The last time people tried this their companies were shut down and their stuff stolen.
What it means: North Korea is a communist state, which means they technically don’t allow people (and especially foreigners) to own businesses, or indeed anything, there. But in 2004 it set up a special economic zone (SEZ), where normal rules don’t apply. That’s a pretty normal thing to do - 75 percent of countries worldwide have SEZs, which number in the thousands. Which is perhaps why South Koreans thought North Korea’s sounded legit, and set up 125 companies in it.
Then in 2016 North Korea did some nuclear rocket testing. South Korea got angry, and the SEZ was shut down. North Korea kept all the businesses’ assets (anything of value, including profits). In total, the SEZ companies lost about $1.4 billion.
So it’s kinda odd that a lot of South Korean businesses are now super keen to have another crack at setting up shop in their northern neighbour. Big companies, including Samsung and Hyundai, have been meeting up with North Korea’s dictator, Kim Jong-un, who has said he might set up more SEZs.
To be fair, a lot of money could be made. North Korea needs a lot of stuff, including $45 billion worth of roads, buildings and other infrastructure. There’s pretty much no finance or tourism industry (we wonder why) so businesses in these areas wouldn’t have to compete with anyone else for customers. Plus North Korea pays its workers pretty much nothing, making them cheap labour.
There’s still plenty of reasons why it could all go wrong, not least because Kim Jong-un quite frequently threatens to blow South Korea up. There’s the fact that North Koreans are mostly really poor, so they don’t have a lot of spare cash for train tickets or jaunts to the beach. Then there’s the sanctions that lots of countries have put on North Korea, meaning they might fine companies that do business with it. Oh, and North Korea doesn’t really respect things like private property, contracts, or the rule of law.
In an interview with the Economist, one business boss says he wants ‘to bring the two Koreas closer’ and ‘profit is not the only motive’. That might be just as well.