NOTE: Viết bản cứng, làm sẵn in text citation
B. Executive Summary
The Vietnamese company selected for this analysis is TH True Milk, a
leading dairy brand under the TH Group. Established in 2009, TH True Milk is
known for its commitment to clean-label, organic, and high-quality dairy
production using modern technology and fresh milk from large-scale farms in
Nghệ An Province. Its main product lines include UHT fresh milk, yogurt and
fermented dairy, nut-based milk beverages, and organic juices. Among these, UHT
milk stands out for its long shelf life and suitability for export, especially to
countries with limited refrigeration infrastructure. The company has already
expanded to international markets like China, Russia, and the Middle East, proving
its capacity to operate in complex and diverse global environments.
This report considers North Korea as the target export market for TH True
Milk’s UHT products. This market offers untapped potential for essential consumer
goods, especially shelf-stable dairy products. With a young, working-age
population, a growing need for nutritional imports, and logistical access via China,
North Korea could represent a strategic opportunity for long-term expansion.
However, it also presents unique challenges due to its centrally planned economy,
limited infrastructure, and strict trade restrictions, making market entry highly
difficult and requiring a cautious, well-monitored approach.
Based on the analysis, it is recommended that TH True Milk should not
export UHT milk products to North Korea at this time. Although there is potential
demand for shelf-stable dairy products in urban areas, the current challenges
outweigh the benefits. Strict sanctions, regulatory constraints, and limited
infrastructure create significant barriers to market entry, alongside the political and
economic unpredictability of North Korea's centrally planned system adds further
risk. Therefore, TH True Milk should closely monitor future developments and
only consider export when conditions become more stable, accessible, and legally
viable.
Section I. Country Overview (no more than 1 page)
A. Factual data
North Korea is located in East Asia, on the northern part of the Korean Peninsula,
with 80% of its terrain is composed of mountains and uplands and coastlines along
the Yellow Sea and the Sea of Japan. The country shares land borders with China,
Russia, and South Korea, with China being its dominant trading partner,
accounting for over 90% of official trade. As of 2025, North Korea has a
population of around 26.5 million, with 63% living in urban areas and a large
portion in the working-age group. The economy is highly centralized and driven by
sectors like mining, manufacturing, construction, and utilities, with the mining
sector playing a key role due to rich reserves of coal, iron ore, limestone,
magnesite, and other valuable minerals. However, these resources remain largely
underexploited because of international sanctions, outdated infrastructure, and
limited foreign investment.
B. Background
Since its establishment in 1948 as a communist state under Kim Il-sung,
North Korea has followed a centrally planned economy based on the ideology of
Juche. Its industrialization began in the 1950s with strong support from the Soviet
Union and China, focusing on heavy industries such as mining, steel, machinery,
and military production - sectors that became the backbone of its economy. This
emphasis continued through the Cold War, with large state-run enterprises
dominating key areas like coal and metal production. Although the country
experienced early industrial growth, the collapse of the Soviet Union in the 1990s
triggered a severe economic crisis. Since then, North Korea has remained largely
isolated, with limited market reforms and continued strict government control,
making foreign trade difficult but crucial for securing essential goods like food and
nutrition.
Section II. Political and Legal Analysis
A. Political ideology
1. Totalitarianism
North Korea operates under a totalitarian regime dominated by the Kim
dynasty. The state's guiding principle is Juche, an ideology developed by Kim
Il-sung, emphasizing self-reliance and national sovereignty. Juche has been
institutionalized to justify the absolute authority of the ruling family and the
centralized control over all aspects of life.
Operating in a totalitarian system like North Korea means that all business
decisions require government approval. TH True Milk would have to work directly
with state-owned enterprises or through government-appointed partners. There is
minimal space for independent or private enterprise, which increases risk and
limits flexibility.
2. Pace of progress
The political structure remains rigidly centralized, with no signs of
democratic transition. Power is concentrated in the hands of the Supreme Leader,
currently Kim Jong-un, the ruling Workers' Party of Korea. The regime maintains
strict control over political expression, with dissent often met with severe
punishment.
Without political reform, policies are unlikely to change in favor of foreign
business liberalization which creates an unpredictable market. TH True Milk would
face consistent regulatory and operational barriers unless granted direct state
support.
B. Political risk
1. Level of political risk
North Korea presents one of the highest levels of political risk globally due
to its international isolation, nuclear ambitions, and frequent confrontations with
other countries. It is under extensive international sanctions from the United
Nations, the United States, the EU, and others.
This means barriers for foreign companies in financing, logistics, and
compliance. Most global banks avoid transactions involving North Korea, and any
business deal risks being viewed as a sanctions violation. TH True Milk would face
legal and reputational risks when attempting to enter this market.
