In the current political climate, you can hardly move for hearing talk about borders, trade agreements, slamming shut doors and opening the windows of opportunity.
But let’s face it, for many in business, such talk is a mere distraction. Money talks, and the world is just one big open market of opportunity. Wherever a deal can be done or an investment can be made, business will follow.
North Korea is a case in point. Despite the obsessive self-isolation, the questionable nuclear programme and the at best erratic behaviour of the country’s leader, there are still plenty of organisations prepared to do business with the secretive Marxist state.
And so it is that one of the most notorious cases of unpaid international debt in modern history arose.
Businesses taking a punt on dealing with Pyongyang nowadays are playing fast and loose with the parlous state of North Korea’s finances, crippled by years of isolation and sanctions. But it wasn’t always the case. In fact, in the immediate aftermath of the Korean War in the 1950s, North Korea was seen as something of an economic miracle, with rampant growth and plenty of ready capital.
There were no shortage of suitors worldwide ready to get a piece of the action, either. Backed to the hilt by their government, a gaggle of those ready corporations hailed from Sweden, including the country’s major car manufacturer, Volvo.
So it was that in 1974 the then Supreme Leader of North Korea, Kim il-Sung, signed off an order for 1000 Volvo 144 sedans. The Swedish firm dutifully complied, marking the highpoint or Swedish-North Korean trading relations. The accord lasted all of 12 months, when it became apparent that Kim il-Sung’s government had not paid for any of the goods it had imported from any of its Swedish suppliers.
Volvo has never recovered a penny of the money it is owed for the 1000 stolen sedans. The Swedish Export Credits Guarantee Board, the government agency which backed the disastrous foray into the North Korean market, still dutifully calculates interest on the debt, which now stands at over $300 million. The Volvo 144s, meanwhile, are still used around Pyongyang as taxis.
Doing business abroad carries risks. Yes, there are great opportunities, as the current round of post-Brexit government marketing points out as it tries to drum home the message that there are great trading opportunities for UK business beyond the EU bloc.
But what happens when things go pear shaped? Businesses are put in a difficult enough position when customers at home don’t pay up. But those problems are magnified many times over when dealing with debts abroad. Can you always rely on finding the right professional help with international debt recovery? Or do exporting businesses have to take responsibility with the decisions they make on where to trade, and who with?
Perhaps we should ask Volvo for their answer.
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