A Chinese company who had slammed "investment traps" in Pyongyang declined Thursday to return to the negotiation table with North Korean officials, a day after North Korean state media hit out at the criticism, claiming media reports about the disputes were "stirring up tensions in bilateral economic cooperation."
While reminding Chinese enterprises to conduct risk assessments before rushing to invest in North Korea, analysts said the rare official response to the investment dispute demonstrated a gesture by Pyongyang to restore Chinese investor confidence.
In an online post, the Liaoning-based Xiyang Group last month reported a loss of 45 million euro ($55.3 million) in a joint venture deal with North Korea signed in 2007, saying that the North unilaterally cancelled the contract for the iron ore exploitation project in February.
The Korean Central News Agency (KCNA) Wednesday quoted an anonymous spokesperson from the North's Foreign Economic Investment Commission as saying that the Xiyang Group should take the main responsibility for the default.
"In the four years after the contract took effect, the Xiyang Group only carried out 50 percent of its investment obligations," said the KCNA.
Wu Xisheng, vice general manager of the Xiyang Group, told the Global Times Thursday that the company's partner in North Korea was an enterprise affiliated with the Korean Workers' Party, instead of what the country called a private entity.
Wu also said Xiyang is one of dozens of Chinese companies who have been cheated by North Korea.
Hu Chenpei, a diplomat with the business section of the Chinese embassy in Pyongyang, told the Global Times that it is "an isolated case of business disputes," adding that both sides of the story are true.
"We have been in contact with related departments in North Korea, hoping the two sides could iron out their disputes through rational discussions," said Hu.
However, Wu insisted that the North should repay their losses or the group will reveal further details about "how Pyongyang cheated it."
When contacted by the Global Times, a diplomat with North Korea's embassy in Beijing said he had never heard of the Xiyang Group and refused to comment.
The North Korean spokesperson also said his government will continue improving its investment environment to further draw international investment, and protect the legitimate rights and interests of international investors who follow the principles of mutual respect, equality and mutual benefit as well as observing laws.
Liu Ming, a researcher with the Shanghai Academy of Social Sciences, said the disputes have dealt a blow to Chinese enterprises' confidence in North Korea.
Jang Song-thaek, a top official in the North and uncle of North Korean leader Kim Jong-un, agreed to jointly develop two economic zones in North Korea with China, one in Rason and another in Hwanggumphyong and Wihwa Islands, during a visit to China last month, reports said.
The North is at a critical moment in terms of attracting Chinese investment, so Pyongyang was trying to reassure Chinese State-owned and private enterprises about its investment climate, said Liu.
Chinese enterprises should carry out detailed studies about the background of their North Korean partners and learn local laws and regulations before entering the North Korean market, noted Liu.