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Korean war fears could be a good thing for businessman with hotel on border

Lihua owner sees business opportunities being channelled into border district from industrial park as storm clouds gather over peninsula

PUBLISHED : Wednesday, 24 April, 2013, 12:00am
UPDATED : Wednesday, 24 April, 2013, 10:19pm

Peter Young couldn't care less about the gathering storm on the Korean Peninsula. For the Hong Kong businessman who operates in Yanbian, Jilin province, it could even be a good thing.

"When North Korea is blocking access to Kaesong Industrial Park [a joint venture with South Korea], there is only one option left for them," said Young, evidently excited at the prospect of the locus of North Korean cross-border business shifting to Yanbian, which shares a 200km border with the hermit state.

He owns the three-star Lihua International Hotel in Yanbian, which he bought from the local government in 2011, and has plans to invest 250 million yuan (HK$313.9 million) for its expansion.

The heightened tension in the peninsula would foster closer ties between China and North Korea, said Young, who is the chief executive of Chemcentral Group, a manufactured goods agent and distributor.

"Hong Kong [small and medium-sized enterprises] could ride the trend, stealing a march over international investors scared away by the military stand-off," he said.

While the world speculates whether North Korean leader Kim Jong-un is setting the stage for launching a war, Young is confident Kim will follow the path of economic reforms and open up the economy in due course.

Pyongyang recently kicked off a plan to export labour to Yanbian, an initiative cleared by the late Kim Jong-il that would ease the labour shortage in Yanbian and add to North Korea's coffers. The workers from North Korea are to give their government two-thirds of their salaries.

A pilot scheme was recently carried out in a privately owned textile factory in Longjing, Yanbian. In the past, North Koreans were only allowed to work in restaurants invested by North Koreans.

"I am applying for imported workers too as they are hard-working and talented. That could also attract foreign tourists interested in North Korean culture," Young said.

Yanbian Korean Autonomous Prefecture is home to more than two million people, of whom nearly 40 per cent are ethnic Korean. It is also the second-largest centre of cross-border trade between China and North Korea. Sandwiched between Russia and North Korea, Yanbian is also a key tourist gateway as the sector witnesses a boom in the region.

Tourist arrivals reached 10.54 million last year. Foreign travellers numbered more than 540,000, of whom 250,000 were from South Korea and 200,000 from Russia. A Yanbian tourism official projected that the number of international tourists would increase 20 per cent this year.

There is a daily coach service connecting Yanji, the capital of Yanbian, and Rason, in North Korea, for business commuters and casino players. Yanbian also offers many cross-border tours to Russia's port city of Vladivostok and the neighbouring cities in North Korea.

Apart from tourists and business travellers, Lihua hotel also plays host to official delegations from Pyongyang every month. The stern-looking officials, easily recognised by the signature chest pins featuring the late Kim Jong-il and Kim Il-sung, go to Yanbian not only for government meetings but also to take back medicines and other supplies.

Russian tourists, who are more interested in shopping for branded products, are also frequent customers at Lihua. Young plans to open a factory outlet at the hotel, which spans 25,000 square metres.

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