February 29, 2024
Analysis

How North Korean trading companies make money

Trade organizations work together by swapping their state-approved quota for surplus materials

SEOUL – One of the most important peculiarities of the North Korean economy is the existence of numerous Foreign Currency Earning Companies (FCEC) that, usually with flowery Chinese-style names, sell resources to China, and import consumption goods to North Korea.

Most communist states historically followed the Soviet model that made foreign trade the nearly exclusive preserve of a particular branch of the central government – typically this branch was known as the ‘Ministry of Foreign Trade’. All exportable items had to be submitted to this ministry which in turn negotiated and made deals with overseas partners. This highly centralized system of foreign trade was established in the Soviet Union under Lenin and was ideologically ‘blessed’ by the founder of world communism himself.

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