Chinese law company set to become first to open branch in North Korea

Law firm Jingsh, headquartered in Beijing, will also be expanding into South Korea and Japan
North Korean office will focus on investment services as Pyongyang attempts to revive its struggling economy

Diplomacy

Kawala Xie

Published: 7:44pm, 15 Nov 2023

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A Beijing-based law firm will become the first Chinese legal office to open a branch in North Korea, as the heavily sanctioned state increasingly looks to China to revive its economy.

As one of the first and biggest partnership law firms in China, Jingsh announced last week that it would expand its law services to North Korea, as well as locations in South Korea and Japan, with openings planned for next year.

The expansion is based on “China’s unique advantages of geographical proximity and cultural exchanges” to boost cooperation in different fields with its three Asian neighbours, Jingsh said in a press release.

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The announcement came as North Korea has resumed rail freight and flight services with China in a sign that its border is reopening after it was shut due to the Covid-19 pandemic.

Official engagements have also resumed, with China sending its ambassador back to the country in April and senior Chinese officials attending key celebration events in Pyongyang in July and September.

Those visits, led by Chinese Vice-Premier Liu Guozhong and Politburo member Li Hongzhong, were believed to have focused on economic talks, as North Korea looked to its biggest trade partner to revive an economy battered by the pandemic and international sanctions over its nuclear ambitions.

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China is North Korea’s main trade partner and its largest source of investment. Most Chinese investments have been directed to mining and infrastructure, according to a report by the Korea Development Initiative in 2021.

China also hosts large numbers of North Korean labourers every year, with around 100,000 of them currently working in China, according to South Korean media.

Jingsh said its North Korean office will provide legal services for Chinese investors on greenfield investments, company mergers and acquisitions, architectural design for infrastructure and energy projects, and labour exports to China and Japan, and will advise on North Korean foreign direct investment laws and regulations.

Pyongyang reportedly revised its foreign investment law in January to give a three-year tax exemption to hi-tech companies which operate for more than 15 years, and lower corporate income tax rates for foreign companies established in special economic zones, an apparent move to attract foreign investment, according to Seoul-based website NK Economy.

North Korea has more than 20 special economic zones across the country, many of which are built and co-managed with China.

Matthew Kim, Jingsh’s equity partner, who is responsible for planning the North Korean office, said many Chinese investors still have interests in North Korea, which has certain labour advantages, and has signalled it is serious about opening up its economy.

North Korean leader Kim Jong-un has pushed for economic reform in his country, with the intention of boosting foreign trade and investment. Still, the economy has continued to struggle under the impacts of the pandemic and international pressure.

Kim from Jingsh acknowledged that while there are concerns over investing in North Korea due to geopolitical tensions, his firm would work to ensure the stability and safety of Chinese investment in the country.

“The most important issue is to ensure the stability of funds from foreign capital, so that they can feel that their investment will have a return, and that it will be safe after the return,” he said.