NK ok? Chinese food equipment firm preparing to sell to North Korea once sanctions lifted

The company has observed changes in North Korean’s consumption demands different from more than eight years ago.

The company, which makes food processing machines for making staples such as noodles, has observed that the North Koreans are demanding western products, such as macaroni and spaghetti, during an invitation by China Council for the Promotion of International Trade Tianjin Sub-Council to Pyongyang International Trade Fair held in September last year.

Deputy General Manager Wang Ge told FoodNavigator-Asia​ that the company hoped that the sanctions could be lifted “as soon as possible”.​  

“As compared to year 2011 and earlier, when the demand is for instant noodles and cold noodles ​(Naengmyeon), there is a growing interest for spaghetti and macaroni. This is possibly due to exposure to media,”​ Wang said.

The company first started selling food processing machines to North Korea in 2005.

The sales were conducted by the state, since they are the ones who had the financial capability and access to agricultural products. In other words, grain processing is a state-controlled industry in North Korea.

As of 2011, it sold a total of five medium sized machines to the country. The cost of a medium grade machine sold to the country cost about US$200k to US$400k.

Trading stopped when the United Nations exercised sanctions against North Korea.

The company has yet to resume trade with North Korea due to the existing sanctions.

However, it is hopeful of opportunities that arise once sanctions are lifted.

“North Korea is an alpine region. There is a lack of coarse grains that can be produced locally. Food processing techniques can help them resolve the product of lack of food,” ​Wang said.

“We are making preparations right now, such as inventing machines suitable for the North Korean market. For instance, we need to come out with machines that can make spaghetti and macaroni using North Korea’s local agricultural products, such as corn and broom corn…In the future, there might even be possibilities of building a factory in North Korea.”​

Since North Korea produces different agricultural products from most of the other countries, the food processing machines need to be redeveloped to adopt to the local context.

Thus, food processing machines sold to North Korea could be more expensive than the average price of US$100k sold to other countries, Wang added.

 “We are confident and the focus now is to redevelop new machines. Once the sanctions are lifted, we will enter North Korea.”​

As of 2017, over 60% of the firm’s businesses is in China, while the remaining is in South East Asia, South Asia, and South Korea etc.

Lotte, a South Korean conglomerate, which also has food businesses, was reported to have set up taskforce to explore opportunities in North Korea, according to Reuters​.

Industrial park to reopen? ​

Recently, the potential resumption of North Korea’s Kaesong industrial park, which was built by South Korea’s Hyundai, has ignited interests from Chinese firms.

North Korean leader Kim Jong-un said in his New Year address on January 1 that he was willing to reopen the park.

He added that he might take a “new path”​ if Washington maintains sanctions amidst his country’s push for economic development.

The park was previously shut down due to political tensions with South Korea.

The 123 firms operating in the park was said to have lost a combined $1.3bn as a result, The New York Times ​reported.  

Chinese government’s support for North Korea​

In June last year, Chinese president Xi Jinping told Kim Jong-un that Beijing would support North Korea’s economic development efforts when the latter visited China.

Pak Thae-song, vice-chairman for science and education in North Korea’s Workers’ Party, also said last year that he wished to “strengthen the cooperation between the two countries (China and North Korea) in agriculture”, ​the South China Morning Post​ reported.