Seoul wants piece of North pie
Food firms eye 1st forays if Kim opens up land
SEOUL, South Korea — At a glass-and-stone office complex in downtown Seoul, a team of corporate strategists is thinking about diplomacy, North Korea and the power of marshmallow, yellow cake and chocolate.
At the same time, dozens of other companies across SouthKoreaalsoarejockeying for any edge to jump into North Korea if Kim Jong Un’s outreach eventually opens investment in a country that needs everything from new roads to designer doorknobs.
But Orion Corp. has something the others do not: the original Choco Pie and its status as a treat so coveted in the North that it can be peddled for many times its price on the black market.
There is still no way to predict whether North Korea could get an investment rush from South Korea and other countries across the region. For starters, theKim regime needs to make enough nuclear concessions to cause a rollback of someU.N. sanctions.
But that hasn’t dampened the optimism of South Korean executives.
Companies of every stripe — construction, shipping, mining, hotel groups, automaker Hyundai and others — have started to weigh the potential windfalls and risks.
Many industry officials see SouthKorean foodcompanies as among the most likely to make the first possible forays, using common culture and tastes as calling cards.
“For South Korean companies, lowwages and close proximity are definite plus factors, and, of course, the shared culture and language as well,” said Gloria Koo, associate director of the University of Southern California’s Korean Studies Institute.
Perhaps no company has amore ready fan base in the North than the South Korean makers of the original Choco Pie, a cake-andmarshmallow sandwich dipped in chocolate, somewhat like an American MoonPie.
An executive at Orion, which introduced the Choco Pie to SouthKorea in the 1970s, said last month that its most-famous snack could be the advance guard in North Korea for the company’s full line of crackers, cookies and other munchies.
Choco Pies were a favored extra among North Koreanworkers at the nowsuspended Kaesong industrial zone, a project that began operations in 2004 to allow a foothold in the North for scores of midsize SouthKorean companies.
The North Korean workers stashed them instead of eating them. Choco Pies became so prevalent for sale or barter on the streets that North Korea reportedly banned their import to Kaesong in 2014.
Choco Pies became such a symbol of resistance that activist groups in South Korea sent them over the border tied to balloons, and the Seoul government gave a lifetime supply of Choco Pies to the North Korean soldier, Oh Chong-song, whowas badlywounded by gunfire in his dash south across the demilitarized zone inNovember.
Investing in food for North Korean markets is also on the mind of one of South Korea’s major conglomerates, the Lotte Group.
The business is counting on lessons learned by its more than decade-long association with the Kaesong economic zone, where the company’s food division provided snacks including a lemon-lime soft drink called Chilsung Cider and itsownversion of theChoco Pie.
The Kaesong project offered cheap labor for some South Korean manufacturers and provided the North with foreign currency.
It was suspended in 2016 amid Seoul’s anger over the North’s nuclear tests.
“In planning our North Korea-bound initiatives, Lotte is approaching this first from a humanitarianaid and social-exchange perspective, rather than business at the moment,” said Lotte spokesman Kang Sung-doo. “Food products will serve such humanitarian and social purposes well.”
This month, Lotte announced aNorthKorea task force that encompasses the reach of the regionalpowerhouse company, which has headquarters in Tokyo and Seoul. Lotte’s food, hotels, logistics and chemical holdings are making contingencies for theNorth.
“There are needs at every level in North Korea. So, of course, this is making companies, especially those in South Korea, very interested to move if Kim Jong Un allows it,” said Kim Byung-yeon, an economics professor at Seoul National University.
“But this is also the concern. North Korea is so unknown and so in need that there could be serious problems if companies just rush in.”
The professor has led calls for “managed economic engagement” if sanctions ease.
But it’s hard to say how many businesses in South Korea are willing to go slow.
A recent North Korea investment forum in Seoul brought together 600 corporate executives and economic researchers to hash over future opportunities.
The list went on and on: roads, railways, ports, airports, the electrical grid, hotels, televisions and consumer goods of all kinds.
Real estate firms zeroed inontheuntouchedproperty in the demilitarized zone, or DMZ. Some tourist companies brainstormed ideas about theNorth— all aware that even giant Hyundai was once burned by the North’s government.
In 1998, Hyundai opened a mountain resort for tourists at North Korea’sMount Kumgang, just over the border. It was hugely popular, but itwas closed in 2008 by theNorth after a sentry shot and killed a tourist. The entire development was confiscated by Pyongyang.
Korea’s central bank estimates that the North Korean economy has expanded at a respectable 1.24 percent on average each year since Kim assumed power in 2011, gradually allowing a budding free enterprise system to emerge with small private shops and restaurants.
China, however, remains the big brother, having served as theNorth’s economic lifeline for decades.
This leaves SouthKorean businesses— even powerful global brands such asHyundai and Samsung — asking for government help to catch up.
Many executives express hope for a master plan by the government of South Korean President Moon Jae-in to handle potential investments into North Korea and, down the road, possible reunification.
“As an individual company, we can’t plan on our own to do work in North Korea,” said Seo Geum-yul, vice president of South Korea Engineering & Construction. “We hope the South Korean government will come up with a plan thatwe can be a part of.”