Korea border factories reopen

HYUNG-JIN KIM
Last updated 14:37 16/09/2013
Korea Demilitarized Zone
CHUNG SUNG-JUN/ Getty

South Korean workers wait to access the Kaesong joint industrial complex.

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South Korean businessman Sung Hyun-sang's relief at the resumption of operations at a jointly run factory park in North Korea is tempered by big worries: Can he make up for the millions of dollars he's lost since Pyongyang shut down the Kaesong complex in April?

About 800 South Koreans began returning today to their factories at the Kaesong park located just north of the Demilitarized Zone to team up with North Korean employees and test-run idle assembly lines. Some were also resuming production.

The reopening of the factories, after a spring that saw threats of nuclear war from Pyongyang, as well as a vow to restart atomic bomb fuel production, was the latest visible sign of easing tension between the rival Koreas. 

But for the businessmen at Kaesong, many of whom, like Sung, operate small or mid-sized companies that need the cheap labour the North Korean factories provide, there's a nagging worry about the future.

The companies at Kaesong say they've lost a combined total of about 1 trillion won (about NZ$1.1 billion) over the past five months and will need up to a year to get their businesses back on track.

''I feel good about the park's resumption, but I also have a heavy heart,'' said Sung, president of apparel manufacturer Mansun Corporation, which has lost about 7 billion won (NZ$7.7m) because of the shutdown.

''We've suffered too much damage.''

The park, established in 2004 during a period of warming ties between the Koreas, was considered a test case for reunification.

It combined South Korean knowhow and technology with cheap North Korean labour. It was also the last major cross-border cooperation project before Pyongyang withdrew its 53,000 workers in early April to protest annual military drills between Seoul and Washington and alleged insults against the country's leadership.

The other reconciliation projects had already long been mired in deadlock amid worsening ties between the Koreas.

The complex survived previous lows in relations, including North Korea's deadly artillery strike on a South Korean island in 2010.

By the end of 2012, South Korean companies at Kaesong had produced a total of US$2 billion worth of goods during the previous eight years.

So the park's shutdown was more than a blow to ties between the Koreas. It also hurt the 123 South Korean companies operating there, mostly small- and medium-sized labor-intensive industries. 

The South Korean government provided about 15 billion won (about NZ$16b) in insurance payments to 46 of those companies but plans to take back the money because the park has resumed operations, according to Seoul's Unification Ministry.

''We felt disconsolate (about the North Koreans' pullout) at first, but we didn't know that would it would last this long,'' said Yeo Dongkoo, director at Sudo Corporation, which produces handkerchiefs and scarves at Kaesong.

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- AP

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