How North Korea Inc. Evades Sanctions Through Innovation

Dr. John Park at TedxPalo Alto 2019

A FamilyMart in the Kaesong Industrial Zone in North Korea

A FamilyMart in the Kaesong Industrial Zone in North Korea. (Mimura/Wikimedia Commons)

By Global Initiatives intern Amanda Lee 

 

June 20, 2019

At TedxPalo Alto 2019, Asia 21 Young Leader Dr. John Park addresses the loopholes of sanctions against North Korea, which have in fact allowed North Korean business methods to evolve and even thrive under sanctions. Dr. Park’s research was prompted by the discovery of advanced American, Western European and Asian circuitry and electronics in North Korean missiles in 2012. In order to answer the question of how North Korea secured this technology, Dr. Park conducted a study on North Korea as a business entity — mapping out its business practices, partners and pathway — rather than the conventional focus on the regime’s national security methods.

The business side of Kim Jong Un’s regime is what Dr. Park calls North Korea Inc., a network of state trading companies that does business on behalf of Kim. Previous generations of North Korean businessmen, according to Dr. Park, did “very little learning of business” by going on short business trips to procure items from Southeast Asia, Eastern Europe and the Middle East, and little beyond that. However, younger generations now live in Southeast Asian cities and are part of local business communities. This increasingly immersive approach has taught North Korean businessmen how to identify local partners, sign contracts and work with middlemen to help with logistics, among other new tactics. More importantly, the approach has made North Korea more robust against sanctions.

Dr. Park met one such North Korean businessman — a Mr. Kim who did business in Southeast Asia and now resides in South Korea as a defector. Strikingly, Mr. Kim “loved sanctions”, even though he was doing business at a time of continuous North Korean missile tests and subsequently harsher sanctions. Mr. Kim explains that increased risks under sanctions, counterintuitively, attracted private companies demanding higher commission fees. In return, North Korean businessmen financed these high-risk deals with the regime’s funds, gaining access, also, to the private company’s local network of businesses. Dr. Park likens this unexpected business phenomenon to antibiotics — concentrated and increased dosage led not only to drug resistance but also to adaptation, mutation and innovation.

Therefore, Dr. Park emphasizes the need to look beyond satellite pictures of North Korea in total darkness at nighttime. Instead, the future of North Korea Inc. lies in brightly lit Southeast Asia and China where North Korean individuals, weathering international sanctions, conduct business. Given this development, better policies to deal with Kim’s regime will come from better understandings of North Korea Inc.

Watch the full video below published by TEDx Talks on May 24, 2019.