DANDONG, China -- When managers at a North Korean metal works began dreaming that foreigners' suits and blouses might one day be draped on the company's aluminum coat-hangers, there was no way to pursue international markets directly.

Few citizens of the Stalinist state are allowed to travel abroad, and it is difficult to make contacts with prospective buyers. So company officials asked Hai Feng Foreign Trade Co. Ltd., a firm in the Yalu River border town of Dandong, to explore the possibility of exporting for them.

"This morning we just received a rail car full of aluminum hangers," said a company official, who asked not to be identified. "We're selling them to Switzerland."

North Korea is hardly an environment that would lure most entrepreneurs seeking to make their fortunes abroad. It has refused to concede that its communist philosophy has led it to ruin, and trade with its former socialist partners has plummeted since the fall of the Soviet Union. Yet Dandong's proximity to North Korea has provided opportunities for traders skilled or tenacious enough to buy, sell or offer middleman services to partners across the Yalu River.

"Businessmen in Dandong don't need to get a passport to visit Sinuju (in North Korea)," said Li Baoguo, a 42-year-old Chinese trader who imports seafood from across the Yalu River. "You just need to get a border card. So it's easy to drive over and work with them."

Likewise, trusted representatives of North Korea's state-owned factories, who would have difficulty visiting virtually any other country, cross over to Dandong. North Koreans are forbidden by law from engaging in private business, but there are incentives for managers who exceed production goals.

Dandong's business ties across the Yalu has grown even as North Korea's foreign trade collapsed with the fall of the Soviet Union. Dandong's two-way trade with the North amounts to $180 million per year, officials estimate. And it has taken root even as North Korea's total trade volume fell from $4.2 billion in 1990 to $1.3 billion in 1998, according to the Foreign Business Development Association, a Beijing-based nongovernmental trade group seeking to pave the way for business with Pyongyang.

Roger Barrett, an Englishman who serves as the group's chief representative, said many foreign firms are finding ways to do business with North Korea. A Chinese company sold ostriches to a North Korean collective farm, and an automobile factory provided Pyongyang with 80 double-decker buses (the government's "gift to the people" on the 55th anniversary of the Korean Workers Party). Barrett notes further opportunities in areas ranging from oil and gas to telecommunications.

"They have been interested in doing business for some time," Barrett said. "But they don't know how to develop the gap that opened when the former communist trading bloc collapsed."

In Dandong, private trade has grown rapidly in recent years, said Thomas J. Payne, president of Thomas Payne Market Development in San Mateo, Calif. Payne's company advises businesses entering difficult markets, and he has even dabbled in exporting Peruvian chili peppers through Dandong into North Korea. Five years ago, he said, the only trade with North Korea was state-to-state exchanges. A year later, he began hearing the first whispers of Chinese private companies that were trading with North Korea.

"Now there are actually private companies that are doing full-time wholesale of products into North Korea, and also pulling them out," Payne said. "That never would have existed five years ago, and now all of a sudden, it's there."

Michael Sun, a Dandong businessman, has shipped everything from army uniforms to used Cadillacs and Toyota Coronas for North Korean elites. His company also owns a store in Pyongyang, stocking it with televisions, refrigerators, Zonghau toothpaste, White Rabbit candies, Bat electric fans, Phoenix bicycles, Golden Dragon brand vegetable oil -- anything he thinks he can unload. The store's clientele are foreigners and a few select party members; payment is in hard-currency only.

"Today the situation is the same as 30 years ago in China," Sun said. "The government needs foreign currency. They need to sell the goods to foreigners in Pyongyang, and [foreigners] need to buy the beer, the things they can't get over there. But they must pay U.S. dollars."

Some are asking whether people like Sun -- members of China's new entrepreneurial class -- might point the way to a new approach in North Korea. There are some promising hints of change. General Secretary Kim Jong Il visited Shanghai last year, touring foreign joint-ventures such as a General Motors plant and a Japanese NEC electronics plant. Sun believes Kim is exploring ways to pursue the Chinese model: a one-party state, but with increasing economic pluralism. So far, however, private enterprise remains illegal.

Still, others wonder whether Pyongyang has the capacity for reform. "They have no choice but to open to the outside world, but it seems to me that they don't understand the outside world," said Choi Won Ki, a researcher at the Seoul newspaper Joongang Ilbo's Unification Research Institute. "And North Korea has already emphasized that it will stick to the model of 'juche' (self reliance)."

Even now, the trade across the Yalu is visible every morning along the waterfront in Dandong. Just before 9 a.m., trucks loaded with cargo and covered with tarpaulins line up at a border checkpoint. The bulk of the exports from China food -- bags of rice and flour -- but there are also rolls of what looks like linoleum wrapped in plastic. Drivers often toss boxes of Tsingtao beer, chewing gum, snack crackers and other goods on top of their trucks. Most of this is private supplies for elites, but Payne believes that a few truck drivers may sell to select friends.

The largest volume of trade continues to be state-to-state deals between Beijing and Pyongyang -- trainloads of North Korean coal crossing the Yalu by rail. But locomotives also haul cargo for private companies in China. Thirty rail-cars a day roll over the Yalu River from China carrying 10 tons of cargo apiece, Li said, while another 30 cars head the other direction. North Korea buys or barters for everything from food to equipment, while it sells or trades goods such as ginseng and clothing.

In Dandong, business often takes the form of brokering deals, particularly with South Korea. Since North Korean businessmen can't visit Seoul, they sell crab, squid, abalone, scallops, sea cucumber and other seafood via Dandong, several businessmen said. The products are cold-stored, then shipped to South Korea, which also does not charge tariffs on products from the North. North Korea also sends raw silk for processing in Dandong, hauls it back to make clothing, then sends the clothes back to Dandong to sell through middlemen.

Other middlemen provide cover for North Korean companies in dealing with buyers reluctant to give their business to the Stalinist state. One Dandong firm imports North Korean clothing for a Chinese company. They will be labeled "made in China" and sent on for sale in the United States and Europe, a company spokesman said, refusing to provide further specifics.

North Koreans are reticent around foreigners on any subject, and trade is no exception. Pyongyang's embassy in Beijing refused to comment for this story. Korean businessmen in Dandong were likewise shy about interviews. North Korean is a long way from China's business-crazy variety of communism. But if North Koreans want to see what trade can do for a country, they need only look across the Yalu River. On a recent night, Dandong, with its 25-story hotels and office buildings, glowed with streetlights and the neon signs of restaurants and video arcades.

On Korean side of the river, exactly 11 lights were scattered across an otherwise blacked-out Sinuju. Maybe someday it will dawn on the planning geniuses in Pyongyang that self-reliance isn't everything it's cracked up to be.