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06seoul559 [2018/06/09 18:34] (현재)
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 +|  06SEOUL559 ​ |  2006-02-17 09:41  |  2011-08-30 01:44  |  대외비 ​ |  주한 미국 대사관 ​ |
  
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 +DE RUEHUL #0559/01 0480941
 +ZNY CCCCC ZZH
 +P 170941Z FEB 06
 +FM AMEMBASSY SEOUL
 +TO RUEHC/​SECSTATE WASHDC PRIORITY 6077
 +INFO RUEHBJ/​AMEMBASSY BEIJING 0107
 +RUEHMO/​AMEMBASSY MOSCOW 7115
 +RUEHKO/​AMEMBASSY TOKYO 0187
 +RUEHUM/​AMEMBASSY ULAANBAATAR 1073
 +RUEHSH/​AMCONSUL SHENYANG 2713
 +RHEHNSC/NSC WASHINGTON DC
 +RUCPDOC/​DEPT OF COMMERCE WASHDC 1352
 +RHEBAAA/​DEPT OF ENERGY WASHINGTON DC
 +RUEATRS/​DEPT OF TREASURY WASHINGTON DC
 +</​code>​
 +
 +====== 제목 : 북한 경제: 개성 산업단지,​ 대박인가 쪽박인가?​ ======
 +
 +
 +==== 요약 ====
 +
 +==== WE ASKED KIC FIRMS: "​HOW'​S BUSINESS?"​ ====
 +
 +==== SHINWON GARMENTS: "​PROFIT IS ALWAYS IN STYLE" ====
 +
 +==== ROMANSON WATCHES: "​CAN'​T EVEN GIVE 'EM AWAY" ====
 +
 +==== SJ TECH PUMP SEALS: "MORE THAN JUST MANUAL LABOR" ====
 +
 +==== SONOKO CUISINEWARE:​ "​WORKERS LOVE THE BENEFITS"​ ====
 +
 +==== 논평 ====
 +
 +
 +
 +====== 원문 ======
 +<​code>​
 +
 +
 + C O N F I D E N T I A L SEOUL 000559 ​
 + 
 +SIPDIS ​
 + 
 +SIPDIS ​
 + 
 +DEPT FOR EAP, EAP/K, EB/IFD/OIA AND EB/​BTA ​
 +NSC FOR CHA 
 +USDOC FOR 4431/​IEP/​OPB/​EAP/​MBMORGAN ​
 +PASS USTR FOR CUTLER AND KI 
 +TREASURY FOR IA/​ISA/​BUCKLEY ​
 + 
 +E.O. 12958: DECL: 02/​17/​2026 ​
 +TAGS: EINV PREL KS KN
 +SUBJECT: DPRK ECONOMY: KAESONG INDUSTRIAL COMPLEX, BOOM OR 
 +BUST? 
