North Korea has the potential to become the latest low-cost sourcing hub because of its low wages paired with a quick-learning workforce. While Trump focuses on denuclearization in the US-North Korea Summit, Asian manufacturers are buzzing about how this meeting will impact future business. North Korea's garment and textile industry were around $725 million in 2016. A significant number of North Korea citizens work in the apparel industry's state-run factories. Not only are the wages less than half of what they are in China, North Korean workers are reportedly more productive than Chinese workers and have harsher working conditions. China is focusing on producing more complex, forward-thinking and technical garments, and Vietnam's labour shortage isn't going anywhere fast. Opening up North Korea for manufacturing could be the answer to several regional supply chain issues.
Yes, it is premature to be thinking about trading during this agenda, but this opportunity has made a significant dent in opening North Korea for more conversations (and transactions).
Taeho Sim, a partner at AT Kearney based in Seoul, South Korea, predicts sanctions on North Korea will be lifted through the peace process. Sim explained that the US-North Korea Summit talk in Singapore will bring significant progress with the confirmation of CVID and that North Korea will get financial aid if this is to be confirmed.
Trump has stated that no new sanctions will be imposed on Pyongyang around the Summit, but the White House has implied that trade will be a major bargaining chip at the Summit.
