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THE FUTURE OF GAESEONG

INDUSTRIAL COMPLEX

A Perfect Tool for the S.K. Capitalists to

Make Maximum Profits

"If completed as scheduled, the Kaesung Industrial Region will include not only labor intensive ones but also heavy industries and high-tech firms, becoming one of the busiest industrial centers of East Asia." (DailyNK, 3.20).

This development will lead to mass dismissals in S.K. and more massive exploitation of the N.K. working class!

Following article, published in today's Hankyoreh gives just one simple example of the likely future (if the S.K. capitalists and their collaborators in the DPRK are able to achieve their goals without the resistance of the Korean working class!!):

S.K. textile industry looks to joint

North-South industrial park
Combination of low wages, high skills cited by companies ’moving North’

 
 
Seo Sang-ik, 77, chairman of mid-size clothing company BMX, has been seriously considering moving his production facilities to the joint North-South Korean Gaeseong (Kaesong) Industrial Complex, located just across the border in North Korea.

Having worked as a businessman for over 40 years, Seo judges the Gaeseong park, with its reportedly low wages and highly skilled workers, as a way to ensure a bright future for his company.

Seo has operated a clothing factory since the 1970s. At that time, South Korea’s textile and sewing industries were representative exports of the nation. But since the 1990s, an increase in wages has elevated the standard of living but also cost the nation its competitive edge in the textile industry. To try to stay afloat, Seo built a factory in Guatemala, and another in Dalian, China. However, he was unable to keep the Guatemala factory open, and the situation in China has greatly changed, as well, with Seo finding it hard to find workers. He blames this on the Chinese government’s attitude toward textiles as a "low value-added" industry in the midst of its feverish push to become an economic superpower. In addition, wages have risen in China, so that Seo finds he has to pay a minimum monthly wage of US$150 per worker.

"I heard that wages for [North Korean] workers at the Gaeseong Industrial Complex are as low as $57 a month, and that the workers have higher skills than those in China," said Seo.

A Gaeseong fever has been sweeping the South Korean textile industry. Since the February 13 agreement on ending North Korea’s nuclear programs, the draw has become even stronger.

Ahead of an additional sale of business spots at Gaeseong next month, more than 200 companies took part in a seminar about the industrial complex held March 7-9 by the Korea Federation of Textile Industries. Up to 86 firms submitted applications to move their factories to the Gaeseong complex, out of 32 slots.

The textile industry has honed in on the Gaeseong Industrial Complex due to the remarkable performance of firms which moved into the model complex in Gaeseong last year. Shinwon Corporation recorded an operational surplus after eight months, citing the harmoniousness of relations between management and labor. The company’s Gaeseong productivity levels are approaching nearly 80 percent of the productivity at its South Korean factories. Moonchang Industry, a uniform-maker that supplies larger brand-name companies, has also been very successful in Gaeseong.

Park Chang-ryeol, an official of the Korea Federation of Textile Industries, said that with Moonchang Industry’s success, large companies also have positively been recommending their subcontractors move into the Gaeseong Industrial Complex.

Indeed, Gaeseong has become the ultimate choice for survival for a number of textile companies.

"Even the best companies with state-of-the-art equipment won’t be able to survive [in South Korea] after two or three years because of the increase in cost and the banks’ concept of textiles as a declining industry," warned Kim Yeong-geol, an executive of a cooperative for textile companies in Seongnam, Gyeonggi Province, South Korea. About ten of the 46 member firms of the cooperative hope to move to Gaeseong, he added.

In fact, the first companies to head to Gaeseong were largely in the textile industry. These companies are occupying a large portion of the already full-to-capacity model complex and main complex of the industrial park. The reasons for the growth of this ’textile city’ are severalfold. The textile industry is labor-intensive and doesn’t need advanced machinery, which cannot be brought into North Korea because they are classified as "strategic goods." Moreover, products whose simple needlework is done in the Gaeseong complex can still be recognized as South Korean-made goods in overseas markets as long as the fabric and materials originate from South Korea.

However, the vision of the textile industry is not solely a rosy one. The companies there are worrying about a potential imbalance of labor supply and demand. Most textile companies seek skilled female workers in their 20s or 30s, but the Gaeseong complex has only less than 20,000 of such workers available, a number expected to not keep up with demand. Complicated customs procedures for bringing materials in and products out of North Korea is another detriment to working at Gaeseong.

Overall, however, the Gaeseong Industrial Complex has a potential to grow into an important world textile hub, some industry observers say. "To compete with Chinese-made goods, the Gaeseong complex should become a complex for the textile industry, complete with all procedures from yarn to spinning, dyeing, and sewing," said Park Hun, a researcher of the Korea Institute for Industrial Economics and Trade, adding that "for maximization of cost efficiency, companies should be allowed to access nearby ports as well as land routes."

http://english.hani.co.kr/arti/english_edition/e_business/197551.html

Related article:

☞ Analysis of Kaesung Industrial Region's Future (DailyNK, 3.20)

To check out the subject:

☞ Gaeseong Industial (i.e. Exploitation) Complex