 + 
 +REF: 05 SEOUL 4653 
 + 
 +Classified By: DCM Mark Minton, for Reason 1.4 (b,d) 
 + 
 +SUMMARY ​
 +------- ​
 + 
 +¶1. (SBU) A round of discussions with South Korean companies ​
 +operating in the Kaesong Industrial Complex (KIC) in North 
 +Korea revealed that most are generally satisfied with 
 +business conditions at the project site.  While most firms 
 +profess to be making money or to be on track with their 
 +business plans, at least one is struggling, although not 
 +necessarily because of factors unique to the KIC.  While most 
 +South Korean companies operating in the KIC appear to have 
 +only a small part of their overall business riding on their 
 +North Korean operations, others look like they are betting ​
 +their future on KIC success. ​
 + 
 +¶2. (C) North Korean workers are reported to be capable, ​
 +reliable, and amenable to changing requirements. ​ Some 
 +employers are able to manage their workers directly, while 
 +others work through DPRK intermediaries. ​ While no concrete ​
 +figures are available, it appears that the total monthly ​
 +labor payment for KIC -- for some 4,200 North Korean ​
 +employees -- totals around USD 242,​000. ​ At USD 57.50 per 
 +person per month, cheap labor seems to be the single most 
 +attractive feature of the KIC for South Korean investors. ​
 + 
 +¶3. (C) Some investors calculate that North Korean workers are 
 +about half as expensive as Chinese laborers, while their 
 +productivity is about 70-80 percent of the Chinese level, ​
 +making the DPRK workers a relative bargain. ​ Another ​
 +frequently-cited advantage of the KIC location is its 
 +proximity to South Korean markets, allowing for completion of 
 +last-minute orders. ​
 + 
 +¶4. (C) If KIC employees can serve as a metric for the DPRK 
 +population in general, the overall DPRK food situation seems 
 +to have improved over the last few years. ​ KIC workers appear ​
 +to consider employment at the complex to be prestigious and 
 +valuable work, and the workers express appreciation for the 
 +fringe benefits they receive. ​ No KIC employers, however, ​
 +know the answer to the question of how much of their monthly ​
 +wage payments actually makes it into the pockets of KIC 
 +workers; the employees themselves are forbidden to discuss ​
 +the topic with South Koreans. ​ End Summary. ​
 + 
 +WE ASKED KIC FIRMS: "​HOW'​S BUSINESS?" ​
 +------------------------------------- ​
 + 
 +¶5. (SBU) Econoff recently met individually with executives ​
 +from four companies active in the KIC: Romanson Corporation, ​
 +ShinWon Corporation,​ SoNoKo and SJ Tech.  These companies ​
 +represent a cross-section of the South Korean companies ​
 +involved in the Pilot Phase of the KIC development. ​ Of the 
 +15 companies selected for the pilot phase, 11 companies have 
 +commenced operations, two are about to start operations, and 
 +two are awaiting the completion of their facilities. ​
 + 
 +¶6. (U) The other seven companies currently operating in KIC 
 +are Samduck Trading (footwear), Buchon Industrial (wiring ​
 +harnesses), Daehwa Fuel Pump (automotive parts), Hosan Ace 
 +(coils), Munchang Company (garments), Taesung Industrial ​
 +(plastic containers) and JY Solutech (moldings). ​ The two 
 +companies poised to commence operations are Magic Micro 
 +(electronics),​ and TS (moldings). ​ The facilities of Youngin ​
 +Electronics (electronics) and JC Com (cable connectors) ​
 +facilities are scheduled to be completed soon. 
 + 
 +¶7. (SBU) The Ministry of Unification (MOU) is in the 
 +preliminary phases of selecting an additional 23 companies to 
 +invest in another small sub-section of the grand First Phase 
 +of the overall project -- essentially a second pilot phase. ​
 +Construction of those facilities can be anticipated to get 
 +started within 2006, although that ambitious goal could slip. 
 + ​According to press reports, MOU is also eager to move 
