Silent Partners: Chinese Joint Ventures in North Korea - US-Korea ...

Silent Partners: Chinese Joint Ventures in North Korea Transcript 22
customers. So the report says these Chinese companies often operate in what they call a state of
blindness. They also point out that they are out of their depth and the other quote that I took that
I thought was great was, “A passive position and an unfavorable situation.”
One person that I interviewed said that they had recently been to North Korea and, having a
meeting with someone who spoke to the Chinese Foreign Minsiter, they were told that the
Chinese Ambassador in North Korea had been telling perspective Chinese investors in North
Korea to go elsewhere, that this was just not a good place to invest. So you’ve got the
Ambassador in North Korea trying to discourage Chinese investors, we don’t know why. But I
can guess and speculate, and I do in the report quite comfortably, it might be the terrible business
environment, it might be the stigma, and it might just be the complicated diplomatic
environment. Of course, several investors had said, “You know the legal system in North Korea
it doesn’t really work. It’s not a rule of law place.” Basically, if you have a problem you can’t go
to the courts, there’s nowhere to go. So where do you go You run to the embassy is the answer.
So I imagine the work load on the embassy staff adjudicating a lot of these financial problems is
quite common. And actually that is not unusual; it is a similar case in other states where you
have an underdeveloped legal system where basically the government acts as your gaurntor.
Trying to deduce what is the intent. This is that number of Chinese mines; again this is all in the
report. We were trying to figure out why there was this increase of Chinese investment in the
mining sector, in particular 2005-2006, and was it sustained and the answer was, clearly not. But,
what was driving it and asking one company, the answer was purely price. Price of commodities
was going up. Coal, copper prices have gone through the roof and that makes these Chinese
investments more attractive. Now, how do you come up with a grand figure The blue line is
simply an index of metals, gives you a sense of what global supply was doing, it captures iron
and steel, scrap metal, and copper and is used by financial traders as a forward looking indicator
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