China works on importing North Korean workers

Jeff Horwich Jul 5, 2012

China works on importing North Korean workers

Jeff Horwich Jul 5, 2012

Jeff Horwich: The U.S. jobs numbers out later this morning, but first, the global perspective on business and economics — specifically, jobs for North Koreans.

North Korea does not export much. But we’re hearing this week of a plan for the “hermit kingdom” to export one resource it does have in abundance: people. North Korea has begun exporting workers to China.

Shaun Rein is with me now from Shanghai. He’s managing director of the China Market Research Group. Hi Shaun.

Shaun Rein: It’s great to be here, thank you.

Horwich: What kind of jobs will these North Koreans be doing in China?

Rein: Well China has been facing a labor crunch over the last several years because younger Chinese workers are no longer to slave away in factories for low-cost wages. So what’s happening is the Chinese government is importing tens of thousands of North Korean workers. So really working low-wage manufacturing jobs in factories in northeast China.

Horwich: Any idea what they’re going to be making? Is this a particular industry where this sort of labor exchange arrangement is being inaugurated?

Rein: They’re going to be working in several different types of factories. Part of it will be seamstresses, low-end textiles, as well as some of the heavy industry manufacturing in heavy equipment, which is in the northeast China region.

Horwich: What’s in this for North Korea?

Rein: I think for North Korea it’s important because they need to get hard currency. Right now, the North Korean government is fairly unstable, it’s basically bankrupt. And they need to get Korean workers to be able to get more money into the state coffers, because the workers are only going to get a small percentage of any compensation they earn, and the vast majority of it is going to go to the government.

Horwich: One thing that China — biggest country on earth — should not be short of, you would think, is people. So what’s in this for China?

Rein: It’s sort of counterintuitive for China, but because of the one-child policy, when workers retire, there are just fewer and fewer people that are available to work in factories. The second thing is because of Leon Panetta’s pivot towards Asia for the U.S. defense, China’s very worried about instability in North Korea and reunification between the North and South, because that would put an American ally right on China’s borders. So China’s going to do whatever it can to prop up a North Korean regime and really create a buffer zone against the United States.

Horwich: Shaun Rein with the China Market Research Group, also the author of “The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World.” Thanks very much.

Rein: Great to be here.

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