 +forward as soon as possible with the full First Phase of the 
 +KIC, which could incorporate as many as 40 additional ​
 +factories, bringing the total to roughly 78 firms operating ​
 +in the KIC, of a variety of sizes. ​ Site preparation ​
 +construction work is currently ongoing for the full scope of 
 +the First Phase. ​ Some firms might begin to establish ​
 +factories as part of that effort within 2007 -- again an 
 +ambitious goal, which could prove elusive. ​
 + 
 +SHINWON GARMENTS: "​PROFIT IS ALWAYS IN STYLE" ​
 +--------------------------------------------- ​
 + 
 +¶8. (SBU) ShinWon is a large garment manufacturer that has 
 +been listed on the Korea Stock Exchange since 1988.  The 
 +company'​s 2004 sales were USD 367 million, and in the first 
 +half of 2005, its reported sales totaled more than USD 150 
 +million. ​ ShinWon is an international company, with factories ​
 +located in South Korea, China, Vietnam, Guatemala and 
 +Indonesia. ​ The company has operated its KIC facility since 
 +February 2005.  According to Lee Chang-yoon, President and 
 +CEO of ShinWon'​s Domestic Division, the value of the 
 +company'​s investment in KIC is approximately 4.5 million ​
 +dollars. ​
 + 
 +¶9. (SBU) ShinWon seems to have a successful business plan for 
 +its KIC operations, and Lee asserted that his company is in 
 +the KIC solely for business reasons. ​ In addition to the 
 +lower labor costs, manufacturing in the KIC also lets ShinWon ​
 +avoid tariffs on shipments back to South Korea, and provides ​
 +the company with a quick solution to meet surges in demand. ​
 +ShinWon'​s KIC plant accounts for seven percent of the 
 +company'​s total production. ​ All of the KIC-produced apparel ​
 +is sold in South Korea. ​ While the company'​s first fashion ​
 +show -- held at KIC -- achieved some notoriety for featuring ​
 +clothing that was reportedly too flashy for North Korean ​
 +taste, an informal survey of our FSN staff indicates that 
 +ShinWon'​s KIC-manufactured lines are acceptable for the 
 +fashion-conscious South. ​ Most of ShinWon'​s designs are 
 +targeted towards young South Koreans. ​
 + 
 +¶10. (SBU) ShinWon currently runs its KIC facility with only 
 +seven ROK managers supervising 330 DPRK workers. ​ According ​
 +to Lee, because of the workers'​ productivity and the low 
 +labor costs, Shinwon plans to expand its KIC facility, from 
 +the current five assembly lines to 15 lines by the end of 
 +February 2006.  The company also plans to hire an additional ​
 +500 North Korean workers to staff the new lines. ​ While Lee 
 +opined that the oft-heard estimates of 100,000 workers at KIC 
 +by 2007 could be met in the fullness of time, he scoffed at 
 +future estimates of 1,000,000 workers that have been 
 +suggested by former Unification Minister Chung and various ​
 +officials at Hyundai Asan Corporation,​ which is doing most of 
 +the infrastructure work at KIC. 
 + 
 +¶11. (SBU) According to Lee, ShinWon is the only South Korean ​
 +firm currently making money through operations at KIC.  He 
 +would not provide exact figures, but claimed that the KIC 
 +labor costs are less than half those at ShinWon'​s Chinese ​
 +plants. ​ KIC companies must pay a minimum of USD 57.50 per 
 +worker per month. ​ That payment is composed of USD 50.00 for 
 +the wage component, and USD 7.50 as a social welfare ​
 +contribution. ​ Additionally,​ all KIC companies provide a 
 +daily lunch or soup, and some use other material items as 
 +incentives for the employees. ​ Still, according to Lee, KIC 
 +workers are currently only about 70-80 percent as productive ​
 +as their Chinese counterparts. ​ He described the North Korean ​
 +workers as "naive but well-educated,"​ and asserted that KIC 
 +worker productivity is certain to increase. ​
 + 
 +¶12. (SBU) Lee claimed that nearly 40 percent of the 
 +(predominantly female) labor force at his plant has graduated ​
