A clothing store selling North Korean garments has recently opened in Dandong, China, and is proving quite popular, sources in the region report.

“In late November, a store selling clothes produced by North Korean laborers opened on the first floor of a building in downtown Dandong. The store sells affordable winter jumpers, hiking clothes, and exercise wear,” a source in China reported to Daily NK on December 11.

“The store has four or five female North Korean employees in their mid-20s. I asked them in Chinese about the products in the store, but they weren’t able to respond in Chinese.”

The clothes in the store are popular due to their inexpensive prices, costing an average of 200 yuan. Some brands sold in the store are available on Chinese online shopping websites for six times the store price.

The design and quality of the clothes are comparable to higher-priced items, and some local residents have brought boxes to cart away their larger purchases.

At least some of the clothes, however, appear to have slight defects. The store is essentially selling clothes produced by a Dandong-based clothing company that were damaged in the production process.

“The clothes normally go for more than 1,000 yuan and despite having slight defects are being sold for only 2-300 yuan. That’s what makes them popular,” said a separate source in China familiar with the shop.

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The existence of the store means that Chinese companies and the North Korean government have found ways to avoid international sanctions, observers say. The clothes are not produced in North Korea, but instead produced in Chinese factories staffed by North Korean workers who enter the country on work visas and therefore not subject to United Nations Security Council-imposed sanctions.

That being said, another issue may exist. The clothing factory in question produces a variety of clothing brands, including those from South Korea’s Kolon and the Chinese brand KAILAS, which are being exported to South Korea, according to both sources.

If that is true and the factory in question is a joint Sino-North Korean company, then the South Korean company could fall victim to a secondary boycott for having outsourced manufacturing to that factory.

“We have to look at all the possibilities. If the Chinese company just hired North Korean workers to make the clothes, then this might not be a sanctions violation,” one North Korea analyst in South Korea told Daily NK on condition of anonymity. “But there is a high possibility that some of the wages of the North Korean laborers at the factory are flowing back to the North Korean government’s loyalty fund. This could cause an issue in the future.”