The North Koreans making it down south

Kim Dae-sung's seafood noodles are getting cold as he extols the virtues of capitalism. With his sharp suits and Hyundai luxury sedan, Kim, 41, could easily be taken for one of the privileged playboys who throng Seoul's upmarket nightspots. But his new life contrasts sharply with the fear and poverty that finally prompted him to leave his homeland. Sixteen years ago he lay dying of starvation in North Korea.

Until the early 1990s only a handful of North Koreans found their way to the South each year. But the terrible famine that began in the middle of that decade saw growing numbers of escapees stream across the border into China. The flight continued even after the food crisis abated and more than 25,000 defectors have now found their way to South Korea, typically after passing through China into southeast Asia or Mongolia. Yet for many, dreams of prosperity in the South do not materialise. Defectors often struggle to find employment, while obtaining funds to start a business is an intimidating prospect for new arrivals without collateral or personal connections.

As chief executive of Working North Korea Refugees (WNKR), a micro­finance institution that provides seed finance and mentoring to entrepreneurs who have made the dangerous journey, Kim is seeking to buck that trend. Since he founded the group in 2008, he has extended loans worth Won2bn ($1.8m) to 43 businesses run by refugees. He also runs a separate business trading consumer goods, and recently set up a company making team-branded headgear for South Korea's fanatical baseball fans. All of this, of course, is a wholesale betrayal of the ideals that Kim was taught in his youth. "Business is a bad word in North Korea," he says. "People think that a businessman is the same as a conman."

Born in 1972 in Hyesan, a midsized North Korean town close to the Chinese border, Kim remembers a childhood that was comfortable compared with what was to come. At the time, North Korea's economy probably still outweighed that of the far more populous South, thanks to a Soviet-backed mass-industrialisation programme after the Korean war.

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Kim's faith in the system began to crack when he was 11. "In the 1980s there was a construction boom in Pyongyang - it looked like North Korea was developing," he says. But amid the ostensible progress in the capital, food was becoming scarce in Hyesan, thanks to a disastrous over-allocation of state funds to the military and misguided economic policies based on self-sufficiency.

"We used to get rations every 15 days but in 1983 that started getting delayed, and from 1986 the rations were cut," Kim says. After the Soviet Union broke up, the situation deteriorated still further as Pyongyang lost a vital source of economic assistance. Other factors, notably a succession of floods, heralded the appalling famine of the mid- to late-1990s.

The unfolding food crisis was to claim the lives of up to one million North Koreans, but the struggle to survive awakened the entrepreneurial instincts of Kim and many like him. As the cuts to rations started to bite, the 16-year-old began trading goods smuggled over the border from China: "I would sell cigarettes, alcohol, spices ... saccharine used to sell like hot cakes."

Compared with the money he would earn as an ordinary worker, the rookie trader could make "a fortune in just one day". But the lack of a functioning banking system forced him to hide his cash at home - from where it was repeatedly confiscated by local officials. "That happened so many times I lost count," he says. "Sometimes I was sent to prison for a spell. Then I would come back and just start again."

In 1994, the year Kim Jong Il took power following his father's death, the food crisis turned into a famine and people began to die in their hundreds of thousands. "The people who did what they were supposed to do were the ones who died," Kim says. But even the defiant young trader struggled to survive, at one point going nine days without food. "The first five days of starvation are really hard," he says. "After seven days you start feeling numb and it's easy just to lie down and do nothing. That's how you end up dying."

In 1997 Kim's mother died. His sister, desperate to find Kim to break the news, was forced to leave her mother's corpse among dozens of others in the local railway station while she went to look for her brother. By the time they returned it was dark, and Kim searched in vain for his mother's body. "There were so many dead bodies and everyone was so thin that it was hard to tell who was alive and who was dead - even who was male and who was female. They didn't have any faces at all," he recalls.

Later that year, risking being shot in the back by a North Korean border guard, Kim managed to wade across the Yalu river into China. For more than a year he worked illegally in northeast China, felling trees, planting rice and building roads, before being taken in by a US missionary, who sheltered him for three years. Finally, he made the long and dangerous journey to China's southwest, smuggling himself through Myanmar and Laos into Thailand, where he presented himself at the South Korean embassy.

Defectors arriving in South Korea are debriefed intensively by security agents before going to the Hanawon rehabilitation complex, where they are given training in the skills considered necessary to lead a normal life in the South. Adapting can still be a struggle: many North Korean defectors are dumbfounded by the slang they encounter in the South, with its plethora of loanwords from English, while their distinctive accent instantly marks them out from the rest of the population. They are also confronted by a maze of unfamiliar technology; one charity worker tells of the humiliation of a middle-aged female defector who stood prodding helplessly at an automated teller machine while those waiting behind her sniggered impatiently.