 +from university. ​ He also noted that when ShinWon first began 
 +hiring at the KIC plant, the applicants were mostly in their 
 +twenties, but now the applicant pool appears to be growing ​
 +older, with some applicants in their forties. ​ As other 
 +employers told us as well, Lee claimed that there is almost ​
 +no turnover among ShinWon'​s KIC workers. ​
 + 
 +¶13. (SBU) ShinWon'​s KIC managers directly supervise their 
 +workers, according to Lee.  He explained that there are no 
 +DPRK intermediaries who get involved in work schedules or 
 +requirements,​ but ShinWon does deal with workers' ​
 +representatives on issues such as fringe benefits. ​ Lee said 
 +that ShinWon is widely acknowledged as providing more 
 +benefits than most of the KIC companies, including shower ​
 +facilities and generous distribution of food, in addition to 
 +the lunch provided by most KIC companies. ​
 + 
 +¶14. (C) When asked about the amount workers actually receive ​
 +from the nominal monthly wage, ShinWon'​s Lee told us that he 
 +did know the take-home wages of his KIC employees. ​ He 
 +explained that DPRK authorities have explicitly forbidden ​
 +discussions on that topic, and that even if asked, the North 
 +Korean workers will not answer. ​ Lee complained that ShinWon ​
 +wants to set up its own payroll system, and has asked 
 +permission to do so from the DPRK authorities,​ but they have 
 +been denied permission. ​
 + 
 +¶15. (C) Before Woori Bank opened a branch office in the KIC 
 +in December 2004, ShinWon -- like the other South Korean ​
 +companies -- held off on making payments to North Korean ​
 +authorities. ​ Since then, payments for worker salaries have 
 +been made in U.S. dollars to the Central Development Special ​
 +Bureau office in the KIC.  ShinWon also paid in full their 
 +"​arrears"​ to the DPRK authorities. ​ According to South 
 +Korea'​s Ministry of Unification,​ individual companies ​
 +withdraw dollars themselves at the KIC Woori Bank facility, ​
 +then transfer the funds to the DPRK-run liaison office. ​ With 
 +an estimated 4,200 North Koreans working in the various KIC 
 +factories at this time, and a minimum monthly wage of USD 
 +57.50, monthly cash payments made through the bank total 
 +approximately USD 242,​000. ​
 + 
 +ROMANSON WATCHES: "​CAN'​T EVEN GIVE 'EM AWAY" ​
 +-------------------------------------------- ​
 + 
 +¶16. (U) Romanson Corporation sells watches and jewelry, ​
 +largely creating new designs in-house and jobbing out orders ​
 +to plants around the world. ​ Most of the products are sold in 
 +Russia, other former Soviet Republics and countries around ​
 +south and north Asia.  Among the companies we visited, ​
 +Romanson seems to be the most unlikely model for a profitable ​
 +venture. ​ As explained below, many of their decisions are 
 +puzzling when viewed in a business context. ​ End comment. ​
 + 
 +¶17. (SBU) The KIC plant is run through a consortium of 
 +investors led by Romanson. ​ Romanson executive director Jang 
 +Ho-sun explained that the consortium started work on its KIC 
 +plant in January 2005, and began manufacturing operations in 
 +August. ​ The consortium was put together to take advantage of 
 +KIC's low labor costs, according to Jang.  He noted that 
 +there were no ideological or political reasons driving the 
 +decision to establish a facility in the KIC. 
 + 
 +¶18. (SBU) Jang, like ShinWon'​s Lee, told us that the cost of 
 +labor at the KIC plant was roughly half that of his company'​s ​
 +Chinese plant. ​ However, much of what Romanson saves in 
 +reduced labor costs may be lost in the cost of maintaining a 
 +large number of South Korean managers at its KIC facility. ​
 +The company has one of the highest South Korean ​
 +manager-to-DPRK worker ratios we encountered,​ with 80 
 +managers supervising 560 workers. ​ In addition to South 
 +Korean-level wages, most companies must pay a "​risk"​ premium ​
