Another Kaesong firm folds

An unidentified small manufacturer for watch and mobile phones cases on Wednesday submitted an application for dissolution to the committee handling affairs at the joint park, according to officials from Seoul’s unification ministry.

It marked the second case since June 2009 that South Korean firms operating at the Kaesong Complex have closed their businesses. It also marked the first time since the operation of the park had been halted briefly last year.

The company, which had employed about 100 North Korean workers, has been suffering from business setbacks since 2012 as its annual sales fell to US$300,000 from its peak of some $700,000. [Yonhap]

The other firm referenced is Skinnet, an apparel manufacturer. Another company, LivingArt, the maker of the much-ballyhooed “peace pots,” went bankrupt in 2006. Its head was subsequently indicted for embezzlement.

Overall, I don’t see much evidence that Kaesong is growing, attracting significant foreign investment, or declining. The reports about the health of its rebound from the 2012 shutdown have conflicted, but I’m always suspicious that the South Korean Unification Ministry has spun reports from Kaesong to make it look more successful than it is, in order to entice more third-country hostages to the complex. My best guess is that it has bumped against its ceiling, but I’ve been surprised by its resiliency. I guess subsidies will do that.