Just one month after North Korea issued numerous business licenses in major cities such as Nampo, Rason, Sinuiju and Wonsan before the 80th Party Foundation Day, new businesses are making sales and creating jobs, but managers are complaining that the government is already claiming a cut of their earnings.
“After the Cabinet gave municipal people’s committees administrative guidance in late August to make way for more entrepreneurship, more businesses have been registered. With the approval process streamlined, several companies have begun operations since early September,” a source in North Korea told Daily NK recently.
According to the source, there are generally two ways to establish a business. The first is to solicit small amounts from multiple investors, and the second is to receive a large sum from a single investor. Depending on the business type, starting capital runs from the tens of millions to hundreds of millions in North Korean won.
Business type varies with the region. Logistics and shipping companies have been cropping up in Rason, a hub of trade between North Korea, China and Russia, while there has been an uptick in tourist-oriented lodging and food and beverage businesses in Wonsan.
While these companies have only been in operation for one month, they are already putting up strong sales figures.
A Nampo clothing company that supplies casual and work attire produced with imported Chinese fabric reportedly recouped 10-15% of its initial capital in two weeks.
In Sinuiju, a food producer is supplying childcare facilities, schools and marketplaces with more than 2,000 bread products and other baked goods at wholesale prices each day, hitting 120% of its weekly sales goals.
Job creation offset by government demands
These new companies have also had a noticeable impact on job creation. Another clothing company in Nampo that started out with 10 workers has more than tripled its workforce in a single month, a source said.
“Women make up more than half of the workers at this company, and lots of young people are being hired as well. People are excited by the new jobs being brought by these companies, which are helping to tame unemployment,” the source said.
But as these companies boost their sales, they have another challenge to face: the government wants a piece of the pie.
Company managers are shocked that nearly half of their profits are being claimed by the authorities under the name of “management fees” and “state contributions” — expenses they had not expected when they took out their business license.
“Now that our sales are increasing, the authorities are assessing so many fees that it’s unclear whether we can even pay our workers’ wages,” one company manager complained.
“Whenever we start making some money, the government finds various excuses to collect it,” another said.
“For now, companies are careful to pay everything they owe because the authorities have threatened that rule breakers will face legal consequences. But we’ll have to see how long that lasts,” the source said.
“Many people are waiting to see whether deep-pocketed investors and industrious entrepreneurs will finally reach a meaningful arrangement or whether this will end up being just one more dog and pony show,” he added.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: dailynk.com
