North Korea’s budding entrepreneurs defy the odds in Kim Jong Un’s totalitarian state
As North Korean
athletes participate in the Olympics in Pyeongchang, South Korea, you
might be curious about how ordinary North Koreans live under the grip of Kim
Jong Un. Is everyone starving and marching in lockstep?
While poverty does
exist and North Koreans don't live
freely inside the communist nation, more ordinary citizens are quietly becoming
entrepreneurs. As business is incrementally tolerated yet monitored by the
regime — everyone from millennials to wealthier professionals are bootstrapping
ventures inside the world's most totalitarian state. "It's constrained and
camouflaged, but it's capitalism nonetheless," says Sokeel Park, director
of research and strategy at Liberty in North Korea, an international NGO that supports
North Korean defectors.
Strains of capitalism emerged in this communist society back in the 1990s
as markets popped up across the country to cope with the famine. Here North
Koreans became entrepreneurs out of necessity to trade for food and other
necessities. Over the years the practice expanded and the regime, unable to
feed its own people, was forced to tolerate the marketization. According to
Daily NK, an online newspaper focused on North Korean issues, more than 5
million North Koreans, or 20 percent of the population, are now directly or
indirectly involved in the general markets.
This growing tolerance for free enterprise has contributed to expanding
physical, outdoor market spaces that permeate cities and the countryside.
Comprised of stalls and roughly akin to an outdoor flea market, entrepreneurs
conduct cash transactions in Korean won, Chinese yuan and even the U.S. dollar.
Ventures range in size and type — offering everything from consumer goods, like
food and clothing, to services including haircuts and transportation, according
to a report on North Korea's marketization and details from North Korean
defectors.
The net effect is a budding, entrepreneurial ecosystem that is evolving
beyond mom-and-pop stalls run by housewives. The outdoor markets in turn are
part of a larger, emerging business framework that includes a start-up bootcamp
and government-supported tech zones. State officials are in on side hustles,
too, helping to create a hybrid, private-state model of marketization.
Not even the economic
sanctions imposed by the United States and international
community is ebbing this movement.
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Just to clarify, North Korea is not the next Silicon Valley. Challenges for
entrepreneurs are formidable. Obstacles include lack of modern infrastructure
and transportation, no widespread internet access and absence of robust
bank-lending activity. Micro entrepreneurs aren't selling their goods online.
And there's nothing equivalent to a venture capital framework. International
sanctions also make large-scale business and trade activity across borders
difficult. Despite these challenges, scrappy entrepreneurs are self-financing
their own small businesses. They're getting access to often Chinese-made goods
that arrive through the porous North Korea–China border.
Lack of internet
access and a modern digital landscape can in fact spark ingenuity. For example,
if you acquire Chinese-made apparel through a middleman, you might resort to an
analog, guerrilla marketing tactic. Get your most attractive — and tallest —
female friends to model outfits and strut up and down an outdoor North Korean
market, as one defector details in a new film on North Korea's millennial
entrepreneurs called "Jangmadang
Generation" (or market
generation).
Roughly 20 percent of North Korea's population of 25 million rely on the
outdoor markets alone, according to a report published last year by Daily NK.
"There is a hunger in this
country for people to start their own business."-Ian
Bennett, outreach coordinator for Choson Exchange
Beyond the market spaces, some North Koreans are participating in business
training offered inside the country. Equivalent to a start-up bootcamp, the
program is run by Choson Exchange, a Singapore-based
nonprofit that supports North Korean entrepreneurs. Choson Exchange mentors its
North Korean partners to incubate and develop their roughly 30 start-up
ventures and early-stage business ideas through workshops and additional
initiatives.
Ventures
range from ginseng-infused face cream to an electricity surge protector.
Students are curious about advances like drones and nanotechnology. Training
workshops include lectures by visiting foreigners from organizations including Facebook and The Economist. Each workshop
includes roughly 80 to 120 students, and the sessions are held in Pyongyang or
Pyongsong, located north of the capital.
On rare occasions a handful of North
Koreans have traveled to Singapore for internships and skills training,
but most sessions are held in the North. The workshops focus on entrepreneurial
skills and economic policy. "There is a hunger in this country for people
to start their own business," said Ian Bennett, outreach coordinator for
Choson Exchange. "North Koreans are fairly open in saying they want to
open businesses," said Bennett. "Profit is not a dirty word."
