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View more articles by Chad O'Carroll
Chad O'Carroll has written on North Korea since 2010 and writes between London and Seoul.
If you visited North Korea in the past decade or two and were feeling in need for a wake-up, you might recall buying slim-style canned coffee drinks by the famous Japanese brand Pokka.
Sold at hotel shops, highway stops, and even kiosks in far-flung corners of the country, the ongoing availability of Pokka drinks represents a rare case of a foreign consumer brand attaining nationwide popularity in the Democratic People’s Republic of Korea.
But due to a combination of recent UN sanctions and a unilateral trade embargo in a country almost 3,000 miles away, something as seemingly innocent as a beloved coffee brand could be forced out of Pyongyang forever.
That’s because among other things, sector-level sanctions imposed by the UN in 2017 even prohibit the export of aluminum cans to North Korea, which happen to be what Pokka package the majority of their canned beverages with.
And that’s something analysts say is becoming a growing problem with the international sanctions regime: that normal North Koreans often find themselves to be unwitting targets in the push towards denuclearization.
A SUSTAINED SINGAPORE CONNECTION
Look closely at any can of Pokka in North Korea – which these days also includes fruit and milk-based recipes – and you’ll see that the product is not actually made in Japan, but Singapore.
It’s been that way since at least 1997, when the Singapore-based exporter OCN – a company whose director currently faces dozens of North Korea sanctions charges – picked up a contract with Pokka’s office there to distribute its coffee drinks throughout the DPRK.
Despite the costs involved in shipping product from Singapore instead of a competing brand from neighboring China, OCN successfully sold and marketed Pokka in North Korea between 1997 and 2012, Pokka’s Singapore office told NK News in 2017.
And because of OCN, Pokka Singapore eventually sold “millions of dollars” worth of canned coffee to the DPRK each year, an informed source told NK News on condition of anonymity, making “the North Korea market … one of the top export markets for Pokka Corp Singapore”.
But that all ended in 2012 when North Korean authorities invited foreign journalists to Pyongyang to report on a controversial satellite launch attempt.
Though the launch was a failure, NK News understands that Japanese journalists among the contingent of foreign press saw how widespread Pokka coffee had become in Pyongyang, raising questions to the brand’s Tokyo-based owners at a time of increasingly acrimonious exchange between Japan and North Korea.
With Tokyo having also used the threat of the April 2012 satellite launch to justify the extension of a soon-to-expire full North Korea import and export ban, the political climate became too complicated for Pokka Singapore to continue selling its product to Pyongyang via OCN.
“In light of the decision of the Japanese government to continue the economic embargo against North Korea, we made an internal decision to cease any trade which exports our products directly to North Korea in 2012, and the labels which state OCN as a distributor have never been used since then,” Pokka Singapore told NK News back in 2017.
But just as sanctions targeting North Korea’s nuclear and ballistic programs have done little to thwart rapid evolution in those domains, Pokka’s popularity in Pyongyang wasn’t about to be dashed by the termination of OCN’s exclusive DPRK distribution agreement.
Quickly filling the place of OCN’s large orders for the North Korea market, new clients with huge orders emerged, including two companies called T Specialist and Mars Rock International, the informed source told NK News.
T Specialist, despite working from the same registered Singapore address as OCN, promised that its coffee orders would only be exported to China, Pokka Singapore told NK News in July 2017.
Pokka later terminated that sales agreement the same year, following “internal investigations” surrounding where the product was actually ending up.
As for Mars Rock International, a company named alongside T Specialist in a UN report this year for involvement in a range of North Korea-related sanctions charges, Pokka Singapore said in July it was “unable to comment substantively on these matters” due to “ongoing legal proceedings in the Singapore Court involving the director of OCN/T-Specialist”.
What, then, explains the persistence of North Korean interest in Pokka, a brand owned since 2011 by Sapporo Holdings, one of Japan’s largest breweries?
The informed source said sales continued indirectly to North Korea after the end of the official OCN distribution deal because the demand – and financial rewards – were so high.
“The Pokka Corporation Singapore Board always mentioned that “as long we don’t ship to North Korea directly, it’s fine”,” the source said.
But that allegation is something its headquarters in Singapore strongly disagrees with.
Pokka Singapore “has always been and remains committed to ensuring that it complies with all national laws and the applicable UN sanctions including ensuring that it has no dealings with North Korea.”
Pokka would “immediately suspend business with customers in and outside Singapore that are suspected of having been exporting to North Korea,” the company said, and always “confirms the final destination of the products is not North Korea with its customers.”
However, it is “difficult for (Pokka) to know whether their products are being exported to North Korea through third parties.”
But while Pokka Singapore says it doesn’t sell drinks to North Korea anymore, its products were still widely available in Pyongyang last September and emails from the firm’s sales staff dated last year showed the company continued to seek business there.
Furthermore, one of Pokka’s former European distributors told NK News that as recently as August 2018, his firm was pressured by senior staff from Pokka Singapore to increase its purchases on paper in order to help cloak further deliveries to North Korea.
While Pokka Singapore dismissed the European distributor’s story as “erroneous, baseless and/or malicious and/or untrue,” it didn’t respond for comment on screenshots of the emails sent by its staff in search of North Korea buyers.
SANCTIONS AND SINGAPOREAN SOFT DRINKS
After a year of sustained ballistic missile and nuclear testing, sanctions pressure on North Korea reached new peaks towards the end of 2017.
In November of that year, Singapore’s government announced that it would be imposing a prohibition of “all commercially traded goods (exchanged for money or barter traded) from or to the Democratic People’s Republic of Korea (DPRK)”.
