Feh! So What? Hyundai Invests in North Korea. That’s Nothing, You Say. But Is Club Med Soon to Follow?

March 16th, 2010 | Author: ADM

Here’s one of the pristine beaches at North Korea’s Mount Kumgang (Diamond Mountain)/Nine Dragons resort, located on the peninsula’s east coast. It’s been a popular tourist destination for South Koreans visiting the DPRK since 1998.

In 2002 the area was designated a special Tourist Region by the North Korean authorities. Kumgangsan was invested in heavily by the Hyundai (Hyundai Asan) corporation and since the late ‘90s had been one of the primary means for Bam Bam and his cronies to take in much-needed hard currency for the Hermit Kingdom’s ailing economy.

Interesting to note is that neither North nor South Korean won is legal tender in any of the area’s shops or facilities; only the US dollar. Another curious factoid is that North Koreans do not serve South Koreans at the resort: employees are for the most part Chinese citizens of Korean ethnicity from the PRC’s Jilin province.

It gets even more bizarre, though…

Before July 11, 2008, this system worked marvelously for both Koreas. South Koreans traveled on a beeline north with astonishment on air-conditioned express coaches through the heavily-fortified DMZ. The Nine Dragons zone was completely walled off from the rest of the area to ensure that Bam Bam’s evil reign could last at least several more months and years as wealthy Southerners eager to get a glimpse of life in North Korea could willingly spend their greenbacks at the facility on all manner of stuff verboten to DPRK’s general population.

On that date, however, a female South Korean tourist was suddenly shot twice by DPRK sentries after apparently ambling into a restricted military area. Read a short summary about the incident here.

Before this sudden jolt in relations between the two Koreas, in particular due to the post-2008 cessation of the “Sunshine Policy” following the election of Lee Myung-bak’s conservatives in Seoul, the Hyundai chaebol was a true pioneer in the reduction of tensions between warring North and South through its pan-Korean peaceful business initiatives.

So it raises an interesting question: what other joint investment projects might the rival Koreas initiate as another exploratory gesture towards rapprochement?

How about the construction of a Club Med in North Korea? Sounds crazy, you say? Well it’s not as far-fetched as it may sound. Read on…

Club Med’s philosophy revolves around luxuriating in pristine natural surroundings away from the hustle and bustle of urban living. Its guests (known internally as Gentils Membres, or Gracious Members) are swathed and pampered in five-star conditions by staff (Gentils Ordres, or Gracious Assistants) whose express purpose it is to serve the individual whims of the discerning traveling connoisseur. Club Med is all-inclusive. It pulls out all the stops for its customers.

Can things get any more isolated than Bam Bam’s Paradise On Earth on the Kim Farm?

Think about the possible win-wins in this scenario:

For North Korea: For South Korea:

hard currency through brisk tourism: a cash-strapped DPRK can follow Fidel Castro’s Cuban “enclave tourism” model which would bring in much-needed US dollars and euros for desperately-needed industrial and other infrastructural improvements.	peaceful crossborder overtures through “win-win” business initiatives: anything which reduces tensions between the two Koreas would be deemed a positive confidence-building measure by Seoul and the US. Nipping closely at Hyundai’s heels, perhaps other Korean chaebols like LG or Samsung might consider investing in DRPK’s tourism infrastructure?
alleviation of the austerity conditions and feeding North Korea’s starving millions: Bam Bam (or whoever inherits the leadership position following his abdication or demise) may be persuaded by the Western Powers and Japan to spend some of his newly-earned cash on feeding his subjects.	“trade, not aid:” profit-generating activities for South Korean corporations would reduce the need for ROK’s government to shell out “no-strings attached” aid to North Korea that produces zero political dividends for ROK’s government; aid which is embezzled by the dictator Kim and his cronies, anyways.
Kim’s survival, not his aggressive elimination: successful crossborder tourism might buy Kim several more years at the throne. It might also considerably reduce tensions along the entire DMZ.	reduction of conflict and instability through sustained economic development: mimicking the successful Chinese and Japanese models, the best way to continually reduce tensions would be for the two Koreas to keep doing business with each other.
reduction of the nuclear threat: as North Korea would become more flush with hard currency, its obstinate need to continually focus on the doomsday option – its nuclear card – at the expense of all other alternative political solutions would be drastically reduced. Bam Bam wouldn’t feel the nagging need to “press the button” because he would have everything he craves: maintenance of his “Glorious System” and all the money he requires to back it all up.	renewed focus on human rights: the West – and in particular South Korea – might also succeed in influencing North Korea’s atrocious human rights record once the latter would cease feeling threatened from all sides: economic, military, political, international, et cetera. Who knows? The “Sunshine Policy” might even be restored as a result of all these commercial activities?
coaxing gradual reform from North Korea’s political fiasco: indeed, we’re not talking about a wholesale removal of the regime (although even most North Koreans would favor the immediate removal of Kim Jong-il). But business success might influence changes up in Pyongyang politically.	inextricably binding the two Korea’s through economics: slowly, without even realizing it, the two Koreas might suddenly find themselves joined at the financial hip. Confederation of some kind might be the next logical step in the political process as the situation along the 38th parallel continues to evolve.

Right now the challenge for the peninsula remains finding the right business solutions for North Korea given its particular political challenges and its present geographical isolation. The vast majority of businesses will most definitely be rejected out-of-hand by Bam Bam and his minions, given the threat they pose to the intractable stability of his autocracy. But a Club Med, however, might be just what the doctor ordered. It fulfills all the criteria for a “North Korean” business (even typing that is so oxymoronic) because:

Club Med’s overall structure and setup would dovetail almost perfectly with what North Korea would demand as a bare minimum from Western tourism.
Pyongyang could gobble all the hard currency it could handle. A local airstrip could even be built to further isolate this proposed resort from the rest of the local population.
the resort’s desolation would prevent contact with the natives and the locals wouldn’t be “corrupted” by DPRK’s Western tourism.
North Korea could show its very best face to the world. Tourists could return to Seoul or other places with positive impressions of their time in the country.
Club Med could gain the exclusivities it normally desires from its global properties and resorts. Moreover, it could enjoy a positive spin-off benefit of running an international business which somehow contributes to inter-Korean reconciliation.

Can you see this happening or am I completely off-base here?

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North Korean SEZs | A New Way for DPRK (aka “Paradise On Earth”) to Go 100% Legit. Could They Be Kim Il-sung’s 98th Birthday Present? Ask Yourself… | Adam Daniel Mezei:

April 14, 2010 at 10:25

[...] We’ve already spoken at this blog about Hyundai Asun’s Kumgang (Diamond Mountain) tourist facility just across the border from the 38th parallel. To this here would-be blogger’s mind, Kumgang would make for an excellent SEZ-type experimentation area should the South Koreans persist in upholding their almost 2-year ban forbidding ROK citizens from visiting the area when a ROK tourist was shot after “walking into [the] no man’s land” surrounding the tourist enclave. There are millions of dollars at stake in the offing, physical plant and facilities which might be put to better use in delivering more predictable hard currency flows to the Kim Farm. Eminently more so than being at the capricious mercy of South Korean officialdom. A good suggestion making the rounds of late is to flood the entire area with Yanbian Korean-Chinese citizens while establishing the sorts of factories which presently exist in China’s Guangdong and Zheijiang provinces. Get things rolling over there, then gradually introduce the kinds of attractions and mom-and-pop shops (egs. cell phone rental and sales kiosks, low-impact consumer purchases, clothing shops, other mixed retail) which one might easily find in a town like Wenzhou. [...]