CHINA: North Korean Restaurants in China Fail To Pay Rent

North Korean hostesses wait for customers at the entrance to a North Korean restaurant in the border city of Dandong, northeastern China's Liaoning province

North Korean restaurants operating in China just outside the isolated U.N.-sanctioned state are finding it hard to pay their rent due to falling numbers of customers, but in many cases have been allowed to remain open because they provide valuable business contacts for Chinese partners seeking trade across the border, sources say.

In China’s Dandong city, just across the Yalu river from North Korea, North Korean restaurants have opened by forming joint ventures with Chinese businessmen or with the landlord of the restaurant’s building, one source in Dandong told RFA’s Korean Service.

“This places almost no burden on the restaurant itself to pay its rent,” RFA’s source said, speaking on condition of anonymity.

“These restaurants provide their Chinese partners with valuable trading connections inside North Korea, and thus receive preferential treatment themselves,” the source said.

With rent often forgiven by Chinese landlords, low wages paid to restaurant employees brought in from North Korea help further to reduce operating costs.

“And even then, these payments are often withheld until the employee returns to North Korea,” the source said.

Unable to pay

The largest North Korean restaurant in Dandong, the Pyongyang Koryogwan, owes about one million yuan (about U.S. $154,000) each year in rent, but for the last two years has been unable to pay because of a decline in its business, a second source in Dandong said.

“However, they have never been forced out of their location, and they still remain open,” the source said.

The owner of the restaurant’s building is the second-largest local trader in goods with North Korea, which was sanctioned on March 2 by the U.N. Security Council after defying international warnings by launching a long-range rocket and testing a nuclear device.

Dandong’s largest cross-border trading firm works together with the city’s second-largest North Korean restaurant, the Ryukyong, RFA’s source said.

“This is well-known to residents of Dandong,” the source added.

Foreign currency source

The 130 known North Korean restaurants that operate abroad serve as a source of foreign currency for the cash-strapped North Korean government, generating some $10 million annually, according to South Korean estimates.

A growing body of sanctions imposed on North Korea by the United Nations Security Council aimed at curbing the funds for Pyongyang's nuclear and missile programs reportedly have made it harder for the eateries to send funds back to Kim Jong Un's government.

U.N. human rights officials have also begun scrutinizing labor abuses committed by North Korea as it dispatches its citizens around the world to toil to earn hard currency for the regime.

Early in April, a North Korean restaurant in the eastern Chinese port city of Ningbo made international headlines when 13 staff members escaped to South Korea to seek asylum—a mass defection that Pyongyang condemned as a "hideous" abduction by Seoul's agents.