What It’s Like Having A Startup In North Korea
North Korea
is not exactly known for its open approach to innovation. A centralised economy
and tight social control mean that little can grow in the country. Despite
this, entrepreneurship is flourishing in one of the most backward nations in
the world. Believe it or not, a territory just north of Pyongyang has even been
dubbed North Korea’s Silicon Valley.
The
Institute for Peace and Unification Studies in Seoul National University claims
that North Korea relies on economic activities rather than state
rations for over 80% of their household income. Since the early 2000’s private
markets have been progressively liberalised and urban markets are regularly
held.
Flash
forward to 2016 and North Korea even held its first startup fair. Held in a
University Auditorium, six foreign professors assisted the event to run
seminars for students who made products out of modelling clay and practised
their presentation style. After attending, Jukka-Pekka Heikkilä of Helsinki’s
Aalto School of Business claimed that a “real” start-up fair will be possible
only after significant changes in the country’s legislation and business
climate.
Despite
having a bad press, Kim Jong-un is the first North Korean leader to implement
market-oriented reforms. In fact, sources claim that it is thanks to this boom
that the nation has recovered from the famine affecting them since the early
1990s. This is largely thanks to his agricultural reform which allows individual
families cultivate previously state-owned fields.
What
Is Holding Startups Back?
The main limitation of the system is that North Korea
only tolerates entrepreneurship that does not threaten the status quo. Many of
the present enterprises are joint ventures with the government or are operated
by foreigners with special authorisation and limited control. The centralised
system requires everything to be approved by the state meaning that even
processes like employment and scaling up require government intervention. The
only loans present are also state given, meaning that businesses are also
financially dependent on the nation’s support. As a consequence, there is
little opportunity for businesses to actually scale up.
Major holdbacks are also present in tech
entrepreneurship as connectivity is lacking, meaning that people are not able
to see their competition and often pitch products that already exist.
North Korea’s Silicon Valley
The Unjong technology zone is where North
Korea’s startup scene is mainly concentrated. The nations ‘hybrid’ socialist
system means that the government owns most of the tech startups. This zone is
divided into information technology, biological technology and other sectors
such as engineering technology. Locals have claimed that individuals with
startup ideas report them to the government who helps them build the business
in the area. However, most private businesses in North Korea are foreign owned
and collaborate with the government. Here are some recent foreign-local joint
ventures that have entered the country.
Noko
Jeans
Three Swedish advertising professionals opened up the first jeans companyexporting to North
Korea. To open the export deal all they did was email the government who
approved the business. Although this venture only lasted from 2009 to 2011, it
was a significant step as it was the first country to import jeans to North
Korea.
Nosotek
Nosotek, also known as The Number One Software
Technology, is the first Western and North Korean IT joint venture. It is known
for creating computer games such as Pyongyang Racer, a racing video game
developed to promote tourism.
Although not your typical venture deals, North Korea
does have a business scene at an embryonic level. So can businesses grow if
economic liberalisation is not accompanied by equal political freedoms? Do the
two phenomena necessarily need to work together to create a prosperous nation?