 +to their South Korean managers -- as well as per diem and 
 +transportation costs -- for working at the KIC.  All South 
 +Korean managers commute for varying periods from Seoul to 
 +Kaesong. ​
 + 
 +¶19. (SBU) While there are no plans to increase the size of 
 +Romanson'​s KIC facility, Jang predicted doubling his labor 
 +force to 1,000 workers. ​ Increasing the number of employees ​
 +at this stage seems to be yet another counter-intuitive move 
 +by Romanson, as Jang lamented that, as a company, the firm is 
 +not meeting overall revenue targets. ​ However, he professed ​
 +confidence that the company'​s sales will increase, especially ​
 +the KIC-made watches. ​
 + 
 +¶20. (SBU) According to company officials, Romanson'​s annual ​
 +sales are approximately 900,000 watches, of which 25 percent ​
 +are currently produced at its KIC facility. ​ Company ​
 +officials hope to increase KIC-produced sales to 50 percent ​
 +of the total this year, and to 80 percent within two years. ​
 +Jang did not elaborate on whether Romanson would concurrently ​
 +reduce other overseas production if KIC production met these 
 +goals. ​
 + 
 +¶21. (C) Following the meeting with Jang, Econoff stopped at 
 +the in-house store located in Romanson'​s building. ​ When the 
 +store clerk was asked about a garish set of commemorative ​
 +watches, she explained that the set of watches -- named 
 +"​tong-il,"​ or unification -- was made to mark the beginning ​
 +of operations at Romanson'​s KIC plant. ​ Three nine-watch ​
 +sets, encased in a traditional Korean lacquered box, were 
 +produced for the occasion. ​ One set was presented to DPRK 
 +leader Kim Jong-il, one to South Korean President Roh 
 +Moo-hyun, and the last set was presented to, but declined by, 
 +an unnamed South Korean cabinet minister, according to the 
 +clerk. ​ We assume this unnamed minister to be former ​
 +Unification Minister Chung Dong-young. ​
 + 
 +¶22. (SBU) According to Jang, Romanson'​s KIC managers are not 
 +permitted to directly supervise their DPRK employees. ​
 +Instead, they supervise the work force through a layer of 
 +North Korean managers. ​ As all the companies do, Romanson ​
 +pays its workers the minimum wage, and company officials ​
 +claimed they make no other payments or "​contributions"​ to 
 +DPRK officials in order to run their plant. ​ Jang was 
 +satisfied with the quality of his DPRK employees, explaining ​
 +that the workforce was stable, and that only two have left 
 +since the Romanson plant opened. ​
 + 
 +¶23. (SBU) In Jang's opinion, the food situation in the DPRK 
 +must have improved. ​ He told us that when North Korean ​
 +workers began reporting to Romanson'​s factory last fall, they 
 +appeared to have visual symptoms associated with 
 +malnutrition. ​ Jang commented that the faces of those first 
 +employees were ashen, but that more-recently-hired employees ​
 +are in better shape and do not appear to be suffering from 
 +nutritional problems. ​ We were shown photographs of the 
 +various KIC plants at most meetings. ​ The North Korean ​
 +workers all appeared robust and seemed to be in good shape. ​
 + 
 +SJ TECH PUMP SEALS: "MORE THAN JUST MANUAL LABOR" ​
 +--------------------------------------------- ---- 
 + 
 +¶24. (SBU) SJ Tech claims to have been the first South Korean ​
 +company to sign up for the KIC -- in September 2004 -- and in 
 +fact, the building address is 1-1 Kaesong Industrial Village. ​
 + ​According to company president Yoo Chang-geun, SJ Tech was 
 +contemplating a joint venture operation with a U.S. 
 +manufacturer in 2004.  The two companies were originally ​
 +thinking about expanding into China, but decided on KIC 
 +instead. ​ While Yoo was originally uninterested in KIC, he 
 +changed his mind because of the low cost of labor, the common ​
 +language, and the South Korean government'​s investment ​
 +guarantee -- with a ceiling of 2.5 million dollars at the 
 +time. 
