DPRK BUSINESS LEANS FORWARD IN NE CHINA

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000164

SIPDIS

DEPARTMENT FOR EAP/K, EAP/CM, INR
MOSCOW PASS TO VLADIVOSTOK

E.O. 12958: DECL: TEN YEARS AFTER KOREAN UNIFICATION
TAGS: CH ECON KN KS PREL RS
SUBJECT: DPRK BUSINESS LEANS FORWARD IN NE CHINA

REF: 08 SHENYANG 123

Classified By: Consul General Stephen B. Wickman. Reasons 1.4(b)/(d).


1. (C) SUMMARY: The DPRK seems to be taking a more active
approach to business in Northeast China when compared to
2008 (reftel),bringing a large government and business
delegation to this region's major trade fair. A senior-
level DPRK official used a public forum to make political
statements criticizing the United States and used a private
forum to make detailed pitches for increased investment in
the DPRK. North Korean traders seem to be more outgoing and
forward than last year. END SUMMARY.

DPRK IN PUBLIC: U.S BAD, LET'S CREATE A NEW WORLD ORDER
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2. (U) Consul General and ConGenOff participated in
Northeast China's principal regional trade fair in Changchun
September 1-3. On September 1, DPRK Vice Trade Minister Koo
Bon-tai spoke at the High Level Forum on Northeast Asia
Economic and Trade Cooperation, which featured Vice Premier
Li Keqiang as the guest of honor, including luminaries such
as former French Prime Minister Dominic de Villepin,
Philippines Vice President Noli De Casto, and Mongolian
Prime Minister Miegombyn Enkhbold.


3. (SBU) While the other 12 speakers used their limited time
to share ideas on economic cooperation in Northeast Asia,
Koo engaged in a 5-minute political statement that only
obliquely touched upon economics and Northeast Asia. He
singled out the United States for creating the global
financial crisis and excoriated Western forces for passing
judgment on the DPRK's missile launch, claiming space
exploration as a sovereign right. Koo also referred
directly to international sanctions, saying that Kim Jong-il
would never succumb to such measures. Koo ended by
suggesting that the countries of the world prevent future
economic crises by constructing a new world trade order
based upon euros, renminbi, and rubles instead of dollars.

DPRK IN PRIVATE: SHOW ME THE MONEY, FOCUS ON INVESTMENT
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4. (SBU) Koo showed a markedly different approach when he
gave a business-focused presentation at the DPRK Business
Day luncheon on September 2, open only to invited guests and
media. The audience was mainly comprised of local officials
from Jilin Province and the Yanbian Korean Autonomous
Prefecture. The Jilin vice governor said that in 2008 PRC-
DPRK trade reached USD 770 million and that, as of September
2009, there were 31 registered Chinese companies operating
in the DPRK with a total investment of USD 100 million.
When China's trade volumes are disaggregated, Jilin Province
becomes the DPRK's fourth-largest trading partner.


5. (SBU) The DPRK's keynote presentation was on the foreign
investment laws adopted in 1984. The DPRK offers joint
ventures five initial years of tax benefits with three years
of tax-free status followed by two additional years at 50-
percent tax-free. The DPRK partner in the joint venture is
responsible for securing and maintaining title to any land.
North Korea especially welcomes foreign investment in the
coal mining, electrical, railway, and metals sectors. The
DPRK also protects foreign-invested industries by
selectively limiting similar sector imports produced outside
of the DPRK. This presentation tracks with recent and
upcoming DPRK presentations in other parts of China to
advertise itself as an investment option.


6. (C) Koo spoke positively about business opportunities in
North Korea and pointed out to his Chinese guests that he
was honored to highlight the 60th anniversary year of PRC-
DPRK relations. The Chinese guest of honor, a Jilin
Province vice governor, did not mention the 60th year of
PRC-DPRK relations in his own speech. Later that evening,
the Yanbian Korean Autonomous Prefecture's Commerce
Department director smiled and told ConGenOff that the
Chinese were "used to dealing with the North Koreans, their
style of business" and knew how to "entertain" such
overtures and new ideas but had noticed a renewed DPRK
emphasis on commercial and economic affairs.


SHENYANG 00000164 002 OF 002


DPRK TRADE DELEGATION: NUMEROUS AND CURIOUS
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7. (C) The North Korean trade exhibit was sizeable, larger
than that of the South Koreans and Japanese, but mainly
engaged in the sale of low-value goods aimed at the average
Chinese shopper, such as herbal medicines, agricultural
products, and trinkets. None of the entities banned by
UNSCR 1874 were on the official list of participating
businesses. Most of the traders came equipped with personal
business cards, which in a change from years past, included
personal phone extension numbers in Pyongyang and individual
e-mail addresses. Furthermore, North Korean traders easily
offered these business cards to interested shoppers.


8. (C) The North Korean traders did not seem to pay much
attention to the offerings of the neighboring Mongolian and
Taiwan delegations, among others. DPRK officials and
traders did, however, frequent the exhibits of the machine
tool manufacturers and agricultural heavy machinery; they
seemed to pay extra attention to the flashy BMW and
Mercedes-Benz exhibitions, where several stopped to ask
questions and take pictures of promotional materials and the
vehicles.

WICKMAN