Korea’s jointly run factories deal with peninsula’s strife

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There is a North Korean factory with no portraits of the country's late leaders on the walls, no North Korean flags, no hand-painted posters screaming party slogans. Everything from the tissues to the toilets comes from South Korea.

Bent over bolts of wool and rayon, North Koreans work quietly to the hum of sewing machines making shirts, suits and overcoats that will go out with vaguely Italian names. Virtually the only hint of North Korea in the factory is a calendar on the wall that proclaims, "The Great Comrades Kim Il Sung and Kim Jong Il Will Always Be With Us."

Today, this factory and others in the Kaesong industrial complex, managed by South Koreans and staffed by North Korean workers, face the prospect of closure. Since Wednesday, North Korea has refused to let in South Korean managers and trucks bearing food, materials and supplies.

It's seen as punishment for Seoul's decision to forge ahead with joint military drills with the United States that continue through April and have incensed Pyongyang, which sees the exercises as a rehearsal for an invasion. Restricting travel through the armed border is also a way to remind the South Koreans that a state of war remains intact on the Korean Peninsula 60 years the fighting ended with a truce. Pyongyang also is angry with Seoul for backing tightened U.N. sanctions on North Korea for conducting a banned nuclear test in February.

North Korea has been raising its war rhetoric for weeks now, but so far, Kaesong is the main casualty. More than 500 South Koreans remained there Saturday and are free to stay, but their companies are beginning to run out of supplies. They hope this disruption ends up being similar lasts no longer than one in 2009 that lasted about a week.

For nearly a decade, the sprawling complex on the North Korean side of the Demilitarized Zone has been held up as a crucible of reconciliation, a test case for how reunification of the two Koreas might look. But as relations deteriorated in recent years, it became a prickly subject for South Korea.

The last media visits to factories from the South Korean side are believed to have been in 2007. In September, The Associated Press visited from the North Korean side, accompanied by officials from the North-South management committee that administers the special economic zone.

Kaesong seems like a slice of South Korea transplanted in North Korea, especially when driving in from Pyongyang.

From downtown Kaesong, the road to the factory park on the outskirts of town runs past rice paddies and simple cottages with tiled roofs. Oxen trudge along the sides pulling carts and a man cycles by with a dead pig strapped to back of his bicycle. A woman sitting by the side of the road has her head in her hands, a small cooler of drinks for sale next to her.

Enter the military-guarded gate to the vast, sparsely populated factory park and you'll find a Hyundai Oilbank gasoline station, two convenience stores with plastic picnic tables outside and a branch of the South Korea's Woori Bank. There are blue road signs in English and Korean, and lane dividers and bike lanes on the road. None of those things exist in the rest of North Korea.

The complex has stoplights, unlike downtown Kaesong, but not much traffic besides the Hyundai buses that shuttle North Koreans workers to and from work, and the Kia, Hyundai and Ssangyong cars driven by the South Korean managers.

The complex, conceived following the historic 2000 summit between late North Korean leader Kim Jong Il and late South Korean President Kim Dae-jung, broke ground in 2003. The first factory opened in December 2004. The plan was for South Korean firms to build 500 factories as part of a pledge to help develop North Korea's economy, according to Pak Chol Su, vice director of the General Bureau for Central Guidance, which manages Kaesong.

Pak, who is North Korean, noted that a June 2000 agreement signed by both Korean governments calls for improving North Korea's economy "equally, on the principle of mutual assistance."

Today, some 120 South Korean businesses have factories in Kaesong. He said they employ about 51,000 North Koreans, mostly women, making the complex the biggest provider of jobs in Kaesong, the country's third-largest city. Shoes and clothing make up 70 percent of the goods produced; the rest are largely chemical and electrical products, he said.

Hundreds of South Koreans run the factories, some living during the week in Kaesong and others commuting every day across the border. Goods, supplies and food are brought in by truck every morning, and leave in the late afternoon with finished products.

South Korean manager Chun Eun-suk took AP on a tour of GS Bucheon, which produces cables and wires that will make their way into Samsung and LG refrigerators and washing machines assembled in factories in China and Southeast Asia. A North Korean official accompanied the AP, which was denied permission to speak with North Korean workers.

Workers in light blue jackets with the company name stitched on the pocket deftly handled multicolored wires.

"It's very simple work. They can learn this in a day," said manager Hong Ha-sung.

The propaganda on the walls here is about health and safety: "Beware of fires!" ''Wash your hands carefully!" There's a pingpong table with balls emblazoned with the word "peace" – sometimes the competition is fierce.

The interaction between the North and South Koreans is collegial and cordial, but Chun and Hong say socializing is kept to a minimum. The South Koreans dine separately from the North Koreans, eating food brought from the South and stored in their own refrigerator.

The question of how North Korean workers are paid is a thorny one, with many believing that the government takes a large cut of the salaries. Hong said he pays the employees directly.

The average Kaesong worker makes more than $110 a month, said Pak, the North Korean official. Trainees make less, but an "incentive-based" system allows workers to earn as much as $150 a month, he said.

"With overtime, they can earn bonuses," Pak said, speaking to AP in September in a conference room with portraits of Kim Jong Il and North Korean founder Kim Il Sung hanging behind him. Discussion of bonuses and incentives has been associated with a directive from current leader Kim Jong Un, son of Kim Jong Il and grandson of Kim Il Sung.

At clothing maker ShinWon's three gleaming, futuristic buildings, the toilets are South Korean and the sewing machines are Japanese. Even the pantry is stocked with South Korean snacks.

Workers are dressed in blue bonnets and in uniforms with "ShinWon" stitched in English on the spot where they'd normally wear a loyalty pin bearing their leaders' portraits.

At one cutting table, a South Korean manager confers quietly with two North Korean women about a design. The women nod in agreement. A sign taped up on a wall says "Accuracy" in Korean.

ShinWon President Hwang Woo-seung said that although Kaesong's tax regulations and other rules can be complicated, it's worth it to be able to employ North Korean workers.

"First of all, we speak the same language," he said in Kaesong in September. "And secondly, they're very skilled with their hands."

On Saturday, ShinWon said its 15 South Korean managers were staying in Kaesong. The company has enough raw materials to last through early May but will soon run out of gas, fuel and food if the entry ban continues, a spokesman said Saturday.

The complex is about more than money, said Cho Dong-ho, a North Korea expert at Ewha Womans University in Seoul: "It is a string that links the two Koreas."

"If it evaporates, there is officially nothing in terms of economic ties between the countries," he said.

South Korea's new unification minister, Ryoo Kihl-jae, says new President Park Geun-hye is open to dialogue with North Korea.

"We have repeatedly said this, but what we want from the Kaesong industrial complex is stable maintenance and development," he said in Seoul on Friday.

Inside Kaesong, managers and workers avoid talking politics. In Seoul, South Korea is called "hanguk" in Korean; in Kaesong, they simply call the country "Choson," the pre-division name for Korea.

Similarly, the labels on ShinWon's garments read simply: Made in Korea.

"We don't say 'DPRK' or 'North Korea,'" Hwang said. "Southerners won't know if it's made in South Korea or North Korea – but the quality is just as high."

He said he's looking forward to the day when everything made on the Korean Peninsula can bear that same label.

"We're waiting for the day when the country will be reunified," he said. "We're working hard every day."

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