2. Main Sources of political risk:
● International Sanctions: prohibit export, reexport of goods, services, and
technology to North Korea
● Government Control: tight control over the economy, with state-owned
enterprises dominating all sectors. Private enterprise and foreign businesses
often face significant bureaucratic hurdles.
● Currency Restrictions: The North Korean won is non-convertible, and the
use of foreign currencies is highly controlled.
● Corruption: North Korea is ranked among the most corrupt countries
globally, with widespread bribery and nepotism.
These risks mean TH True Milk would face difficulty in securing reliable
local partners, navigating customs procedures, and ensuring payment. Without
strong government backing or third-party involvement, investment is unsafe.
3. How to adapt to the political risk
To adapt to the political risks, companies must work through indirect
channels and diplomatic frameworks. According to Vietnam’s Government Portal,
Vietnam values its traditional friendship with North Korea and is ready to
strengthen economic and trade cooperation (Vietnam Government Portal, 2024).
Leveraging diplomatic ties and state-led trade agreements could offer a safer route.
For TH True Milk:
1. Work through the Vietnamese Government: Collaborate with Vietnam’s
Ministry of Industry and Trade to explore diplomatic trade avenues.
2. Government-to-Government Contracts: Any export should be formalized
through bilateral agreements to ensure legal clarity and state protection.
3. Limit Investment Risk: Avoid large-scale capital investment; focus on
short-term, low-volume exports through humanitarian or development
frameworks where permissible.
C. Legal system
1. Common law, civil law, or theocratic law
North Korea’s legal system is based on a socialist framework, deeply rooted in
Juche ideology (self-reliance) and serving to reinforce the authority of the ruling
Kim regime (CIA, 2024). Unlike common law or civil law systems, North Korea’s
legal structure lacks judicial independence, transparency, and predictability
(Freedom House, 2023). The application of law is often arbitrary and politically
motivated, rather than guided by established legal precedent (HRW, 2023). As a
result, the legal system is not conducive to secure or reliable business operations,
making it extremely difficult for foreign enterprises such as TH True Milk to
protect their interests or resolve disputes through formal legal means.
2. Incidence of intellectual property violations
Despite being a nominal signatory to international agreements like the Paris
Convention, North Korea has a poor record in protecting intellectual property
rights, particularly those of foreign companies (WIPO, 2023). Counterfeiting,
unauthorized reproduction of foreign trademarks, and misappropriation of brand
elements are widespread, with little to no legal recourse available (USTR, 2023).
IP enforcement mechanisms are weak or nonexistent, and violations are rarely
prosecuted. This environment presents a serious risk for TH True Milk, as the
likelihood of brand misuse or IP theft is high, and any proprietary assets introduced
to the market could be compromised without compensation or legal protection.
3. National enforcement of property rights (patents,
trademarks, and copyrights)
All land and significant assets in North Korea are owned by the state, and foreign
entities cannot legally acquire property rights (OECD, 2022). Business operations
are generally limited to state-approved joint ventures, where the foreign partner has
limited control and little security over their investments (UNCTAD, 2023). Patents,
trademarks, and copyrights may be recognized on paper, but in practice,
enforcement is inconsistent and subject to political discretion (WIPO, 2023). This
means TH True Milk would have no guarantee of maintaining control over its
assets or protecting its intellectual property within the country, significantly
increasing the risk of operational and financial loss.
4. Presence of product safety and liability laws
North Korea does maintain some basic regulations concerning food safety, but
these are outdated and inconsistently applied (FAO, 2022). There are no reliable
product liability laws or enforcement systems to address consumer harm, defects,
or recalls (HRW, 2023). Regulatory inspections may occur but are often arbitrary
and politically motivated, with limited transparency or due process. For TH True
Milk, this implies that any product-related issues - whether valid or manufactured -
could be politicized and used against the company, and there would be no
dependable legal framework to handle such situations. Extreme caution in quality
control and government relations would be essential.
5. Level and focus of taxation
Taxation in North Korea is opaque, unstable, and heavily influenced by political
considerations (York, 2019). While some Special Economic Zones (SEZs) may
offer favorable tax terms to attract foreign investment, these incentives can be
altered or revoked without legal justification. There is no clear or enforceable tax
code for foreign investors, and tax burdens may shift depending on the political
environment or government needs (Lee, 2003). For TH True Milk, this creates a
highly uncertain financial landscape, where even initially attractive agreements
may lead to unforeseen costs and state intervention. Any tax arrangement would
require high-level negotiation and ongoing diplomatic engagement to ensure
stability.
Section III. Economic Analysis
A. Economic system
North Korea has a centrally planned economy, which means that the government
controls nearly every part of the economy, including what is produced, how much
is produced, and how resources are used. The state owns almost all land, factories,
and farms, and private businesses are either banned or very limited. Prices, wages,
and trade are also set by the government, not by supply and demand like in market
economies (BTI Project, 2024).