Imposing fines of up to $200,000 and prison sentences of up to three years for those who violate the embargo, the Singapore Customs circular said that even transhipment of goods via third countries would be prohibited.
Then – less than a month later – came United Nations Security Council Resolution 2397, which included sector-level sanctions that made it illegal for North Korea to import a wide range of commodities, products, and materials.
In particular, one of those measures was a decision that “all Member States shall prohibit the direct or indirect supply (to North Korea) of…iron, steel, and other metals (HS codes 72 through 83)”.
Harmonized System (HS) codes are a globally standardized means for classifying internationally traded products. And falling under the parent category of HS Code 76 – specifically prohibited by UN Resolution 2397 – exists an extremely important aspect of Pokka’s offering: aluminum cans.
So not only would the distribution of Pokka Singapore drinks to North Korea after December 2018 have breached Singapore’s unilateral trade embargo, but also United Nations sector-level sanctions prohibiting the export of anything containing aluminum there.
It was perhaps due to the growing scale of the sanctions regime, then, that things took another turn for Pokka Singapore in October 2018.
In the wake of news that Pokka’s drinks were still widely for sale in Pyongyang last September, Singapore Customs conducted a raid on Pokka’s offices in October last year, the informed source said and NK News confirmed on Thursday.
“Given that there are pending legal proceedings and ongoing investigations, Pokka Corporation Singapore Pte. Ltd. (“PCS”) is refraining from making any substantive comments so as to avoid interfering with any legal proceedings and/or obstructing any investigations,” Pokka Singapore told NK News in July when asked about the raid.
“We are rendering full cooperation to the authorities in relation to matters/events that largely took place prior to 19 September 2018,” Pokka Singapore continued in an emailed statement.
That’s the date, Pokka Singapore said, when “Ms. (Rieko) Shofu took over as CEO … from Mr Alain Ong,” the chief executive suspended last year in what the Straits Times described as a “management shake-up”.
But though NK News understands the company remains under active investigation by Singaporean authorities – something Singapore’s foreign ministry declined to comment on despite repeated multiple requests – beverages produced by Pokka Singapore continue to remain widely available in the DPRK – even as recently as this year.
Indeed, drinks with expiration dates as fresh as May 2020 were readily available in several downtown Pyongyang shops as of June 2019, cans seen by NK News showed, indicating that both supply and demand for the drink remains high.
WHAT’S THE PROBLEM?
Pokka’s canned drinks in North Korea cost anywhere from about 50 cents to a dollar, depending on where you buy the product.
In a country where a single cup of Mocha can cost as much as $7 in high-end cafes like Pyongyang’s Kumrung Coffee Shop – and where an estimated 25% of the population now maintain cellular phone subscriptions – Pokka’s canned drinks are clearly no luxury product.
That they’re sold in shops in cities and towns located even in the far northeast region of North Korea also indicates the brand isn’t just popular with the Pyongyang elite.
But after the changes to the sanctions regime in 2017, it now appears that measures intended to slow Pyongyang’s special weapons programs are also having the effect of hampering the supply of a popular range of soft drinks from Singapore.
Despite the apparently friendly-fire of the measures, one sanctions specialist said that this might actually be the point.
“The sanctions are unambiguously clear in expressly prohibiting transfers of whole categories of materials,” said Tristan Webb, a former UK foreign office analyst on North Korea.
So while “UNSC sanctions resolutions expressly reaffirm that they are not intended to cause civilian harm,” it was always “foreseeable that such prohibitions – if implemented effectively – would have the effect of stopping North Koreans buying things like your example of imported soft-drink cans,” Webb said.
And given the political climate surrounding the Trump administration-led “maximum pressure” policy of late 2017, Webb said he couldn’t rule out that the UN’s sector-level sanctions “might have been privately intended to stop North Koreans buying things like imported soft drinks, indeed it seems quite possible.”
The wide-ranging scope of the North Korean sanctions regime is “ethically questionable, because in principle they constitute something akin to a medieval siege,” said Dr. Rüdiger Frank, a professor of East Asian Economy at the University of Vienna.
“The logic is to starve the population of a besieged city in the hope that after enough of them died, they will surrender and hand over the castle’s commander,” he said.
“This clearly violates our ethical standards…the wrong people are suffering, and positive change in North Korea is hampered.”
And if sanctions do have the effect of limiting supplies of imported products in the North, Frank said the power of the state will consequently be strengthened, because “they create a shortage which will typically be handled via rationing and public distribution”.
Instead of restricting the supply of foreign goods to North Korea, then, Frank said countries should “support (marketization and monetization) trends by expanding the scale and scope of available goods and services rather than stifling them by reducing the volume of imports and of currency in circulation.”
But Joshua Stanton, a Washington DC-based sanctions specialist, said broad prohibitions – even if they might inadvertently impact soft drinks like those of Pokka – are needed because “the same financial and logistical pipelines may also carry higher-priority targets like maraging steel and flow-forming machines.”
And to an extent, he’s right.
After all, it was OCN’s name printed on Pokka’s very-own drinks which helped reveal one of North Korea’s largest luxury goods acquisition networks in an NK Pro investigation back in 2017.
In the meantime, however, Singapore’s investigation into Pokka and its North Korea presence could eventually complicate supply lines there.
But precedence strongly suggests that North Korean importers will continue identifying creative ways to get their hands on Pokka, even if both the company and local Singaporean authorities increase scrutiny on where the cans are being sold and exported.
The end result?
As when any scarcity of supply emerges, the price paid for Pokka by ordinary North Koreans will likely only go up.
Whether or not progress towards DPRK denuclearization will correspondingly become easier remains another question, however.
Main picture: Pokka drinks obtained in Pyongyang in June 2019, NK News