North Korea is demanding that the South raise monthly wages at the Kaesong Industrial Complex from US$55 to $300, and boost the rent from US$16 million to US$500 million, the latter being a mere 31-fold increase.
Doesn’t look like South Korean companies will go for it:
For South Korean companies operating in Kaesong, the relatively low wages for employees has given them a competitive edge. But if the Kaesong salary was raised to $300, companies said they might have little option but to close operations.
“We’d pay $300 per month to experienced labor workers or office workers in an advanced industrial zone in China,” said a head of a textile company who declined to be named. “Unless we can get the productivity that warrants such a big raise, then it’s just ridiculous.”
Some think the North Koreans are just highballing:
But some feel there still is room for negotiations with the North. Prof. Kim Yong-hyun of Dongguk University said, “If it had decided to close down the industrial park, the North would have unilaterally told Seoul that it would do so, without setting a date for the next round of talks. It seems that Pyongyang is trying to see how Seoul would respond to a maximum demand.”
I guess we’ll see on June 19, the date of followup talks.
Oh, and no word on the Hyundai Asan employee being held hostage detained in the North.
{ 18 comments… read them below or add one }
Ah, strikethroughs are such a
lamewitty way of making comments and are not passe at all. lolSeriously though, I think the Norks do want the park to be closed to SK business. Then they can keep the factories going for their own use (nationalized facilities) and make money by exporting what they make to other countries. And no more ChocoPies (poor man’s Wagon Wheels) or SK managers anaymore.
By doing it this way, rather than just saying “ok, everybody out of the pool!” the Norks look like they are just reasonable businessmen, rather than dictatorial thieves and assholes. This way, the progressive forces in the south can continue to blame Pres. Lee and businesspeople for ruining Gaeseong.
Prof. B.R. Myers agrees that the Norks want to close it, saying “it’s more trouble than it’s worth for Kim JI.”
Of course, there is always the slim chance that the SKs might turn around and actually pay their
extortionreasonable demands. That might make it worth the Norks’ while to keep the darn thing going.But surely by now we can see what an outrageously risky venture this was, and what a white elephant this is turning into.
This is all Lee Myung Bak’s fault. He forced the North Koreans to act like that.
Where is the democracy in Korea? Dokjae-ta-do!
I’m just repeating the Korean way of rationalizing.
If the Norks were smart, they’d demand their workers be paid (at least) the South Korean minimum wage.
The could say that the South is using them for what is akin to slave labor, and oppressing them.
Anyone who invested in Kaesong or Keumgang needs to watch this:
http://www.killerclips.com/clip.php?id=123&qid=1556
LOL. It might seem like extortion, but then again it could just be that they are deluded communists that think there is no problem with this kind of thing, and they cannot imagine the companies operating in Kaesong actually having to compete in the marketplace.
Is there any way to find out the names of the businesses that operate in Gaesong?
I have no opinion on this.
Me neither.
cm: I sure hope you were being funny.
Seth: there must be a list somewhere.
Shak: doesn’t it count as extortion if you are holding a SK manager hostage?
So if the workers at Kaesong get a raise, will they actually see a dime of it after KJI has skimmed it all off the top. What’s the difference between $8 out of $55 currently, or $8.10 out of $300?
Easy one. $o.10. Right?
I might have said $244.90, but I’m on the side of the proles…
hamel, I guess you are right. But then again, investment is about risk management. Could any SK manager operating in the North say they were unaware of the risks when they went there?
Adams-awry, I guess that means that KJI’s take would go from $47 to $291.90. Not bad. If the Southern companies give in and pay it, it will show once again that for KJI, extortion really does work.
Seth Gecko, all the subcategories and divisions make it impossible to give you a direct link, but if you navigate http://www.kidmac.com you can find all the businesses, by product category, operating in the KIC.
* The English website is horribly outdated.
I read this news in the paper this morning.
I first laughed loudly at the audacity of the North Korean “offer.” More like “demand” or “extortion demand.” I sure hope those South Korean diplomats strolling into the session past the phalanx of photographers were greased in the rear beforehand — because that’s where NK sticks their “brotherly love.”
Anyway, I laughed even louder later when I read that the South Koreans are actually considering the offer.
What an embarrassment. A truly dysfunctional relationship. From the South: “We love you even though you hate us, belittle us, and mock us. Please be nice to us so that we can continue the charade that the Sunshine Policy is/was not a total failure.”
From the North: “Bend over.”
I thought we were done with this stuff now that 2MB is in office.
Final suggestion for a final solution: Withdraw all diplomats, clear all managers out of the buildings, get as much equipment out of there as possible on a midnight run (ask beleagured hagwon employees in SK if any help with the planning is needed), and blow up the buildings in a bombing run at dawn.
Oh, I forgot, that’s not practical — because of the wrongly-held journalists, among other things — but it’s a nice fantasy.
Shak: I think on paper that might be true. But this is probably a good case where, at least for some, pre-investment analysis of risk factors became mixed up with sentiment and a desire to help those less-fortunate brothers up north, etc.
Looking at it with a cold, calculating eye, this thing was always fraught with danger. But audacity has a way of paying off sometimes. Not here, though.
Well, I don’t feel any sympathy for those companies who invested in that retarded scheme. That’s what you get for investing in an unstable environment. They jumped in, now they’ll have to jump out – all on their own.
But you know what the unfortunate fact about this is? Lee’s government will once again be blamed for this, and the Koreans will fall for it hook, line and sink.
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