A four-year-old retail company which claims to be headquartered in Japan and has branches in South Korea and the United States recently opened the first ever foreign brand chain outlet in North Korea, pictures obtained by NK News confirm.
A branch of Miniso, a Uniqlo-style Japanese-Chinese low-cost retail brand that sells everything from umbrellas and humidifiers to computer mice and neckties recently opened on Pyongyang’s Ryomyong Street, a showcase development featuring over 3,000 new and refurbished apartments which was completed in April this year.
But the firm’s claims to have stores in the United States and a headquarters in Japan – despite the majority of its factories and distribution network being based in China – could mean its presence breaches tightening unilateral sanctions from Washington and Tokyo against the North.
North Korean state media is yet to report on the store, but sources in Pyongyang told NK News that news of its existence is quickly spreading throughout the city.
“It’s a huge hit with the younger Pyongyang crowd,” one source said, requesting anonymity due to the sensitivity of speaking to media about the issue. “All items are two or three dollars and it’s legit.”
Observers familiar with the North Korean economy told NK News on Tuesday that the branch’s presence was a significant development in light of Pyongyang’s traditionally sparse range of retail options.
“I think the most notable thing is that it appears to be a foreign chain operating a modern, branded store in Pyongyang, there’s nothing else quite like that,” said Andray Abrahamian, an honorary fellow at Macquarie University.
“As far as I know, their products are quite cheaply sold in most markets – cheap enough to be competitive in the DPRK,” he said. “I think the shop will be seen by Pyongyangites as modern and affordable: I’d bet it does quite well.”
Benjamin Katzeff Silberstein, an associate scholar at the Foreign Policy Research Institute, and co-editor of North Korean Economy Watch, described the new store as a “really interesting development both from an economic policy point-of-view, and from a consumer’s perspective.”
“In the first realm, it is a telling sign of how much the North Korean economic landscape really has changed, from a time when the opening of a pizza restaurant was considered a radical breakthrough, to a foreign retail chain opening up shop,” he said.
“It also says something about the changed character of North Korean consumption, from goods like these being sold only on marketplaces sometimes in a semi-clandestine way, to them being offered front and center in a chain store in the capital of the revolution.”
While the firm’s Japanese representatives claimed ignorance about the new Pyongyang branch during Tuesday calls from NK News, a January 2017 press release issued by the company’s Chinese office specifically confirmed the connection.
“On 18 January, 2017, Japanese fast fashion designer brand MINISO took another step forward, signing strategic cooperation agreement with North Korea…” the notification said, describing the deal as having been made with the “North Korea Economic and Trade Department”.
But while Miniso has come under fire both for appearing to be a Chinese company only feigning Japanese ownership for branding purposes, as well as for a low-level quality of advertising copy often associated with Chinese companies, it nevertheless continues to claim it is a Japanese company in media and press releases.
“On the face of it Miniso’s activities in Pyongyang are not a violation of UN Security Council sanctions,” said Tristan Webb, senior analyst at NK Pro.
“The more relevant issue here is unilateral sanctions: Miniso’s business operations in the DPRK bring it within the remit of Japanese and U.S. unilateral sanctions because, according to a press release apparently issued by Miniso, it has company headquarters in Japan, produces at least some of its products there, and also has a U.S. presence.”
Therefore, if Miniso hasn’t obtained permission for its DPRK operations from Japanese authorities, Webb said, then it may well be breaking the law.
“Specifically, since Japan’s Cabinet decision of 7 April 2017 to renew unilateral sanctions which go back at least as far as 2013, Article 48 paragraph 3 of Japan’s Foreign Exchange and Foreign Trade Act prohibits any exports from Japan to the DPRK without METI approval, and Article 25 paragraph 6 prohibits any transactions involving the movement of goods between the DPRK and a third country without METI approval,” he said.
“If Miniso does not have permission from METI to trade with the DPRK like this, then its only defense under Japanese law is if the goods are for humanitarian purposes: the claim could be made, but I wonder if METI would be persuaded by it.”
The company could also experience problems with U.S. authorities, he said.
“Since starting its DPRK operations, Miniso has become at risk of designation by the U.S. Treasury Department: for example, Executive Order 13687 (from 2015) allows the Treasury Secretary to designate any person or company that has “provided […] goods or services to […] the Government of North Korea,” he said.
“Executive Order 13722 (2016) goes even further and allows the Treasury Secretary to designate any person or company operating in any sector at all of the DPRK economy.”
As such, if the Treasury Secretary “chooses to designate Miniso under either of these EOs, then Miniso’s U.S. operations would be frozen, its U.S. assets seized, and it would be precluded from using the U.S. financial sector until the designation was lifted.”
Miniso claimed have opened its first store in the United States in southern California in April this year, offering Americans the same blend of cheap consumer goods now available in North Korea’s capital.
“On average, Miniso opens 80 to 100 stores monthly and is anticipated to open 6,000 stores worldwide by 2020, with global revenues of $9 billion (USD),” a press release issued by the company said.
“The company has signed agreements in more than 40 countries and regions, including the U.S., Canada, Russia, Singapore, Dubai, Korea, Malaysia, Hong Kong and Macao.”
Additional reporting: Kosuke Takahashi
Main picture: NK News
Edited by Oliver Hotham
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