Dream of fried chicken empire in N. Korea goes bust

Posted on : 2014-02-17 12:12 KST Modified on : 2014-02-17 12:12 KST
With Pres. Park talking about ‘unification jackpot’, inter-Korean businesses still prohibited from operating
 selling South Korean-style chicken
selling South Korean-style chicken

By Choi Hyun-june, staff reporter

“How are they supposed to hit the ‘unification jackpot’ when they can’t even keep a little chicken restaurant going?”

Choi Won-ho was once the head of a chicken franchise with over 100 restaurants. In 2007, he drew worldwide attention by opening North Korea’s first fried chicken restaurant in Pyongyang. But soon his whole business was foundering as inter-Korean exchange was cut off by the South Korean government. Today, Choi, now 55, has just a single chicken restaurant in Seoul’s Gangseo district to his name -- and dreams of a comeback.

 opened in June 2007 in Pyongyang by Choi Won-ho. Choi borrowed 500 million won to invest in the business but hasn’t been able to operate due to restrictions on inter-Korean economic exchange. (provided by Choi Won-ho)
opened in June 2007 in Pyongyang by Choi Won-ho. Choi borrowed 500 million won to invest in the business but hasn’t been able to operate due to restrictions on inter-Korean economic exchange. (provided by Choi Won-ho)

“I did get my hopes up a little,” Choi admitted on Feb. 15 about North and South Korea agreeing at a recent high-level meeting to “make some progress” in their relationship.

“But you can tell how sincere the South Korean government is by looking at how they’re dealing with the businesses involved in economic cooperation with North Korea,” he added.

President Park Geun-hye talked in her New Year’s press conference about hitting the “unification jackpot,” but Choi said, “I still don’t buy that yet. How are you supposed to hit the ‘unification jackpot’ when you’re fundamentally suspicious of the other side?”

Choi’s doubts about Park’s remarks stem from his own failure in an inter-Korean economic cooperation project. He describes the experience now as “learning an expensive lesson for eventual reunification,” but the disaster has dealt a blow to his professional ambitions. What hurts the most, though, is that his own government’s policy decision - not any lack of commitment or effort on his part - was to blame.

In 2005, Choi made his first trip to North Korea to inquire about chicken imports. Soon he had changed plans: he would open his own restaurant there selling South Korean-style chicken. Acquaintances tried to talk him out of it, but he was determined. “I went to Pyongyang and I could see there was money in it,” he recalled. And with economic cooperation between South and North at an all time high, he didn’t see much of a political risk either.

He went back and forth to Pyongyang a few times looking for partners. Finally, in June 2007, he opened up the Rakwon Chicken Restaurant, selling South Korean-style chicken on Puksae Road in the Kaesonmun neighborhood of Moranbong District. His North Korean partner provided the building and staff; Choi was responsible for the interiors, ingredients, recipes, and management system. He reached a deal where he took 70% of profits with a total investment of 500 million won (US$470,000). The opening drew a lot of media attention at the time, with write-ups in the South Korean press and foreign outlets like the Washington Post and Japan’s NHK.

Early on, he did strong business selling at fairly steep prices - the equivalent of US$11.30 for a single bird. His clientele came mainly from the city’s upper class and Chinese visitors. Sales of 100 million won (US$94,000) a year looked to be in sight. “My plan was to open up 100 restaurants in the North,” Choi said.

But in 2008, less than a year after he opened the restaurant, Lee Myung-bak took office as South Korean President. Lee’s administration put a stop to the previous decade’s policies of engagement and cooperation with North Korea, opting for sanctions and containment instead.

“There was a promise between the two sides, and I never thought that would be rejected completely,” Choi said. “Suddenly, that was the reality.”

Bit by bit, exchange ground to a halt. A March 2008 shipment of ingredients through Nampo turned out to be Choi’s last interaction. He had not yet received a single share of revenue.

Then came the announcement of the so-called “May 24 measures” in 2010. Following the sinking of the ROKS Cheonan warship the preceding March, Seoul had called a complete halt to all exchange and economic cooperation with North Korea.

“All the May 24 measures did was drive it home,” Choi insisted. “Most of the economic cooperation had been choked off long before that.”

For the next four years, Choi wasn’t able to set foot in North Korea. Without his support, the restaurant lost its chicken focus and began selling ordinary cuisine. Choi’s other business began to suffer too.

“I’d put my house and buildings up as collateral to borrow the 500 million won to invest in the North,” he said. “Then, to top it all off, there was the US financial crisis. Things began to go downhill rapidly in South Korea, and my business started to fall apart.”

“They didn’t overturn the 1965 Treaty on Basic Relations between Japan and South Korea or the 2007 Free Trade Agreement with the US just because a new government came into office,” he added. “Shouldn’t they do the same when it comes to relations with North Korea, at least when it comes to economic things?”

In Choi’s view, Seoul’s response has been fundamentally lacking in sincerity. To date, its only support to economic cooperation businesses that have suffered has come in the form of two low-interest loans. Credit rating and collateral restrictions mean that even these loans have only be available to ten to twenty percent of affected businesses.

“If the government’s policy decisions hurt people, then it ought to compensate them,” said Choi. “Seoul has been starving the economic cooperation businesses all over again.”

Choi cited mainland China and Taiwan as an example of another divided nation making rapid progress in the space of a decade.

“To achieve real unification, you need to separate the political and the economic right now,” he said.

“In the past, mainland China and Taiwan were on terms as bad as ours,” he added. “Even now, their political relationship is antagonistic. But they took the bold step of opening doors in economic areas, and things have now reached the point where there are millions of people and tens of billions of dollars going back and forth each year. That’s what you call a ‘unification jackpot.’”

Choi expressed skepticism about Park’s ideas for a “Korean Peninsula trust-building process.”

“The person who doesn’t have anything has the highest self-esteem,” he said. “For us to build trust, we need to show trust before we start demanding it from North Korea.”


Please direct questions or comments to [english@hani.co.kr]


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