kim jong un north korea
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Foreigners want to open businesses in North Korea

Er, why?

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.

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Reader Comments

  • RW

    Your right to a degree. You mentioned “the wandering Jew”.

    I elaborate that the Jewish people, historically have tended to migrate almost exclusively to locations that are economically and culturally vibrant already. I would speculate that Jews have thrived in these places and have often improved the bounds of their economies and knowledge base.

    You can also ask; how many massive entertainment conglomerates, Nobel winners or billionaires has Isreal developed? If Jews are so capable, why isn’t Tel Aviv the Rome of our time?

    Jews are successful because they value education, maintain a strong social cohesive, they actively monitor and have a good sense for Zeitgeist wherever they are and they carefully choose the places they settle and congregate themselves heavily in these choice locations.

    But most importantly (haulocaust increased the importance of this aspect), they actually designed their culture for success. They not only attend Harvard, they use what they learned to better the group as a whole. With as much, they studied intricate networking systems, adapted to it and in many cases improved upon them. (See how Japan acquired Aegis warships and made them better).

    Of course there is nothing wrong with any of this. It’s when you elaborately gain disproportionate power in any society where you would stand out, you must take care when attempting to make a society better (Civil Rights movement) and rewriting that society all together (mass immigration). Ask blacks in China, Mexico, Philippines or India how much opportunity they have? Go to businesses owned by their American diaspora and see how many blacks they hire. Go to Silicon Valley and see how many East or South Asian tech workers wish they could work with more black people. California might work as a state, but as a nation, I think your rolling the nuclear dice here. I hope we can succeed as a tolerant pluralistic superpower but at this stage in human societal development, it’s a pipe dream.

    And if Jews really are the icon for success, they would see that fundamental human successes happen over generations. Just look at the rest of the planet? Are we ready?