 + 
 +¶25. (SBU) Since that initial decision, SJ Tech has invested ​
 +USD 8 million in its KIC plant to date, nearly double the 
 +amount covered by South Korean government guarantees against ​
 +political risk for investment in KIC.  In January 2006, the 
 +South Korean government increased the guarantee to five 
 +billion won (approximately USD 5 million. ​ In comparison, ​
 +non-KIC South Korean companies are covered up to one billion ​
 +won against political risk for investments elsewhere in the 
 +DPRK.  Yoo's company produces a range of industrial products, ​
 +but its KIC plant produces rubber rings used in hydraulic ​
 +seals. ​ Yoo explained that all inputs for KIC operations are 
 +sent from South Korea, and that final assembly of the 
 +hydraulic seals takes place in South Korea. ​
 + 
 +¶26. (SBU) SJ Tech's KIC operations require a degree of 
 +technical expertise. ​ Therefore, the company asked DPRK 
 +authorities to recruit employees with technical backgrounds ​
 +or training. ​ Despite the fact that nearly half of the new 
 +employees showed up with a technical degree, SJ Tech 
 +reportedly had to train them for nearly one year before they 
 +could begin full-scale production. ​ In comparison, Yoo told 
 +us that SJ Tech's South Korean workers require only a 
 +five-month session to receive equivalent training. ​ While 
 +most anecdotal accounts of KIC operations include the 
 +assertion that the South Korean firms only use low-tech, ​
 +outdated, or worn-out equipment in Kaesong, during our visit 
 +Yoo showed a flashy PowerPoint presentation on SJ Tech's KIC 
 +operations. ​ The equipment featured in the presentation ​
 +appeared to be modern, functioning and well-maintained. ​
 + 
 +¶27. (SBU) According to SJ Tech's projections,​ the KIC factory ​
 +will reach the break-even point sometime in 2007.  According ​
 +to Yoo, only five percent of SJ Tech's overall sales come 
 +from its KIC operations, and the seals produced there are 
 +sold only in the domestic South Korean market. ​ SJ Tech'​s ​
 +DPRK labor force has 143 workers, with five South Korean ​
 +managers -- down from the 20 they started with in May 2005. 
 +While he does not have plans to expand his KIC operations, ​
 +Yoo told us that he is happy with his decision to invest ​
 +there. ​ Among the executives we met, Yoo was the most 
 +tight-lipped about KIC salaries and benefits. ​ He comes 
 +across as a savvy businessman who is concerned only about the 
 +bottom line. 
 + 
 +SONOKO CUISINEWARE:​ "​WORKERS LOVE THE BENEFITS" ​
 +--------------------------------------------- -- 
 + 
 +¶28. (SBU) Kim Suck-chul, owner of SoNoKo Cuisineware, ​
 +formerly known as LivingArt, is a gritty businessman with 
 +three decades of experience in the kitchenware business. ​
 +SoNoKo (derived from "South and North Korea"​) is the 
 +restructured version of LivingArt, which was dissolved when 
 +Kim's partner failed to make promised investments. ​ According ​
 +to Kim, this unnamed partner asked him to participate in the 
 +KIC venture because of his extensive experience. ​ Kim claimed ​
 +to have invested USD 3.5 million of his own money and said 
 +that he had taken a USD 2.3 million loan from the 
 +Inter-Korean Cooperation Fund.  Kim did not elaborate on the 
 +unnamed partner'​s contributions. ​
 + 
 +¶29. (SBU) The LivingArt company was the first to bring 
 +KIC-produced goods to South Korea for sale.  In fact, its 
 +first run of KIC-made kitchenware --  simple pots and pans -- 
 +was an instant sentimental hit in South Korea, selling out as 
 +part of a flashy promotional event at the prestigious Lotte 
 +Department Store on the first day.  The company'​s 2005 sales 
 +totaled USD 2 million, all in South Korean sales. ​ Since 
 +then, the KIC plant had to suspend operations for an extended ​
 +period in 2005, and is currently operating at reduced ​
 +capacity. ​ While Kim conceded the going remains rough, he 
 +claimed that he is starting a second production line at his 
 +plant. ​ SoNoKo'​s products are currently sold in Mexico ​
 +because of his "​long-standing contacts and experience there," ​
 +but Kim spoke longingly of his target market -- Europe. ​ Kim 
 +claimed that there would be no problems with "rules of 
 +origin"​ or "made in Kaesong"​ labels in the European markets. ​
 + 
 +¶30. (C) Kim explained to us that, because his was the first 
 +company to actually talk with DPRK officials about operating ​
 +in the KIC, he had a difficult time, and he complained that 
 +he had received little support from the South Korean ​
 +government. ​ Kim went on to tell us that because of these 
 +problems, he suffered delays in the start of production at 
 +his KIC plant resulting in his failure to produce samples for 
 +trade shows in early 2005, denying him any significant ​
 +international sales that year. 
