Japan Coast Guard patrol boats plucked the ship's entire crew out of the water in the early hours of the morning after they had abandoned the vessel and taken to life boats.
A distress signal was received yesterday from the 6,558- tonne Chong Gen which began sinking about 60 kilometres southwest of Fukue island in Nagasaki prefecture, the spokesman said.
The ship finally sank before dawn some 27 kilometres from the island.
The coast guard cited the crew as saying the ship was transporting rice from North Korea's port of Nampo on its west coast to the east coast city of Wonsan.
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"We rescued all the crew members safely and no one was injured," the coast guard spokesman said.
"We are investigating the cause of the accident by interviewing them on our patrol ship offshore," he added.
The spokesman said no decision has been made on what to do with the crew as the two countries have no diplomatic relations.