Source: Global Times Published: 2017-8-27
China`s recent ban on new investment from North Korean companies and individuals to China will hit the restaurant sector the most, even though investment from North Korea has already been on a persistent decline in recent years and has reached historic lows.
The Chinese commerce ministry over the weekend announced a ban on the formation of new joint ventures or wholly-owned foreign companies that involve North Korean entities and individuals.
In a statement on its website, the ministry said that the expansion of existing companies with North Korean involvement is also banned.
The move is in line with a resolution passed by the UN Security Council this month to impose sanctions on North Korea in response to its launches of ballistic missiles.
"The sanctions will mainly affect North Korea`s import and export trading companies in trades such as medicines and materials," Liu Zhiqin, a senior fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Sunday.
Most North Korean investment in China is in the restaurant business. Some media reports estimate there are more than 100 restaurants in China owned at least in part by the North Korean government.
The South Korean government estimates that Pyongyang makes around $10 million every year from restaurants overseas, according to the report of Reuters.
However, the North Korean restaurant sector has been in decline for some years.
Qibaoshan, a joint venture between China and North Korean companies that operates many restaurants in Northeast China`s Liaoning Province and other areas, is under pressure after its Chinese owner was investigated for violating sanctions on North Korea.
As part of the probe, Dandong Hongxiang Industrial Development Co`s stake in Qibaoshan has been frozen, according to public records.
"The whole restaurant business has been getting tougher over the years, so there`s no chance for these North Korean restaurants to expand," Lü Chao, an expert on Korean studies at the Liaoning Academy of Social Sciences, told the Global Times on Sunday.
Some North Korean companies also invested in software, arts projects and even real estate, primarily through joint ventures with Chinese partners, but the volume is of no substance, according to media reports and public records.
North Korean investment in China dropped to a historic low of a mere $70,000 in 2015, according to a report from the Korean International Trade Association, which was based on the latest data available.
Such a low point came after steep falls in recent years from a peak at $11.22 million in 2010 to $2.68 million in 2013 and to $290,000 in 2014, according to the report published in November 2016.
Liu Zhiqin is a senior fellow with the Chongyang Institute for Financial Studies at the Renmin University of China.