Amid Nuclear Dispute, a Chinese Beer Business Fails in North Korea

It is not that easy for the Chinese to cater to North Korea's growing beer demand

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Lee Jae Won / REUTERS

For years, China has been North Korea’s biggest trading partner. Beijing helps keep the Kim regime propped up with supplies of food, fuel and pretty much everything else it needs to survive. But there is one market that even the Chinese have failed to crack: the beer industry.

Harry Kim, a Chinese national of Korean descent, told Reuters how his attempt to launch a brewery foundered in the North Korean coastal city of Chongjin after Beijing and Washington announced new sanctions against Pyongyang, prompting open criticism of Chinese investors in North Korean state media.

(MORE: U.S. and China Pledge to Work Toward a Nonnuclear North Korea. Does That Matter?)

It is not that the North Koreans don’t drink beer. They love alcohol as much as (if not more than) everybody else. Jang Gwang Ho, a senior North Korean official who met with Coca-Cola representative Gabriel Schulze in Pyongyang in 2011, told Forbes “with a chuckle” that many North Koreans over 60 years old will line up to buy beer, and that some of his countrymen drink up to 30 bottles of beer in an evening. (Keep in mind, this is also the country who said its late Dear Leader Kim Jong Il hit 11 holes in one the first time he set foot on a golf course.)

Beer may, in fact, be the one thing that North Koreans do better than their southern neighbors, reports the the Economist; the national brand Taedonggang is made using equipment bought from a defunct British brewery and is apparently much tastier than mass-market South Korean brews like OB or Hite. And in a nation of beer drinkers, Chongjin is a great place to start a business. North Korea’s legendarily bad infrastructure means a bottle of Taedonggang costs twice as much there as it does in Pyongyang, where it is made.

(MORE: Why the North Korean Crisis Demands a New Diplomatic Approach)

According to Reuters, however, things didn’t work out for businessman Kim, who gave up after spending months waiting for authorization from Pyongyang. He told Reuters that it “could raise suspicions” if he pushed too hard.

It is not just the beer business that’s flagging. According to Bloomberg, Chinese shipments of all kinds to North Korea fell 13.8% in the first quarter of the year. UPI reported that China has also halted tourism to North Korea after its ruler, Kim Jong Un, ratcheted up his nuclear rhetoric in recent weeks.

As for Harry Kim, his losses are not so bad. To hedge the risks, he tied his beer investments to shipments of North Korean seafood, highly sought after in upscale Chinese restaurants because they are farmed in relatively pollution-free waters. According to the New York Times, the seafood trade won’t be going anywhere soon; most observers believe Beijing will continue to invest to prevent the North Korean regime from collapsing and to boost the economy of China’s Jilin province, which borders North Korea and where an estimated 2 million ethnic Koreans live.

(MORE: China’s Long, Fruitless History of Irritation With North Korea)