Unlocking the Entrepreneurship of North Korean Refugees

July 20, 2022

By Jaemyung Lee, Kwang Kim

There are almost 34,000 North Korean refugees in South Korea, most of whom have risked their lives and fled their homes in search of political and economic freedom on the other end of the peninsula. While finding a job is still the norm for these people as they look to make a living in their new homes, entrepreneurship is slowly gaining popularity.

This includes celebrity refugee entrepreneurs such as the founder of Jessie’s Kitchen, a food and beverage business selling flavors from North Korea, made famous by an episode of Somebody Feed Phil on Netflix. But most refugee entrepreneurs struggle to keep their businesses running, including one we spoke to not long ago who was agonizing over closing her restaurant.

Seoul cityscape. Many North Koreans with entrepreneurial ambitions are ill prepared for the hyper-competitive environment they encounter in the South (photo: Robert Koehler).

While no exact figures exist, it is estimated that there are at least a thousand North Korean entrepreneurs in South Korea. Forty percent of North Korean refugees aspire to become entrepreneurs, according to the Hana Foundation, but despite these aspirations, the entrepreneurial journey is not an easy one for North Koreans, who have no experience and little understanding of South Korea’s competitive, free-market culture. In fact, in an Asia Foundation survey of 131 North Korean entrepreneurs in 2020, 53.4 percent pointed to excessive competition in South Korea as their most daunting business challenge, along with lack of access to financing. Many continue to struggle with the basic concepts of a market economy.

Many of my fellows naively believe that once you start a new business, good things will happen, only to discover that things are far from “good” here in a capitalistic society.
—A North Korean refugee entrepreneur

After surviving their perilous journey, refugee entrepreneurs from the North need a particular kind of support that equips them with the fundamental attitudes and perspectives required in the hyper-competitive market environment of the South.

The Asia Foundation has launched a program called Personal Initiative Training (hereafter PI Training). PI Training was originally developed in Germany during reunification to close the cultural and economic gap between workers in East and West Germany after several decades of separation—a situation analogous to what North Korean refugees experience upon their arrival in the South.

Unlike traditional entrepreneurship programs, which rely on one-way lectures focused on skills and knowledge, PI Training emphasizes hands-on training, group discussions, and feedback exchanges to instill the mindsets, attitudes, and behaviors that contribute to entrepreneurial success—the so-called “PI traits” such as self-starting, future thinking, and overcoming barriers. The training uses a mix of carefully designed case studies and facilitated group discussions to help trainees apply what they’re learning to the management of their businesses.

What makes PI Training special is that it forces you to think and act in a “PI way”… through constant group discussions and case studies. After weeks of repetition in challenging yourself and your peers to think [this way], you find yourself doing this naturally as a new habit in your regular business operations. This is really what PI Training is all about.
—Dr. Alexander Glosenberg, PI master trainer, Loyola Marymount University

PI Training has led to tangible results in business performance that go beyond mindset and behavioral changes. A study in the journal Science found that PI Training was more effective in improving business performance than best-in-class entrepreneurship training programs like the World Bank International Finance Corporation’s Business Edge.

Personal Initiative Training for North Korean refugee entrepreneurs. Instead of lectures, PI Training using interactive coaching to instill the mindsets, attitudes, and behaviors that contribute to entrepreneurial success.

Since 2020, the Foundation has trained five North Korean entrepreneurs as trainers, who have since delivered a six-week PI Training curriculum to 20 fellow entrepreneurs from the North. Throughout the PI journey, the trainees “were challenged to question their status quo and constantly explored more ‘PI ways’ to improve their businesses and overcome the barriers at hand, through intensive group discussions and exchanges of feedback,” according to one participant.

The training program resulted in significant changes in the mindsets of participants, more of whom expressed a willingness to take risks to secure new opportunities and differentiate their businesses from their competitors. Post-training interviews found significant behavioral effects: 87 percent reported making changes in their business operations and management, and 80 percent reported improvements in communicating with customers.

More significantly, PI Training’s impact on North Korean refugee entrepreneurs can be seen in the bottom line. Within three months of completing the program, 67 percent of participants said they had improved their profitability, either through increased sales or cost reductions.

After I learned the “bootstrapping” concept from PI Training, I looked at my current operations for cost reductions. After careful examination, I discovered a way to significantly reduce the fixed cost of my office by getting a space that is provided at a very affordable price to disadvantaged groups. This allowed me to improve my profitability in the short term and invest more in product development to enhance my competitiveness in the long term.
—Ms. Ahn, fashion business

Thirty-three percent of participants also gained access to new sources of capital within six months of their PI Training—either government grants or seed funding from a business accelerator. One participant said that she obtained KRW 100 million in government funding (about USD 77,000) that she had repeatedly failed to secure before the PI Training:

Before the training, I focused only on my own ideas when preparing my grant proposal, but PI Training showed me the importance of feedback from other perspectives. I conducted surveys and interviewed people from donor organizations to get honest feedback about my previous proposals, and I figured out their emphasis in evaluating proposals. As a result, I was able to develop a much better proposal, and I was finally awarded the KRW 100 million grant.
—Ms. Kim, art education business

These small but significant changes in the entrepreneurial outlook and resolve of North Korean refugees are having an impact. The restaurant owner who was considering closing her business is now developing an updated menu and a delivery service. “The PI Training gave me new hope to continue my business,” she says. Hope is a much-needed currency in the refugee community and in North-South relations as a whole.

Jaemyung Lee is a program analyst in The Asia Foundation’s Korea office, and Kwang W. Kim is the Foundation’s Korea country representative. They can be reached at [email protected] and [email protected], respectively. The views and opinions expressed here are those of the authors, not those of The Asia Foundation.

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