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North Korea’s firms in China face shutdown over UN sanctions

From restaurants with singing waitresses, to secluded traders in back alleys, North Korean businesses in Beijing face a precarious start to the New Year with a looming, sanctions-linked January deadline to shut up shop.

Accounting for 90 percent of North Korea’s trade, China is a major outpost for what little financial and economic interests its secretive ally has abroad.

But Beijing — fed up with Pyongyang’s nuclear and missile tests — has given North Korean businesses and non-profit organisations until January 9 to shut down in accordance with United Nations sanctions, the commerce ministry told AFP.

china north korea sanctions

A sales promoter of a supermarket uses her mobile phone as she walks past a North Korean restaurant in Beijing on December 20, 2017. Photo: AFP/Wang Zhao.

In visits to a dozen North Korean companies in the Chinese capital, AFP found that many owners and staff were unsure whether they would have to leave.

Near the North’s massive embassy complex in Beijing, where a red propaganda banner proclaims “Long live dear supreme leader Kim Jong-Un,” four trading companies are run out of ground floor shop fronts in a back alley.

Each door is emblazoned with a silver placard and the name of the occupant: Ever Victorious Trading, Korea Sungjon Trading, Korea SEK Company and Korean Five Rings Trading.

Ever Victorious is registered to a man named Chen Shire, though the middle-aged man who opened its door declined to give his name or say if he was affiliated to the nearby embassy. The UN says the North’s diplomats commonly abuse their diplomatic status to engage in business.

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“We buy essentials that are available here,” the man said, declining to elaborate on what his company traded in.

Inside his office boxes labelled as electric rice cookers were stacked to the ceiling.

“We’re doing fine based on our self-sufficient, independent economy,” he said, though when asked about US President Donald Trump, he admitted the expanding sanctions were having an impact.

“Because of that bastard (Trump) our country is having such a hard time. We despise him very much,” he said.

“But no matter how much Trump bullies us, we have our own power to go on.”

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He could not say if the trading company would shut down come January, and directed questions to the Chinese government.

A commerce ministry official told AFP that all North Korean businesses had been notified they must close.

“If they are still operating after January 9, they will be operating illegally,” the official said, adding that they would be inspected.

The UN resolution does not set a firm date. But UN diplomats said they were eyeing a January 12 deadline for joint ventures and cooperative entities to shut down, in line with the 120-day timetable in the September resolution.

‘I listen to the motherland’s orders’

Restaurants with singing and dancing North Koreans were once popular among Beijing’s nouveau riche and wealthy North Koreans visiting the city.

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Some opened as joint ventures, with the North Koreans overseeing the entertainment and food while the Chinese side supplied financing.

That was the arrangement made to establish the Begonia chain of North Korean restaurants in 2011.

Chinese woman Li Li invested 15 million yuan ($2.3 million) for a 60 percent cut of the profit, while her North Korean partner took 40 percent for running the place and bringing clientele, chefs, waitresses and entertainers from the North.

But the North Koreans reneged on the contract. Li won a lawsuit after claiming that she never received an allocation of profits, but she only recouped a fraction of her investment.

Some of the Begonia restaurants remain in operation but waitresses said the manager was not in and did not know when he would return.

They also did not know what would happen in January, as did waitresses at the joint-venture Yuliuguan restaurant, which markets its “beautiful North Korean ladies wearing the national dress”.

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“This doesn’t concern me,” waitress Xu Yingning said in stilted Chinese when asked about the fate of the restaurant, which features a stage and shelves with hollowed copies of “War and Peace”.

“I listen to the motherland’s orders.”

‘Always be prepared’

In recent years, Beijing Wanjing Science and Technology jumped between spaces in an office tower beside the Beijing offices of American tech giant Hewlett Packard.

Business records show the North Korean-owned company developed software. A former accountant for the company said she did not know what it did, and declined to answer further questions.

When AFP visited its listed address on the 16th floor, a new occupant had moved in. A neighbour said Beijing Wanjing left about six months prior.

“They kept to themselves,” the neighbour said of the four or five young North Korean men he saw coming and going from the office.

“They lived and worked in the apartment,” he said. He never saw any clients visiting the office but guessed they were in the IT business.

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Several other North Korean companies which AFP visited had already vacated their offices. Many had long been replaced.

One restaurant became an elementary school; a sanction-breaking front company turned into an investment firm; the Ferrous Metal Import Export Company’s address did not exist.

Only the Korea Traditional Art Center selling North Korean artwork was adamant it would not close.

Inside, a prominent painting featured a Korean woman bundled up against a snowstorm, with a poster in hand.

“Always be prepared,” it read.

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North Korea's firms in China face shutdown over UN sanctions