But Kim was determined to succeed. He took advantage of a government scholarship programme to study for a degree in Chinese at Seoul's prestigious Hankuk University of Foreign Studies. Soon afterwards he started his microfinance organisation with the support of Yoo Jae-hoon, a senior official in the Financial Services Commission, the main financial regulator.

Kim is blunt about the need for business nous and has refused credit to many of the defectors who approach him. Even so, four of the entrepreneurs he did back have already lost their businesses - and their stories provide a sad illustration of the challenges facing North Koreans in the South. One woman's hair salon collapsed after she struggled to make small talk with customers, and to cut the unfamiliar styles they demanded. Another, a man who set up a convenience store was, says Kim, exploited by the owner of the store franchise, who gave him such a poor location that he was unable to stay afloat.

Most of the entrepreneurs selected by WNKR are still in business. But for Park Jina, 37, who opened a traditional medicine clinic with its support, it has been a shock to lose the elevated social status that she enjoyed as a doctor in North Korea. Soon after she started her business a client told her that he would demand his money back if her treatment was substandard - an unthinkable way to speak to a doctor in the North, where they are highly revered.

Before escaping to the South, Park worked as a doctor in the main hospital of her town (which she prefers not to name). She still staunchly defends the standard of medical treatment in the North: "South Korean media describe North Korean medical quality as being very low - but it's not true. We may not have had cutting-edge technology but the quality of care was quite high."

However, she remains haunted by scenes she witnessed in North Korean hospitals during the famine. "When people don't eat for several days their faces swell up. But all we could do was give them pills that did nothing for them. Until then I had been very loyal to the government. But when I saw all those people dying of hunger, I began to wonder if the regime was to blame."

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Park set up her clinic in 2011, four years after arriving in South Korea. It is small but modern and attractively decorated, with a steady stream of patients. Yet Park's difficulties in integrating - something shared by many defectors - give a bleak hint of the trauma that will be encountered if the nation is reunited.

Korea remained fully integrated for more than a millennium after King Taejo first unified the peninsula in 936, its people's fierce sense of nationhood withstanding invasions from Manchuria and Japan. The second Japanese occupation ended with the empire's defeat in 1945, after which Korea was divided into US and Soviet zones of temporary stewardship. Initial plans for national elections were never fulfilled.

Since then, the respective cultures of the two Koreas have diverged dramatically. Fewer and fewer South Koreans yearn to see relatives trapped on the other side of the border, or can remember life before partition. Many, particularly the young, fret about the economic impact of unification, which would cost up to 7 per cent of South Korean gross domestic product every year for a decade, according to the Seoul government. In a 2011 poll conducted by the Asan Institute, only 21 per cent of South Korean respondents felt a common identity with the North. Twenty-two per cent said it was "the enemy".

This cultural and emotional gulf means that many defectors find themselves unable to build relationships with the people of the South. "I feel thirsty for companionship," Park says. "I don't have bosom friends that I can share sad or difficult things with."

When she married last year, she invited only a few of her patients and some volunteers from organisations that aid defectors. Her pharmacist husband is also originally from the North. "How could a South Korean man understand what a North Korean woman has been through?"

Earlier this year, warnings of imminent war from North Korea's state media made global headlines. Happily, no one was killed - but one victim of the breakdown in relations was the Kaesong Industrial Complex (KIC), the only outpost of South Korea's capitalist economy in the North.

Launched in 2004, 15km inside North Korea, the complex hosted 123 South Korean companies employing 53,000 North Korean workers, before Pyongyang suspended it in April. Intergovernmental talks this summer have made erratic progress towards a resumption of operations. Critics of the KIC argued that it did little more than allow second-rate businessmen to exploit cheap North Korean labour. Proponents said it had the potential to open North Korean minds to the prosperity to be found across the border.

For Kim Na-yong, who used to live near Kaesong, it was Choco Pies that made her realise life was better in the South. "Oh, they were delicious!" she cries, remembering the sweet snacks distributed by the KIC companies as bonuses to their workers, many of whom sold them on the black market. "North Korean food is so rough. When we tasted the Choco Pies, that was when we knew that South Korea was more developed."

Despite the limited culinary resources available in the North, Kim was proud of her abilities as a cook. She is now preparing to open a cookery school in Cheongju, a town in the central region of South Korea. Start-up funding came from the Korea Microcredit Joyful Union, another of the microfinance groups that help entrepreneurs unable to get funding from banks. But there were plenty of other challenges: "When I looked at the recipes with things like butter, cheese and mayonnaise, I didn't know what these things were," she says. "I went to the supermarket and tried to figure it out."

