North Korea is threatening to pull its 53 thousand workers out of the Kaesong Industrial Zone which is a joint economic project between the north and south which was set up in 2004.
More than 120 South Korean firms operate there - and there are currently more than 800 workers from the south.
Last year trade between the north and south reached a record high - 1.97 billion dollars - despite the tension.
However, all that could be in danger.
Al Jazeera's Harry Fawcett reports from Seoul..