North Korea has partnered with a small Chinese IT company in Shenyang, Liaoning province, to establish a startup focused on AI security technology development.
While publicly promoting joint development of AI security technology, the arrangement appears to be a strategy for North Korea to access international markets by disguising itself as a Chinese company without physically relocating personnel.
According to a Daily NK source in China recently, “In early April, Pyongyang Program Joint Development Company contacted a small Chinese IT firm in Shenyang, Liaoning province, and signed a contract to establish a joint venture under the pretext of ‘joint development of AI security solutions.’ The Chinese company is currently in the process of registering the joint venture in a free trade zone or startup incubation district.”
The source said North Korean developers plan to begin work this fall as “anonymous developers” once registration procedures are completed by the end of April. Specifically, about 30 mid-level developers from the Pyongyang Program Joint Development Company will be divided into two teams working from a separate workspace set up at a branch research institute in North Pyongan province.
Their strategy involves creating security technology portfolios under the joint venture’s name without revealing their identities, then generating revenue by offering these products on multinational platforms. While similar to existing methods where North Korean IT workers earn foreign currency through multinational platforms under disguised identities, this arrangement is notable because personnel won’t physically cross borders.
“On the surface, it looks like a Chinese startup, but in reality, North Korean personnel lead the technology development,” the source said. This appears to be North Korea’s attempt to secure foreign currency using its skilled technical workforce while evading international sanctions.
The Chinese company isn’t merely lending its name but has contracted with North Korea for joint patents or partial royalties on technologies developed by North Korean developers.
By registering the developed technologies as its own, the Chinese firm can receive various incentives from local government, including startup development subsidies and tax breaks, effectively gaining benefits without investment costs.
“Among small and medium-sized Chinese companies, there’s a shared understanding that local governments turn a blind eye to this type of cooperation with North Korea,” the source said. “Some companies are looking to reduce development costs by leveraging North Korea’s advanced technical skills.”
A new model of cooperation appears to be emerging where Chinese companies reduce technology development costs by utilizing North Korea’s skilled technical workforce, while North Korea gains more stable foreign currency by exporting technology under Chinese company names.
The source added, “North Korea sees this joint venture as a new path for exporting intangible technology, with support being cultivated at the national level. This type of technical foreign currency earning is perceived as much more prestigious than factory-based foreign currency earning.”
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