This type of system creates many problems for foreign companies. First, it is very
hard to make business decisions because everything must go through government
approval. Second, there is no real competition or free market, so companies cannot
respond to consumer needs or changes in demand. Third, the government can
change rules or cancel agreements at any time without warning, which makes
planning and investing very risky.
For TH True Milk, this system is a serious barrier. Even if there is a need for UHT
milk, the company would not be allowed to sell directly to customers or open
stores. Any sales would have to go through the North Korean government, and the
company would have no control over pricing, marketing, or delivery. Because of
these strict controls and unpredictable policies, the centrally planned system in
North Korea does not support safe or successful exports. TH True Milk should not
enter this market under the current conditions.
B. Economic development
North Korea’s economy is weak and not suitable for commercial trade. Even
though UHT milk could meet some nutritional needs in the country, economic
conditions make it too risky and not profitable for TH True Milk to export at this
time.
1. GDP and GDP per capita
In 2023, North Korea’s total GDP was estimated at 29.66 billion USD, with a small
growth of 3.1% compared to the previous year (Bank of Korea, 2024). However,
GDP per capita was only 1,217 USD. For comparison, Vietnam’s GDP per capita
in the same year was about 3,900 USD, and South Korea’s was 32,000 USD
(Trading Economics, 2024; Wikipedia, 2024). This low number means that people
in North Korea have very little money to spend. Most of the population cannot
afford imported products like UHT milk. For TH True Milk, this means there is no
realistic customer base to sell to using regular retail methods.
2. Level of human development
North Korea’s Human Development Index (HDI) is about 0.73, which puts it in the
medium range, but many people still live in poor conditions (IMUNA, 2023). Life
expectancy is 71.6 years, but around 10.1 million people - nearly 40% of the
population - are food insecure (World Food Programme, 2023). Most people do not
consume dairy because the country has almost no dairy industry, and there is very
little cold storage (BTI Project, 2024). UHT milk can be stored without
refrigeration, so in theory it fits the situation. However, most food aid is managed
by the government or international organizations. There is no open market where
TH True Milk can sell its products directly or earn profits. The product might help
people, but it would have to be given away or sold under special programs, not
through business.
3. Macroeconomic indicators (unemployment, inflation, etc.)
North Korea does not share official data about inflation or unemployment, but
experts say both are serious problems (BTI Project, 2024). The government
controls prices and restricts the use of foreign currency. Many people use Chinese
yuan or US dollars in informal markets, but these markets are not safe or legal for
foreign companies. Trade is also very limited. Since 2016, North Korea’s trade
volume has dropped by over 90% due to sanctions ([Link], 2023). In 2023,
the country only imported about 116,000 USD worth of dairy products - mostly for
aid - from China (OEC, 2023). This shows there is no real system for importing
and selling products like UHT milk commercially. TH True Milk would depend on
government permission, with no control over how the product is used or who
receives it. Even though UHT milk could help solve some health problems in
North Korea, the country’s poor economy, low income levels, and strong
government control make it too risky for TH True Milk to export there. At this
time, the company should not enter the North Korean market. It is better to wait for
changes in the economy and political system before considering any future
business there.
C. Infrastructural forces
Infrastructure in North Korea is very weak, especially in transportation and
communication. These problems make it difficult for foreign companies to deliver
goods or manage business operations. Even though UHT milk does not need
refrigeration, the lack of reliable infrastructure still creates serious challenges for
export.
1. Transportation (logistics)
North Korea has around 26,000 kilometers of roads, but only about 700 kilometers
are paved and usable all year (CIA, 2023). Most roads are in poor condition, and
many areas in the country are hard to reach, especially during winter. The railway
system is the main way to move goods, but the trains are old and often delayed due
to electricity problems. North Korea also has several seaports, like Nampo and
Rajin, but they only handle a small amount of cargo, and all shipments are strictly
controlled by the government. For TH True Milk, this means the company cannot
manage how its products are delivered or stored. It would have to rely fully on
state-run transportation. While UHT milk can last for months without a fridge, the
risk of delays or product damage during shipping is still high.
2. Communications (internet connections/speed, mobile phone
penetration/costs)
North Korea has one of the most closed communication systems in the world. The
internet is not available to regular people, and mobile phone services are controlled
by the government. Foreigners and companies are not allowed to use the same
network as locals (BTI Project, 2024). For a business like TH True Milk, this
means there would be no way to advertise, talk to customers, or receive feedback
through normal digital methods. Instead, all communication would need to go
through embassies, aid agencies, or official government departments. This lack of
access makes it almost impossible to monitor product performance or build
customer trust.
