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Prolonged Kaesong complex suspension chokes S. Korean small firms
SEOUL, April 23 (Yonhap) -- A prolonged suspension of the joint inter-Korean industrial complex in North Korea has begun to hurt South Korean small companies that have factories in the communist country, officials said Tuesday.

   North Korea has shown no signs of lifting the entry ban to the complex in its western border city of Kaesong amid tensions on the Korean Peninsula. The North pulled out all of its 53,000 workers from the complex earlier this month, bringing operations of the 123 South Korean factories there to a halt.

   The head of a small clothing company expressed concerns about a possible collapse of his company as he could not meet a deadline to deliver goods to a large South Korean company.

   He said his company's possible collapse would result in the bankruptcies of dozens of its subcontractors. The official did not elaborate and asked not to publish his company's name.

  


A local maker of machine parts said it was considering abandoning its assembly line in Kaesong and setting up a factory in China after its biggest business partner floated the idea. The local company also asked not to be identified, citing the issue's sensitivity.

   The development underscored challenges facing South Korean companies involved in business ties with North Korea.

   Daewha Fuel Pump Industrial Ltd., a South Korean auto parts supplier that has a factory in Kaesong, said its Indian business partner has canceled a deal as it failed to deliver parts to the Indian company due to the suspension.

   The Indian company told the South Korean company that it would switch to a U.S. supplier instead.

   The Indian company also asked Daewha to either return modeling equipment from its factory in the complex or pay back money equivalent to its investment, according to Choi Dong-hun, a Daewha official. Choi declined to identify the Indian company.

   Meanwhile, Kolon Industries Inc., South Korea's leading textile and chemical material producer, said it would receive clothes worth about 6 billion won (US$5.3 million) from its five South Korean suppliers in Kaesong after the complex's operations return to normal.

   Kolon Industries said the decision is part of its efforts to share the burden with its business partners.

   Yoo Chang-geun, a vice chairman of the association of South Koreans who run factories in Kaesong, called on the government to provide emergency loans to the South Korean companies in Kaesong.

   Most of the 123 South Korean firms operating in the industrial zone in Kaesong are small and medium companies.

   On Monday, President Park Geun-hye instructed aides to come up with support measures as early as possible for South Korean firms suffering from the suspension.

   entropy@yna.co.kr
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