Defectors funding small businesses in North Korea

They use underground funding channel to help people become less reliant on state

SEOUL • As the United States and other nations grasp for new ways to sanction Pyongyang in response to its latest nuclear test, some North Korean defectors see investment in its rudimentary market economy as a way to spark gradual change from within.

One defector living in South Korea uses a clandestine funding channel to send hundreds of thousands of dollars to help dozens of North Koreans open small businesses, such as noodle shops and grocery stores.

Last year, he shipped more than 3,000 Chinese LED desk lamps, chargeable with 12-volt solar panels, to three North Korean entrepreneurs. The defector, who escaped through China in the early 2000s, has also sent acupuncture needles, handbags, hair dye, vitamins and lingerie procured cheaply or through donations.

Under Mr Kim Jong Un, North Korea has allowed a growing number of semi-legal markets known as jangmadang, where individuals and wholesalers buy and sell goods they have produced themselves or imported from China.

The markets have improved the quality of life for many but also make them less reliant on the Soviet-style planned economy, undermining the power of the state. They also facilitate trade of contraband foreign media through USB sticks and DVDs.

"The North Korean business owners I am helping can be an alternative group to build sound capitalism," said the defector, who is in his 40s and declined to be named, fearing for his safety and that of his partners in the North.


The bigger markets grow, the weaker the regime gets, so we need to support North Korean entrepreneurs.

MR JI SEONG HO, a defector who heads Now, Action and Unity for Human Rights.

The defector, who does not seek a profit, said he has financed several grocery stores with investments of 20,000 yuan (S$4,100) to 30,000 yuan in rural towns, and more in Pyongyang.

A South Korean government-commissioned report last year proposed nurturing North Korean private businesses as a way to drive reform. The plan, which is not government policy, envisions microfinance for start-ups and partnerships with big South Korean firms.

Contact with anyone in the South, however, can be punishable by death in North Korea. That's because the 1950-53 Korea War ended in a truce instead of a peace treaty, leaving the two Koreas in a technical state of war for the past six decades.

South Korea also forbids its citizens from trading with the North but turns a blind eye to remittances estimated at US$10 million (S$13.6 million) a year sent to relatives by many of the nearly 30,000 defectors in the South.

Mr Hong Soon Jick, a research fellow at state-run Korea Institute for National Unification, said defector financiers can use the same funding routes.

"This can accelerate marketisation and circulation of information," he said. "But there are political risks, so these transactions should be done secretly, even if South Korea-North Korea relations improve."

The approach is a departure from the distribution of leaflets and USB sticks and radio broadcasts that are more typically used by anti-regime activists in the South to win the hearts and minds of North Koreans.

In a similar vein, the US State Department recently sought proposals to fund projects aimed at promoting democracy in North Korea and encouraging young defectors living in the South and who grew up among the "jangmadang generation" to reach out to young North Koreans.

One such young defector, Seoul-based activist Ji Seong Ho, has been sending funds of US$300 to US$500 at a time for North Koreans to open food stalls and crop-lending businesses in rural areas.

"The bigger markets grow, the weaker the regime gets, so we need to support North Korean entrepreneurs," said Mr Ji, 34, who heads Now, Action and Unity for Human Rights, which tries to help North Korean refugees in China to defect.

More than 1,000 North Koreans defect to South Korea every year, mostly via China. But in a rare defection yesterday, a North Korean soldier went to the South by walking across one of the world's most heavily fortified borders, the South's military said. The soldier was unarmed and there was no exchange of fire.


A version of this article appeared in the print edition of The Straits Times on September 30, 2016, with the headline 'Defectors funding small businesses in North Korea'. Print Edition | Subscribe