Section IV. Market Potential
A. Identify basic appeal
1. Suitability of climate
North Korea has a continental climate, characterized by cold, dry winters
and hot, humid summers - conditions that pose serious challenges for the storage
and distribution of perishable goods such as fresh milk. These extreme seasonal
shifts, along with poor cold-chain infrastructure, especially in rural and
mountainous areas, make it difficult to maintain product quality during transport
and storage.
While UHT milk may become an ideal product for the North Korean market
for its long shelf life and resistance to temperature fluctuations, notable barriers
still exist within the country’s environment. Therefore, despite its advantages, UHT
milk exports to North Korea are not recommended at this stage, as the combination
of climate and infrastructure limitations would likely undermine product
performance and distribution.
2. Absolute product bans
North Korea maintains a tightly controlled import regime under its centrally
planned economy, but there are no known absolute bans specifically targeting dairy
products like UHT milk. However, imports are often subject to strict government
approval, prioritization, and political discretion, especially under the framework of
international sanctions.
Notably, North Korea has previously accepted dairy-related aid, such as
milk, from international organizations and countries like China (OEC, 2023,
$116K in imports) - indicating that dairy imports are not completely prohibited.
Therefore, while regulatory caution is needed, UHT milk remains a viable product
for entry, especially via indirect routes through China.
B. Measure market potential
Even though North Korea has food shortages and low domestic milk production,
the country does not offer real market potential for commercial exports like UHT
milk. Most imported goods are handled by the state, and the country does not have
a free or open market for foreign dairy products. Based on current data, the risks
and restrictions are too high for TH True Milk to export there.
1. Measure current level of imports of your product category
North Korea imports very few dairy products. In 2023, the country imported only
116,000 USD worth of dairy from China, mostly milk powder and long-life milk,
and mainly for use in government programs or aid donations (OEC, 2023). This
number is extremely low compared to the population size, and it shows that foreign
dairy is not part of everyday consumer life. Most imported milk is controlled and
distributed by the state. For TH True Milk, this means there is no normal sales
system or supply chain to enter. The company cannot rely on supermarkets,
distributors, or any retail structure inside the country.
2. Calculate market potential indicator (if appropriate)
Although many people in North Korea need better nutrition, actual demand for
imported UHT milk cannot turn into sales under current conditions. The population
has very low income, no access to foreign products, and very limited freedom to
choose what they buy (Trading Economics, 2024). The government decides what is
imported and who receives it. There are also strict trade sanctions, no foreign
investment laws, and no consumer marketing channels. Even if TH True Milk
donated milk or worked with aid groups, this would not build profit or brand
recognition. For these reasons, the market potential is extremely low, both in size
and in value.
C. Select the market or site
Although North Korea appears to have a need for UHT milk due to its poor
nutrition levels and limited local dairy production, a closer look at the country’s
accessibility and market structure confirms that it is not a suitable site for export.
TH True Milk would not be able to gather important market information, reach
end-users, or operate safely in the current environment.
1. Field trips
In most international business projects, companies carry out field trips to visit the
target market, talk to potential partners, and study consumer behavior. In the case
of North Korea, however, field trips are extremely difficult or impossible.
Foreigners must follow strict rules and are only allowed to visit certain areas under
the supervision of state guides. It is not possible to travel freely, visit local shops,
or hold business meetings with North Korean companies without special approval.
There is also no access to online data, market surveys, or customer insights, since
internet use is limited and tightly controlled. For TH True Milk, this means the
company cannot collect any first-hand information or test the product in real
conditions, making market evaluation highly uncertain. This lack of access
increases both financial and operational risk.
2. Competitor analysis
At first glance, North Korea may seem attractive because there are very few or no
foreign dairy competitors. The domestic market for milk is also very small, and
local production of UHT milk is almost nonexistent. However, this does not mean
the market is ready or open. The absence of competitors is not due to a lack of
interest, but because of heavy trade restrictions, poor infrastructure, weak legal
protections, and lack of market freedom. In fact, even if TH True Milk entered as
the first company, it would not be able to advertise its brand, protect its products,
or sell through normal channels. All distribution would have to go through the
North Korean government, and there would be no guarantee of payment,
transparency, or product use. Furthermore, most milk that enters the country is
used in aid programs, not sold to individual consumers. In this case, the biggest
“competitor” is not another brand, but the government’s control and reliance on
donations.
After analyzing both access and competition, it is clear that North Korea is not a
suitable export site for TH True Milk. The company would not be able to
understand the market, connect with consumers, or operate under fair business
conditions. Even though there is no competition, the lack of freedom,
infrastructure, and legal support makes the market unattractive. TH True Milk
should avoid entering North Korea until the situation improves and the business
environment becomes safer and more open.