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Monday, July 31, 2006

Shin-won sees no dangers operating in Kaesung


Park Sung-chul, CEO of Shinwon, South Korean clothing company, says “despite North Korea’s recent missile firing, the mood in Kaesung industrial park is very peaceful and lively.” “From early next month, the second factory will be up and running, and the number of local workers will double and so will the production line. North Korean officials underline the Kaesung business will not be influenced by political conditions,” said confident-looking CEO.

In fact, South Korea has been consistent in its position that Kaesung projects won’t be put in jeopardy despite international criticism that the South is virtually tunneling money into the regime without being assured where all the money is going. The international community points to Seoul’s two-pronged stance that Seoul serves as a lifeline to the Kim’s regime while it called off humanitarian assistance such as fertilizer and rice to the poverty-stricken people.

For its part, North Korea has recently made it clear it also doesn’t want to hamper inter-Korean economic projects and will continue to safeguard the Kaesung industrial park. Given it has nowhere else to turn to, it is no surprise the regime tries to defend the projects. US’s financial sanction followed by China’s recent freeze on North Korean bank accounts turn out to be very successful to put more constraints on already cash-strapped regime. Having said that, for the regime there is no option but to clinging to the projects.

After the missile launches, Shinwon saw its stock price falling once to W17,000 from W32,000 but the company maintained composure. In an effort to diversifying dangers, the production in Kaesung amounts to only 5 per cent of the company’s whole production and the company is always ready to move its production facility out of Kaesung in emergency. The CEO says “order has increased a lot so we extend working hour by 2 hours. When the third factory begins operating from this fall, the local workers will total 1,000.”

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