March 10, 2011 13:20
Hyundai Asan, the Hyundai Group's subsidiary for business projects in North Korea, is struggling to find a new source of income now that package tours to the North have stopped. One option is to act as a proxy in government projects in developing countries, and another to offer field trips for middle and high schools.
Asan's signature tours to North Korea's scenic Mt. Kumgang resort have been halted since the shooting death of a South Korean tourist there in July of 2008, and the search for alternatives is becoming a desperate bid for survival.
Asan has recently won nine projects worth around W2 billion (US$1=W1,116) in tenders by the Korea International Cooperation Agency aimed at supporting the development of poor countries. The company will be paid by KOICA to provide agricultural machinery and offer classes to farmers in El Salvador, the Dominican Republic, Zimbabwe and Congo.
It has also come up with a tour package to the Demilitarized Zone that separates the two Koreas, which has drawn around 22,000 tourists since May 2009, and has recently begun offering trips to students. And last year, the company launched its own brand of urban homes.
Before the tours to Mt. Kumgang stopped, Asan employed 1,084 workers, but at the end of last year that had dropped to 314. The company tried to keep staff on by cutting wages, telecommuting and placing employees on standby but had to surrender to the inevitable. Revenues have halved since 2008, and it posts a deficit of W20-30 billion each year.
"It's simply heartbreaking to see what Hyundai Asan has been doing to survive since the tours stopped," a Hyundai Group executive said. He added the company issued new shares twice to increase capital and stay afloat. For now, it continues to cast around for new business.
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