An extract from a recent interview which appeared in the DR & AJU Law Group’s monthly newsletter where Michael Spavor director of the Paektu Group / Paektu Consulting discussed North Korea as a business/travel destination.
Given the recent summits, this issue is dedicated to those considering opening a business in South Korea [Legal & Brief] and/or North Korea [Q&A]. The final responses in the North Korean Q&A were provided by Canadian Michael Spavor, Director of the Paektu Group, Paektu Consulting, and Paektu Cultural Exchange, a consultant with over 20 years of experience working with the DPRK.
June 28th 2018
Question 1: Can foreign companies open businesses in North Korea?
Michael Spavor: Existing non-sanctioned business is taking place. As far as new investments, they are still forbidden, and there are very strict and complicated rules concerning sanctioned items, and working with sanctioned organizations and individuals. That being said, our organization has seen a year-on-year three-fold increase in interest from investors seeking market research as well as face-to-face matchmaking with potential DPRK ministries and future partners. While most of the interest is coming from China and Asia, we have also interest from quite a few western based organizations wanting a head start over others if sanctions are lifted.
Most successful trade and investment projects have been facilitated through trusted interlocutors or businesses that have strong and long-term “relationships” with their DPRK partners, which take many years of experience to develop. You also need to know how to connect with the right people inside the country, which can also be challenging.
Not having a strong knowledge and grasp of the DPRK’s complex business environment and not having a deep understanding of some of the sensitivities and socio-political issues concerning the DPRK from a DPR Korean’s perspective can lead to problems. Misunderstandings or the wrong attitude can lead to offending or disrespecting your potential partners resulting in them deciding not to do business with you despite how lucrative your offer might appear.
Question 2: Will the Kaesong Industrial Complex re-open?
Michael Spavor: I was in Kaesong last month and spoke to a few people that worked in the Kaesong Industrial Complex. They were very confident that the Complex would open soon. As this was a key strategic inter-Korean project and as high-level meetings are going extremely well, I believe that we should see the re-opening in the next 6 months.
Question 3: Is it possible to travel to North Korea?
Michael Spavor: Yes, of course, it’s possible. We’ve never stopped bringing tourists, potential investors and business people during the past 20 years. Even though new investments are still sanctioned, many public and private groups meet with officials, do matchmaking and/or cultural exchanges and tourism. I first visited North Korea in 2001, and since 2005, we’ve brought in over a thousand people for a variety of purposes, from the three Dennis Rodman visits in 2013-2014, as well as larger organizations such as the Young Presidents Organization, private business interest groups, scientific surveys, tourists and a number of knowledge exchange projects and other specialized delegations. There are sometimes cultural or communication issues or misunderstandings on any visit to a foreign country; North Korea is no different, however, these minor issues in our experience have always been worked out very professionally with our host organizations.
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