By: Michael Spavor, Paektu Cultural Exchange Director
Based on experience and my network of business people in the Rason Special Economic Zone (SEZ), I find the recent Daily NK article about foreign investors abandoning Rason hard to believe.
“Rason, regarded as a symbol of North Korea’s reform and openness, has been actively seeking foreign investment, although sources in the region say it now feels like a “ghost town,” and has lost signs of its previous vitality. Foreign investors have stopped visiting the city, and existing foreign-owned companies are said to be withdrawing in quick succession.”
When I visited Rason in June, August, and November 2016, it was much busier than I had seen in the previous 8 consecutive years. The central market was filled with both domestic and foreign-made products, and had more vendors and shoppers, while the city of Rajin itself was alive with new construction projects … the furthest thing from a ghost town.
The claim that “foreign investors have stopped visiting the city” is just simply incorrect. Our organization Paektu Cultural Exchange (PCE) regularly takes investors and interested business people to the Rason SEZ.
In fact, PCE will be taking a group of investors August 4-9, 2017 to attend the Rason International Trade Exhibition (RITE) and meet with government and investment officials, and some foreign friends and partners businesses which continue to be successful. (See below for more information on joining us for the RITE, application deadline is July 18th, 2017.)
“The Chinese companies in Rason all want to withdraw, citing unacceptable government practices. Some Russian companies have withdrawn from the city in the middle of construction, realizing that they can’t expect to profit from investing in the city,” a source in North Hamgyong Province told Daily NK.
I’m not sure how “a source in Hamgyong Province” can claim that all the Chinese and Russian companies in Rason want to withdraw from the zone. It seems odd that this source claims to know that all of those companies want to leave.
Just a few days ago I spoke with a successful foreign business partner, in the seafood industry, who came back to Yanji last week. He said that his business in Rason was in fact booming and we talked about his current trade shipping out live and frozen seafood from Rason to Hunchun, China, where it is either processed, stored or distributed to Shanghai, Beijing and other major cities.
Another close Chinese-Korean friend and beverage factory owner in Rason said that his venture is doing very well and is now expanding to meet domestic demand and shipping their products throughout the country.
“Some foreign companies have left the city quickly, without even attempting to take their investment profits with them, believing that it’s a waste of time. They must have concluded that they should leave before losing even more.”
“Some private Chinese investors have yet to receive any of their profits because they believed that their North Korean counterparts would abide by their promises to remit the money. Despite this, some small and medium-sized businesses and private investors appear unwilling to leave the city.”
The above claims and assumptions about Rason’s foreign investors and businesses seem extreme and biased.
“Foreign investors are tired of North Korea’s ridiculous demands and are saying that they will never invest in North Korea again. Even the local residents are saying that the city is being abandoned.”
It is true that fuel prices have risen this year and both Chinese and foreign business people have had challenges in doing business in Rason; but I have to seriously question this article from DailyNK. I’ve mostly heard positive news in the past few past months from Russian, Chinese, and North Korean business people who often go back and forth from Yanji and Rason.
On our upcoming “Exploring the Rason SEZ’s International Trade Exhibition, Investment Opportunities & Economic Environment“ trip to the zone this August , we will have the opportunity to speak with local government officials and foreign businesspeople and also see with our own eyes whether or not Rason has become a “ghost town” and if foreign investors are actually “withdrawing in quick succession”.
We always look forward to visiting the RITE every year, meeting with our North Korean partners as well as local entrepreneurs and consumers to exchange business ideas and find out first-hand about new trends and opportunities.
If you are curious about Rason’s current economic environment and the outlook on trade and investment, join us on one of our trade and investment focused trips to North Korea. Take a look now at our upcoming trips and delegations.