It's not on everyone's investment list but North Korea is being touted as a major strategic advantage by Chinese processors keen to access the country's seafood and uncongested ports. Seafood processors have linked with government officials in Hunchun, a Chinese city on the borders of both North Korea and Russia, to coax investors in seafood processing into the region, highlighting low costs and access to North Korean ports and fishery resources as key incentives.
North Korea has the potential to produce 10 million metric tons (MT) of aquatic products each year, according to Hunchun government official Li De Ping, who's tasked with drawing enterprises to invest in the zone. The way he sees it, seafood from North Korea seas and Chinese as well as North Korean aquaculture operations could go to the Hunchun Export Processing Zone for processing before being shipped out of nearby Rajin port (in North Korea) to key markets like South Korea, Japan and Russia.
Seafood processors promoting the zone include squid-processing specialist Hunchun East Yang Industrial Co. and Hunchun Honghao Food Industry & Trade Co., which ships shrimp, squid and cuttlefish. Meanwhile Yantai Da Cheng has supplemented its main base on the coast with a newer plant in Huchun with a 12,000 MT annual capacity focused on the European processed squid market.
There are precedents for cooperation between China and North Korean on processing: A 2013 deal allows textiles from Hunchun to be sewn into shirts in North Korea and exported back to China. "Seafood processing is a priority but we're also looking for electronic products, bio-pharmacy and textiles, among other industries," Li said. The national government wants to make Hunchun a regional economic center. "It's because of the strategic location, at the junction of China, Russia, and North Korea," added Li.
While the town is far from China's traditional east coast fishery processing and trading hubs, foreign seafood processors would be well advised to set up shop in Hunchun. "We have great infrastructure," said Li, pointing to roads, factory buildings and a high-speed rail link under construction which will link Huchun to key regional Chinese cities like Changchun.
A four-lane bridge connects Hunchun to the North Korean town of Wonjeong — this route has gotten busy since 2010 when China signed a deal to use the Rajin (also sometimes referred to as Rason) port in North Korea. Likewise a railway line links Hunchun to Makhalino, a station in Russia. "We're only 60 km from Zarubino port in Russia," adds Li.
Li says since the Hunchun Border Economic Cooperation Zone opened in 1992 it has drawn over RMB 4 billion (USD 643.5 million, EUR 466.3 million) of national and regional government investment with the Hunchun Export Processing Zone and Huichun Sino-Russia Trade Zone also established in the 24 square kilometer area.
It's not the first time North Korea has sought to tap into the global seafood trade: the country is a key supplier of shellfish to China, supplying over 50,000 MT of mollusks per year, according to recent Chinese customs data. Canadian experts were invited last year to advise on a series of salmon farms in North Korea, established with Norwegian technology. "The water is pristine and the facilities well-kept," one adviser told Seafoodsource. "But they've not really fully figured out how to properly feed the fish, so the fish are not reaching optimal weights." It's believed the salmon is sold into northern China, with some of it bartered for fish feed.
Hunchun could be well placed as a trading hub if North Korea seeks to liberalize its socialist economy. But it may also face competition, given wages in North Korea are believed to be a fraction of the annual average RMB 17,500 (USD 2,815, EUR 2,040) local wage in Hunchun. North Korea's State Economic Development Commission is meanwhile selling the Rason Economic and Trade Zone (of which Rajin port is officially part) as a special economic zone "equipped with all conditions favorable for preferential trade and investment, transit transportation, tourism and financial and service businesses." The Commission says the Pyongyang government is "constantly encouraging foreign investors to invest in trade and industry as well as agriculture, and promises "high profit with small investment."