 + 
 +¶31. (SBU) Kim explained that he would soon be traveling ​
 +abroad to display his KIC-made kitchenware at this year'​s ​
 +trade shows. ​ He claimed that if he could get "USD 30-45 
 +million worth of orders,"​ at these trade shows, he could 
 +operate at full capacity and produce nearly 200,000 sets of 
 +kitchenware per year.  That, he told us, would allow him to 
 +turn the company around and make a profit. ​
 + 
 +¶32. (SBU) SoNoKo'​s operations are limited to its KIC factory, ​
 +with 380 DPRK workers and seven South Korean managers. ​ The 
 +ratio was originally 270 to 13, but Kim explained that 
 +increased productivity from the DPRK workers permitted a 
 +reduction in the number of more expensive South Korean ​
 +employees. ​ According to Kim, when the DPRK workers first 
 +started, their productivity level was about 20 percent of 
 +South Koreans in the 1970's and 1980'​s,​ when a viable South 
 +Korean kitchenware industry last existed. ​ Kim estimated that 
 +his workers at KIC are now up to about 60 percent of the ROK 
 +productivity level. ​
 + 
 +¶33. (SBU) SoNoKo'​s managers also deal directly with their 
 +DPRK employees, and Kim told us that requests to work 
 +overtime are handled painlessly. ​ According to Kim, overtime ​
 +is booked at time-and-a-half,​ with settlements made along 
 +with the regular monthly wage payments. ​ Like the other 
 +companies, SoNoKo'​s main form of compensation given directly ​
 +to the employee -- usually for overtime work -- seems to be 
 +providing extra food or other material reward. ​
 + 
 +¶34. (C) Kim, like the other executives we interviewed,​ told 
 +us that he has no idea how much of the cash monthly wage paid 
 +to the DPRK authorities is actually taken home by his 
 +workers. ​ Unlike the others, Kim speculated that it could be 
 +possible that the workers receive no pay at all out of the 
 +monthly payments. ​ But, he added, even if the workers are 
 +getting no pay at all, they are probably content "just to 
 +receive food, clothing, and a comfortable working ​
 +environment,​ in addition to housing provided by the DPRK." ​
 + 
 +¶35. (SBU) Like Romanson'​s director Jang, Kim believes that 
 +the food situation has improved in the DPRK.  He recalled ​
 +that when the plant first opened, his North Korean workers ​
 +were adding barley to their rice at lunch to make the meal go 
 +further. ​ Now, they bring only rice in their boxed lunches, ​
 +indicating that they are somehow getting more food -- either ​
 +through the Public Distribution System or through market ​
 +purchases. ​
 + 
 +COMMENT ​
 +------- ​
 + 
 +¶36. (U) Although admittedly a second-hand look, our 
 +interviews revealed that KIC profitability neither lives up 
 +to the very rosy view of some South Korean champions of 
 +greater inter-Korean cooperation,​ nor falls within the 
 +dismissive "​wasted investment"​ view of some Seoul-based ​
 +critics of North-South engagement. ​ Although there are signs 
 +that some KIC investment decisions are driven by 
 +sentimentality or a desire to accelerate reunification,​ we 
 +also gained the impression that the majority of the 
 +businessmen directly involved in KIC work are making credible ​
 +business decisions, motivated primarily by hoped-for profits. ​
 + If reports of increasing levels of productivity are 
 +accurate, it is possible that the KIC's North Korean labor 
 +force could provide South Korean companies a lucrative option ​
 +relative to outsourcing from China, fairly soon.  In short, ​
 +however, it remains to be seen whether the KIC can be 
 +declared a business success. ​
 + 
 +¶37. (C) There are signs that some North Korean citizens are 
 +being exposed to market principles in the KIC to some degree ​
 +or another, and that a limited number of workers are learning ​
 +advanced work skills. ​ As they receive decent treatment and 
 +tangible fringe beniefits from their South Korean employers, ​
 +at least those North Koreans working in the KIC may be 
 +starting to understand the economic value of their work. 
 +VERSHBOW
 +</​code>​