Korean-run ShinWon Corp. garment factory inside the Kaesong Industrial Complex in Kaesong, North Korea.
Technicalities
South Korean companies utilized North Korean labor because wages in North Korea were significantly lower than in South Korea. This arrangement also aimed to build trust between the two sides and encouraged South Korean companies not to relocate their factories to other countries, such as China. Although both governments were initially involved in setting the framework, private companies made all the decisions regarding technical details. Companies like Hyundai and Korea Land Corporation participated in this operation.
Seoul provided political insurance to protect companies from risks related to political conflicts. If conflict between the two states led to a halt in operations, Seoul would cover the costs. All products manufactured in Kaesong were shipped to South Korea. South Korean workers in Kaesong did not need work visas to travel within North Korea.
In the early 2000s, approximately 129 companies operated in Kaesong. During this peak industrial period, products such as textiles, clothing, machinery—including cars and semiconductors—were produced.
Approximately 54,000 North Koreans were working at the Kaesong Industrial Complex (KIC) during its peak. It is important to note that all wages earned by North Koreans at the KIC were held by the North Korean government, with only a small portion of the collected wages distributed back to the workers. The labor produced in North Korea was then shipped to South Korea, where it was labeled as “Made in South Korea” before being exported around the world, including to the United States.
Production
You could be wearing articles of clothing made by North Korean workers
China and North Korea
By 2013, clothing exports to China had reached up to $800 million. A significant portion of these clothing items was re-exported, often through bonded warehouses.
North Korean workers may also be employed in China, producing items for well-known brands such as Nike, Adidas, and Reebok. Although China claimed to have halted all operations with North Korea following UN sanctions, it is believed that these activities continue through underground tunnels and the illegal employment of North Korean workers in Chinese factories.
For many North Korean workers, these jobs were seen as highly desirable compared to the nonexistent job market at home. Reports even indicate that some North Koreans paid bribes just to qualify for these overseas jobs, despite the dangerous and exploitative conditions.
Cosmetics
Taesun Hata was one of the cosmetic companies operating in the Kaesong Industrial Complex. Workers wore blue uniforms with white hats and were tasked with producing plastic containers used for makeup.
China-based firms have been found importing partially finished products from North Korea into China, where they are “completed” and then marked and packaged as Chinese-made. One example is false eyelashes, which are later shipped to destinations including the United States. In response, the U.S. has taken precautions by placing sanctions on all North Korean textiles and any companies potentially involved in funding the regime.
Shoes
The production of shoes would also take place in Kaesong, 1500 workers sat in various rows, situated at desks . Where they would sew orthopedic shoes together for the “Staflid” brand.
Staflid is one of the brands that were produced in “unification”
Unification just meant that one part of the product were made on South Korean soil, and the other part in North Korea. In the case of Staflid, soles were produced in South Korea while the shoe upper (part that covers the shoe) was manufactured in North Korea. Still despite the equal collaboration these products would be slapped with a “Made in South Korea” label.
Clothes
ShinWon, a South Korean clothing company, is one of the many garment companies that operated at the Kaesong Industrial Complex (KIC). Sixteen percent of their five clothing lines were manufactured on North Korean soil. Muchang Co., another South Korean company, produced streetwear. Despite “Western-style” clothing being produced within North Korea’s borders, North Korean citizens were not—and still are not—allowed to participate in “capitalist fashion” and face severe punishment if caught doing so.