Kim's unfamiliarity with these foodstuffs is particularly striking given her privileged position in North Korea. Her parents hailed from the poor northern region of Hamgyeong but were sent to Kaesong as part of a forced population movement in 1960. Only trusted citizens were allowed to live there, and Kim's father's position as president of a factory meant that her family's life was more comfortable than most. Nonetheless, she had just one pair of socks to last her a year - a reflection of the spartan existence of North Korea's people even during its economy's strongest years.

By the time of the famine, Kim was married to a senior army officer and working in an administrative role in Sariwon, a town near Kaesong. Her high social standing meant that she never faced starvation. But like so many defectors, she remains haunted by the breakdown of the 1990s. "One day a young boy asked me for money for food as I was walking to work," she says. "I gave him 10 won to buy some noodles. The next day I saw him frozen to death in the same spot. I cried all the way to work."

Yet the idea of fleeing never occurred to her until her 23-year-old daughter suddenly vanished in 2008. After several months she received word that her daughter was in South Korea and she decided that she and her son must go too, her husband having died a few years earlier. Kim's savings, combined with remittances from her daughter, came to about $5,000 - enough to pay for her passage in a series of trucks and buses through China and Myanmar into Laos in just 12 days. But she paints a damning picture of the treatment of many defectors by some of the intermediaries entrusted with their lives.

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Knowing that their charges had nowhere else to turn, Kim says, a string of Chinese "brokers" treated them "not as human beings but as cargo", feeding them just once a day. Three times in less than two weeks she saw young female refugees summoned to have sex with the brokers - a hideous echo of the "joy brigades" conscripted by North Korea's leaders. "We put our lives in their hands - they could play God with us," she says.

In a covered market complex in Gunpo, a dreary satellite town on the outskirts of Seoul, Park So-yeon's shoulders brace with the effort of stirring a vat of tofu the size of a Roman cauldron. In a photograph hanging at the front of her small shop she appears smiling alongside then South Korean president Lee Myung-bak, whom she met at a small business owners' forum last year.

Park, who fled North Korea in 2002, periodically breaks off her labour to greet her customers with easy banter. "That one's a regular," says Park of a woman leaving the store laden with shopping bags. "She knows I make the best cucumber pickle in town."

Despite a recent slowdown in business amid a faltering South Korean economy, Park has built a successful operation and has already paid back half the Won50m ($45,000) loan that she secured from a microcredit foundation funded by Hyundai. But she faces bitter competition from rivals, one of whom told customers that Park put harmful chemicals in her tofu. "North Korea is a very pure society," Park says. "But the South Korean market is like a war zone. People struggle for money and everything else - they're so aggressive, trying to trample on other people."

Park came from the relatively poor province of Hamgyeong but her husband's job, managing the distribution of goods, gave her an elevated status. This protected her from the famine, although she had to deal with a constant stream of visitors in search of coffins for their loved ones. Yet that period did not prompt her to condemn the regime, even in retrospect: she still attributes the disaster primarily to insufficient US humanitarian aid.

Had it been up to Park, she would never have left North Korea. "I didn't mean to come all the way here," she says. Her husband's family had warned him against marrying a woman known to have relatives in China and their fears proved founded. In 2002, she was caught near the border on her way back from a secret visit to family members. Park spent a week in prison - a traumatic experience, although she escaped the horrific concentration camps that hold tens of thousands of people considered politically undesirable by the regime. More serious was the reaction of her husband, who divorced her to save the honour of his family. Disgraced and isolated, Park decided she had to leave. "I regret leaving North Korea but I had no choice," she says.

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According to the constitution of the Republic of Korea, all 25 million people in North Korea are subjects of Seoul, on exactly the same basis as the 50 million in the South. There are even five governors charged with administering the provinces north of the border. But Park feels she has spent the past 10 years in a foreign country. She is aghast at what she sees as its lax approach to crime, citing a recent string of child abuse cases that have drawn heavy media coverage. And she laments the fierce jostling for position in South Korea, speaking nervously about the career prospects of her two children, who migrated with her. Her 31-year-old daughter plans to open a beer bar, while her son, 28, works for a computer company. "In North Korea, when people graduate, they get dispatched to work," Park says. "They don't have to worry about finding a job."

Yet Park's open doubts about South Korea's brash, materialistic, competitive society cannot hide the fact that she has, in other respects, wholeheartedly embraced it. "I want to make money, I want to be rich," she says. "People can't make money in North Korea however hard they work. Now I've tasted capitalism in South Korea, I couldn't endure that. I couldn't go back."

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Simon Mundy is the FT's Seoul correspondent.

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