Hyundai Asan Scrambles as North Korea Threatens to Scrap Tour Deal
By Kim Tong-hyung
Staff Reporter
A steady business based on North Korea is an oxymoron, as a battered and bruised Hyundai Asan would attest.
The company, which operates tour programs to North Korea as its main business, is reeling after North Korea's state-controlled media reported that the country is moving to freeze tourism and take control of some buildings constructed by the South at the Mt. Geumgang resort.
A Hyundai Asan official said the company has yet to receive any word from North Korean authorities over the future of the tour operations, and is contacting its employees stationed in the North to get a hold of the situation.
``We haven't heard anything directly from the North Koreans and there are no new facts coming from our North Korea-based employees yet,'' said Choi Phil-kyu, Hyundai Group's vice president of public affairs.
``There is absolutely nothing more we can do, and it's time for the government to step in and talk with the North. Even the allies and Germans talked during the two World Wars.''
There are about 50 Hyundai Asan employees remaining in North Korea, company officials said, including 20 South Korean nationals and 30 Korean-Chinese citizens, along with another 20 workers from the company's business partners. Although Kumgangsan Hotel and Oegeumgang Hotel, owned by Hyundai Asan, weren't included among the South Korean assets North Korea threatened to freeze, company officials are worried they eventually will.
Hyundai Asan can ill-afford to lose its business in North Korea, although the tours to Mt. Geumgang have been suspended since July 2008 when a 53-year-old South Korean tourist, Park Wang-ja, was shot dead after wandering into a military zone near her beachfront hotel. The tours to the North Korean city of Kaeseong were also suspended in November that year.
The talks over restarting the tour hadn't been going smoothly, with South Korea insisting on being involved in an on-site investigation into the shooting incident and also demanding that North Korea strengthen safety measures for tourists from the South. North Koreans had balked at the demands, saying it was already providing all the necessary conditions to resume the tours.
Hyundai Asan officials are hoping that the North Koreans are not serious about finding a new business partner for the tour operations. There are observations that the North Korea's recent threat is part of its tactic to press South Korea to cave in and allow its citizens to visit the North again, as the tour programs were a crucial revenue source for the cash-strapped Hermit Kingdom.
The desperation is shared by Hyundai Asan. The company has been involved in the North Korean tours since 1998, under the will of late Hyundai Group founder Chung Ju-yung, and losing the arrangement might represent an existential crisis.
Before Park's death, the Mt. Geumgang tours accounted for about 70 percent of Hyundai Asan's sales from tourism, a business that generated about half of the company's total revenue.
According to Hyundai Asan officials, the company's losses from the suspended tours amount to over 258 billion won (about $230 million).
The company last year reported a loss of 29.9 billion won, with an operating loss of 32.2 billion won, representing a six-fold increase from last year's 5.4 billion won.
