Miniso in North Korea



A story in The Economist was responsible for reviving the interest in Miniso’s advance into North Korea. Originally announced in January with the first store opening in April, the case is now yet another example of the complexities—and perversities—of the sanctions regime. Co-founded by the young Chinese entrepreneur Ye Guofu and Japanese chief designer Miyake Jyunya, the chain has shown remarkable growth over the last four years and claims to be opening 80 to 100 stores a month through an aggressive globalization. Miniso peddles a lifestlye corporate brand, competing in the price space of UNIQLO, MUJI and Watsons.

However, the entry into North Korea raises question of where the firm is actually headquartered and what obligations its domicile implies. (NKNews has been doing particularly aggressive and good reporting on the issue; see also here). The group appears to be headquarterd in Japan, and in Ginza no less. But headquarters is now claiming, apparently after consulting with a lawyer, that it had nothing to do with the deal, which was spearheaded by Miniso China. This despite a photo of the launch in which the two co-founders are seen with Nam Chengyi, reportedly the chief delegate of the North Korea Economic Cooperation Council China Dandong Office.

Oops. Unfortunately for the group, a Japanese--Katsuhisa Furukawa—recently served on the Panel of Experts designed to monitor North Korean sanctions busting. He has been willing to share the quite obvious conclusion that the store opening is not only in likely violation of Japanese sanctions but of multilateral ones as well. Article 31 of UNSC Resolution 2321 obligates all member states to close “representative offices, subsidiaries or banking accounts” inside North Korea. If this interpretation is correct—and the lawyers will have to decide—then it would appear to ban Miniso China from opening the store either. In addition, Miniso could be vulnerable to secondary sanctions. Also yet to be determined: whether the store-opening violates Japan’s Foreign Exchange and Foreign Trade Act with respect to North Korea.

Even if these problems are resolved in Miniso’s favor, the optics could not be worse: China opening up retail outlets in North Korea while the US seethes, and Japan throwing up its hands and pointing its finger at a subsidiary. Not good.

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