The
rise of capitalism
North Koreans have dabbled in free enterprise for years in a
kind of gray market with prescribed rules. After the North's state food system
collapsed in the 1990s, people turned to markets to feed themselves. Based on
interviews with North Korean defectors and experts over the last few years,
it's apparent the markets are irreversible and entrenched fixtures in the
economy. "Economic liberalization and opening appears to be the only
viable survival strategy," according to Park of Liberty in North Korea.
Most of the goods sold in the North Korean markets originate from China —
food, clothing, school supplies, kitchen items. Relationships with wholesalers
and middlemen with ties in China can yield shipments of goods. While the border
is protected, a bribe or two can unlock deliveries, according to defectors.
North Korean and Chinese leadership are aware of the burgeoning commercial
trade, which sanctions so far have failed to curb. But leader Kim Jong Un has
proved he can adapt to evolving marketization while maintaining control.
The Daily NK report verified the existence of 387 officially sanctioned
markets inside the country, with people selling from roughly 600,000 stalls
within the markets. The report itself and its methodology are unique. The data
was based on information gathered by 32 informants. And a third of these specially
trained informants reported from inside North Korea, which is extremely rare.
"The
image of an isolated, failing North Korea needs revision," according to
Stephan Haggard, a widely followed North Korea watcher who authored the
report's opening remarks.
Beyond
consumer goods
North Korea's markets have evolved beyond consumer goods and
offer services like transportation. For example, amid the North's decaying rail
system, military units are using their vehicles for commercial purposes. An
intercity bus line carries people and goods.
It's difficult to calculate and verify how much money is being
made through marketization activities. But according to North Korean defectors
and experts, some entrepreneurs with larger ventures are likely accumulating
significant amounts of capital.
While bribery and corruption do exist, the market ventures
broadly operate as monitored for-profit enterprises. The businesses aren't
designed to funnel income directly to the regime, according to North Korea
experts.
And don't worry. There are still housewives participating in the
markets amid businessmen with higher rank and income. But armed with China-made
cellphones, savvy housewives turned micro entrepreneurs are brokering deals
with middlemen to secure Chinese goods for sale.
Said
Liberty's Park, "We're seeing initiative from individuals in the pursuit
of profit." Park also co-directed a documentary on North Korean
millennials and their experiences inside the country as creative entrepreneurs.
The film "Jangmadang Generation" was produced by Liberty in North
Korea. "Trading is human nature," Park said. "People will find a
way."
Can
free enterprise spark reform?
Looking ahead, a key question is whether free enterprise might
unlock personal freedoms and broader reforms. But the hopeful expectation that
the trend could undermine authoritarian rule might be wrong, according to
Haggard. Seen another way, if you're an ordinary North Korean and can earn
cash, buy beer and a nice outfit, you're less likely to dissent against the
regime.
And that's not to say dabbling in free enterprise doesn't come
without risks. "The increase in marketization is almost certainly
contributing to much more pronounced inequality and corruption," according
to Haggard.
For now, though, Kim Jong Un has proved strategic, and the regime
quite resilient. The markets are evolving, but again with limitations. While
the government tolerates consumer goods and other services in the markets,
acquiring and selling outside foreign media — including thumb drives downloaded
with foreign films and unfiltered news — remain punishable offenses.
Despite the risks, most entrepreneurs are moving forward incrementally with
prescribed businesses that avoid illegal foreign media.
And while you're watching the Olympics, keep in mind North Korea's cheerleading
squad is from the same country, with regime leadership that's growing its
nuclear arsenal and, according to the United Nations, has committed crimes
against humanity that has no "parallel in the contemporary world."
Human rights abuses and nuclear weapons are important issues, but there's
no doubt the socio-economic reality underpinning them has radically altered,
according to Haggard. And it's in this surreal mashup of North Korea that
expanding marketization and entrepreneurship offer a pathway forward.
Said Geoffrey See, founder of Choson Exchange, "Having a channel of
communication, even if it's only with entrepreneurs who are not politically
influential, gives us a way to communicate what the international community is
thinking. It is a way to shape the future of an isolated country."
