Ethnic Koreans in China swap burdensome North for profitable South

BEIJING, July 4 Wed Jul 3, 2013 5:06pm EDT

BEIJING, July 4 (Reuters) - When a delegation of North Korean officials visited the head of the Korean business association in China last year asking him to drum up investment in their impoverished country, Jin Rong-guo turned them away.

The 200-strong ethnic Korean business group has its eyes on a more inviting prize - South Korea.

"North Korea has lost credibility for investment. Korean Chinese businessmen always question if they can recoup their money," said Jin, 51, whose office is in Beijing's Korea Town, where South Korean franchise cafes and restaurants line the streets.

Some two million ethnic Koreans live in China.

Many migrated to avoid Japanese imperial rule of the Korean peninsula from 1910-1945.

Others have crossed from North Korea in recent decades, seeking a better life as China's economy boomed while the North's stagnated and the country became more isolated because of its banned nuclear programme.

North Korea had long been the main foreign investment and trade option for ethnic Koreans in China. But when China and South Korea established diplomatic ties in 1992, that gave them an alternative.

Annual trade between North Korea and China is $6 billion. By contrast, South Korean and Chinese trade was worth $215 billion last year, according to South Korean data.

"For the Joseonjok (ethnic Koreans in China), the North is a burden," said Lee Jang-sub, an expert on the Korean diaspora at South Korea's Chonnam National University.

NEW TIES SPAN BUSINESS, CULTURE AND STUDY

Jin's story shows how things have changed.

He worked for five years at an ethnic Korean-run company that sent Chinese corn, animal feed and sewing machines to North Korea in exchange for nylon up until 1990. When the Chinese government started demanding payment in hard currency, many of those companies, including Jin's, went bankrupt.

Jin now does advertising for South Korean companies in China and organises cultural events for performers from Seoul.

On top of that, he has two sons studying at South Korean universities.

"Conglomerates like Samsung and LG treat us well. One of my friends recently got moved to a senior managing level at one of those companies," said Jin, referring to two of the biggest corporate names in South Korea, Samsung Electronics Co Ltd and LG Electronics.

Ethnic Koreans are also investing in the South.

While there is no data, ethnic Korean entrepreneurs are involved in a $300 million property project in Jeju, a tropical island popular with Chinese tourists. Ethnic Koreans also do business in fashion, food and household items with their counterparts in the South.

Some 50 percent of all Chinese small businesses in South Korea are run by ethnic Koreans, the Korea Trade and Investment Promotion Agency said.

Meanwhile, South Korean companies have poured more than $40 billion into China.

Those growing ties were on display last week during a visit to China by South Korean President Park Geun-hye, who brought along a big delegation including executives from Samsung and Hyundai Motor Co.

When the North Korean officials came to his office, Jin didn't tell them his association members were not interested. Instead he pointed them to a Chinese partner who might have been willing to invest in a wig-making venture.

In the 1990s, ethnic Korean businessmen often met with North Korean officials. Now, they rarely bother.

Jin cited a number of reasons why his colleagues found it hard to do business with the North. These included having to do deals in cash and the country's unpredictable politics.

"In big cities, we tell each other to avoid doing too much business (with the North)," said Jin, whose father was born in what is now South Korea and migrated to China to avoid forced labour by Japanese colonialists.

NORTH RELIES ON CHINESE COMPANIES FOR TRADE

It was once common for members of Jin's association to broker sales of North Korean jeans or oriental medicines to the South. But when Seoul severed most economic ties in 2008 after a North Korean soldier shot dead a South Korean at a tourist resort in the North, that trade largely dried up.

The North also shut a factory park it ran with the South in April at the height of recent tensions on the peninsula.

Those moves, combined with the wariness of the Korean diaspora, has left the North almost totally dependent on Chinese firms for trade, who typically buy the country's gold, coal and mineral resources, and on small Chinese traders along the 1,400 km (875 mile) land border.

That has sparked some concern in South Korea and among ethnic Koreans in China that the North is becoming so dependent on China that if North-South relations ever improved, Chinese firms would have the market sown up.

It's not just business ties that have suffered between ethnic Koreans and North Korea. Few of them want to live or work in North Korea either.

In South Korea, however, more than 350,000 ethnic Koreans from China are there as guest workers, according to South Korea's statistics office. They are employed as babysitters, cooks and construction workers and account for nearly half the entire foreign workforce in South Korea.

Despite the collapse of economic incentives to deal with the North, emotional ties remain strong, especially for the older generation.

"If a neighbour has a relative from North Korea visiting, we give them pollack (a Korean staple fish) ... or a bicycle or bedding," said Ryu Pil-lan, a 55-year-old Korean woman who moved to Beijing in the late 1980s from Yanbian, an ethnic Korean region near China's border with the North. (Editing by David Chance and Dean Yates)

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