Contract manufacturing work once done by ordinary North Koreans in their homes is shifting to prisons and state-run factories as Chinese businesses reduce orders due to quality problems and fraud.
Work allotted to household teams has fallen to less than half of pre-pandemic levels, according to multiple Daily NK sources recently. The decline follows a series of problems including demands for higher unit prices, shoddy workmanship, delivery delays and scams by North Korean trading companies.
Chinese businesses initially increased orders in the second half of last year, but trust has eroded as North Korean partners failed to meet delivery dates and secretly sold finished goods to other buyers.
Contract work moves to prisons and factories
A source familiar with the trade in North Pyongan province said North Korea currently manufactures knitted dolls and hats, bags, accessories, blankets, cushions, loofahs and decorative flowers on order from China. Unit prices remain below one Chinese yuan ($0.14), making it impossible for workers to earn more than three yuan ($0.42) daily.
“Not only has work allotted to household work teams fallen, but there’s almost nothing left to pay wages when the costs of logistics, customs and other expenses are subtracted,” the source said. “This being the case, household work teams comprising ordinary people are gradually disappearing.”
Contract manufacturing work now flows primarily to prison facilities such as Paekto Reeducation Camp in Sinuiju, clothing factories producing exports and other workplaces that don’t pay separate wages beyond the unit price.
People involved in the trade view this as a structural shift between North Korea and China. Work allocation to household teams will naturally vanish since they aren’t cost-efficient compared to prison facilities with free labor and factories paying monthly wages regardless of hours worked.
“It seems that the sharing of work with household work teams after importing raw materials from China, as was done in the past, will disappear,” the source said. “Transactions focused on reeducation camps, which use free labor, and factories that don’t pay separate daily wages will likely grow.”
Quality problems in prison-made products have become severe enough that Chinese managers now travel to North Korea to inspect finished items personally.
“In the past, Chinese managers would visit to simply explain the products and carry out model training at the factories, but now, Chinese managers come to inspect items to reduce quality disputes that arise after the North Korean side delivers the finished goods,” another source in North Pyongan province said.
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