How a sanctions-busting smartphone business thrives in North Korea

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In 2017, official customs data show North Korea imported $82 million worth of mobile phones from China, the third biggest import item after soybean oil and fabrics. That number dropped to zero in 2018 as sanctions bit. But while sanctions eliminated official imports, informal trade along the China-North Korea border appears to be ongoing, experts and defectors say.

The availability of North Korean mobile phones are a big asset in North Korea’s flourishing grey market economy. One young North Korean woman surnamed Choi recalled selling two pigs and smuggling herbs from China to raise the 1,300 Chinese yuan ($183) her family needed to buy a mobile phone in 2013. She used the phone to help successfully run a retail business selling Chinese clothes and shampoos, arranging deliveries from wholesalers.

“It turned out we could make a way more money than our official salaries,” said Choi, who has since defected to South Korea, declining to give her full name for fear of retribution against relatives still in North Korea.

In a survey this year of 126 North Korean defectors who had used mobile phones, more than 90% said cellphones improved their daily lives and about half said they used them for market activities. “Millions of people are using mobile phones and need them to make a living or show off their wealth,” said Shin Mi-nyeo, executive director of the Organization for One Korea, a South Korean support group for defectors that conducted the poll.

Sin adds: “Then their phone bills create huge income for the government.” Kim Bong-sik, a researcher at South Korea’s Korea Information Society Development Institute, said estimating revenues was difficult, but it was likely to be one of the state’s biggest earners given the scale of the business.

North Korean phones can only be used to call domestic numbers and have some unique security features. Downloading or transferring files is severely restricted. Reuters found a warning pop-up when installing an “unidentified program” on the Pyongyang 2418 smartphone stating: “If you install illegal programs, your phone can malfunction or data will get destroyed.”

“North Korea puts algorithms and software in its mobile phones to keep data from being copied or transferred,” said Lee Young-hwan, a South Korean software expert studying North Korean smartphones. The regime has also developed a home-grown surveillance tool on mobile phones, according the U.K.-based cybersecurity company Hacker House. When a user accesses illegal or non-state approved media, an alert is generated and stored inside the phone. A modified version of Android also conducts surveillance and tracks users, Hacker House said.

[Reuters]

This entry was posted in , , by Grant Montgomery.

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