Industrial zone combines South Korean management, North Korean labor

KAESONG, North Korea —

Rows of women in white blazers sit hunched over tables in a well-lit factory, methodically cutting, sewing and piecing together fabric into clothes destined for sale in the thriving shops of capitalist South Korea.

They are some of the 6,000 North Koreans employed by South Korean companies that have set up businesses in an erstwhile free-market enclave that officials in communist North Korea opened Monday for a rare visit by foreign news organizations. The Kaesong Industrial Complex, just six miles from the world's last Cold War frontier, is an ambitious experiment pairing South Korean technology and management expertise with North Korea's cheap and abundant labor.

Kaesong was born from the goodwill that arose after a dramatic summit in 2000 between the leaders of the divided Koreas. The meeting helped reduce decades of distrust after the 1950-53 Korean War, which ended in a truce instead of a peace treaty, leaving the nations technically at war.

Kim Dong-keun, a South Korean who heads the Kaesong Industrial District Management Committee, consisting of officials from both sides that oversee the zone, ticks off the advantages for South Korean companies.

"Cheap labor, highly educated workers, infrastructure, the same language," he says, adding that the zone's proximity to Seoul, roughly an hour's drive away, is another plus.

Construction on the complex began in June 2003, three years after the historic summit. The district began operating the following year, led by Hyundai Asan, the Seoul company spearheading South Korean business efforts in the North.

So far, 15 South Korean companies have set up shop in the fenced-in enclave, surrounded mostly by barren hills and dusty fields.

Plans are for 2,000 businesses to fill in the zone's 2,720 acres by 2012.

The companies there now are shipping manufactured goods such as footwear and cases for makeup and cosmetics. North Korean workers earn about $57 a month, the country's minimum wage, for a 48-hour week — about 30 cents an hour.

Trade surged 51.5 percent in 2005, topping $1 billion for the first time, the Korea International Trade Association said last month.

The value of trade at the Kaesong zone more than quadrupled in 2005 to $176.7 million last year from $41.7 million in 2004, the group said.

Besides the factories, the facilities for the 600 South Korean workers include a branch of Seoul's Woori Bank and a Family Mart convenience store that sells South Korean snacks, beer and toiletries for U.S. dollars.

J.S. Lee manages the store, which employs North Korean cashiers. He says the gulf between South and North Korean ways is wide.

"The culture and customs are totally different," Lee said, attributing that to a legacy of living for decades under capitalist and communist systems.

Still, he said, North Koreans are curious about life in South Korea , though discussions beyond basic information, such as about one's family, are forbidden for workers.

Most of the North Korean workers commute from the nearby city of Kaesong. With a population of 140,000, the city was the capital of all Korea more than 600 years ago and has a long history as an economic center.

Though steadily rising, the amount of trade with North Korea remains minuscule for South Korea, the world's 11th-largest economy and the home to industrial behemoths like Samsung Electronics and Posco, the world's fifth-biggest steelmaker.

North Korean officials tend to focus on Kaesong's role as a symbol of inter-Korean cooperation rather than issues of work ethic or productivity.

Yun Sung Hyon, who works for the North's main bureau focusing on development of special zones, says an undertaking like Kaesong was not imaginable before the 2000 summit.

"We hope that North and South Korea will become a strong [unified] country," he said.

Associated Press reporter Kwang-Tae Kim contributed to this report.