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How to be a sanctions-busting smartphone, the company is thriving in North Korea

SEOUL (Reuters) – North Korea’s evasion of the U. N. sanctions, in order to cash in on the increasing domestic demand for smart phones with the help of low-cost hardware, the input to the generation of substantial revenues for the regime, according to defectors and experts, and an analysis of the North Korean-made mobile phones.

FILE PHOTO : A man uses his mobile phone in addition to e-bikes within the city of Pyongyang, North Korea-October 8, 2015. (REUTERS photo/Damir Sagolj/Files Photo

Economists estimate as many as six million North Koreans – a quarter of the population – now have mobile phones, an essential tool for participation in the informal market economy, which has grown to be an important source of income for many of them.

Reuters spoke to for about 10 defectors and experts on the use of mobile devices in North Korea, as well as to examine the state of messages in the media and advertising on mobile devices, and the examination of two of the Korean brand’s smart phones.

The phones are provided by Taiwan semiconductor manufacturing, the batteries are made in China, and is a version of Google’s open-source Android operating system, which is the analysis of North korea’s phones are revealed.

The united Nations imposed sanctions on it in 2017, but the North’s weapons programs, to prohibit the importation of mobile hardware.

The north Korean leader, Kim Jong-Un has approved the use of wireless networks, which is said to be built with help from China’s Huawei and the local mobile phone brands, by public lectures, and a trip to a cell phone in the plant have been reported by the state-controlled media.

GREAT INVESTMENT

Basic of North korea’s phones are usually priced between $100 and $400 in state shops and private markets, experts and defectors say. Subscription to the mobile carriers have been registered in the netherlands, the ministry of stories.

The phones are usually sold with a service plan that is 200 minutes of talk time. The Prepaid plan will cost you about $13 usd for 100 minutes, the North Korean phone advertising.

While these rates are similar to, or higher than, the mobile-phone customers pay in other countries, North Koreans earn an average of $100 per day, per month, to only about 4 per cent of its southern neighbor, according to South Korean government data.

International brands, such as Apple’s (AAPL.D) the iphone, are not available to the public on-sale, but merchants and the rich North Koreans can buy them out of the land, and to use them with local SIM cards, defectors say.

The Korean phones are only to be used to make phone calls to domestic phone numbers, and also have a number of unique security features.

The process of downloading or transferring the files is very limited. Reuters was for a warning message to pop-up to install an “unknown” in the Pyongyang, 2418, smartphone, stating the following: “If you install a pirated program, your phone may malfunction, or data will be destroyed.”

“The north Korea-set algorithms and software for the mobile phones to keep track of the data to be copied or transferred to it,” said Lee Young-hwan, a South Korean software is an expert in the study of the Korean smartphone market.

Apps such as maps, games, and an English-language show was developed by North Korean engineers, the state-run enterprises, public schools and universities.

The regime also has a home-grown surveillance software onto a mobile phone, according to the uk’s cyber security company, Hacker, Home.

When a user is granted access to the illegal or non-state-approved media, and an alert will be generated and saved in the phone. A modified version of Android, it also performs monitoring, and tracks the users, the Hacker House, he said.

North Korea’s representatives to the United Nations, did not respond to requests for comment.

TOOLS FOR BUSINESS

Still, the mobile phones are one of the major assets in the North on the gray market economy and has flourished ever since a devastating famine in the 1990s.

A young North Korean woman, surnamed Choi, called for the sale of two of the pigs, as well as the smuggling of spices from China, to increase around 1,300 yuan ($183) and her family will need to buy a mobile phone in 2013.

They can use the telephone in order to assist in the successful running of a retail business, sales of Chinese clothing, and shampoo, taking care of the deliveries from the supplier.

“It turned out that we were able to make it in a way that will earn more than the official salary,” said Choi, who is now defecting to South Korea, and the refuse to use her full name for fear of reprisals against family members still in North Korea.

In a survey of 126 North Korean defectors who had used cell phones for more than 90% say mobile phones have improved in their daily lives, and about half said that they would be used for the market activity. “Millions of people are using cell phones, and they need to get a life, or to show off their wealth,” said Shin Mi-nyeo, the executive director of the Organization for One Korea, a South Korean support group for defectors, which conducted the poll. “It’s their phone bill, to create a huge income for the government.”

Kim, Bong-sik, a researcher at South Korea, the Korea information society Development Institute, said that the estimate of the revenue, it was not easy, but it is likely to be one of the biggest earners in view of the scale of the business.

THE SANCTIONS-BUSTING

In the two Pyongyang-branded smartphones, surveyed by Reuters, powered by the chips from Taiwan’s MediaTek (2454.T), and it’s running a version of Google’s Android operating system, along with to the North korea’s security software. Advertisements for Arirang-branded handset is also said to be the use of MediaTek chips.

Pyongyang 2423 smartphones produced last year, featured Mediatek’s MT6737 chipset and is a slot for a SIM card and a memory card. The card and the serial number showed it was manufactured by the Japanese chip maker Toshiba (6502.(T).

The device and the identification number showed the phone was manufactured by the Chinese company Gionee, a maker of high-end smartphones and tablets.

Google is said to be a hardware maker, you can make use of the open-source Android software, at no cost, which means that there are no export regulations have been violated with regard to the North korea’s smartphones and tablets.

Mediatek said in a statement to Reuters that it had not been sent the products in, North Korea, and has been, in full compliance with the sanctions. Toshiba has also said that the company will not do business with North Korea.

Gionee does not immediately respond to requests for comment.

“North Korea is not the phones, without the use of foreign components and technology,” said Kim, the analyst. “This means that, contrary to the sanctions and to keep up with the running of the business.”

Official customs data shows that North Korea imported $82 million cell phones in China in 2017, the third-biggest import item after the soya-bean oil and chemicals.

That number dropped to zero in 2018, when the sanctions a little bit.

However, while the sanctions lifted, official imports and informal trade along the China-North Korea border appears to be under way, experts and defectors say.

William Brown, a retired U.S. intelligence official who studies North Korea, said the mobile phone’s hardware, components are very easily smuggled across the border with china.

By intermediaries it is often difficult to find a person who will be responsible for the violation of any of the sanctions, he added.

China is North Korea’s only major ally, and the mobile phone industry has been busy with a few well-known local smartphone manufacturers.

Chinese officials have referred questions to the Ministry of Industry and Information Technology, who declined to comment. China has repeatedly said it will maintain U. N. sanctions, however, has defended what she calls “the normal trade with North Korea.

A large Chinese telecoms brands have been supplied to North Korea as well.

Huawei provided 3G network equipments to North Korea after the late leader Kim Jong-Il’s father, Kim Jong-Un, toured with the Chinese tech giant in 2006, according to the united states, Nautilus Institute and the monitoring group 38North.

FILE PHOTO : A man talks on the phone at the front of the April 25 House of Culture, the position of the Workers ‘ y of Korea (WPK) conference in Pyongyang, North Korea-May 6, 2016. (REUTERS photo/Damir Sagolj/Files Photo

The U.s. Commerce Department’s investigation of Huawei, since 2016, and that the assessment of whether the company violated export control regulations in connection with the sanctions imposed on North Korea, the sources said.

ZTE Corp. (000063.SZ) last year agreed to pay $1 billion in fines for violating US sanctions, with a shipment of telecom equipment to Iran and North Korea.

Huawei and ZTE did not respond to Reuters’ requests for comment.

Reporting by Ju-min Park; additional reporting by Yi-Mou Lee, Taiwan Makiko Yamazaki in Tokyo, japan, Paresh Dave, San Francisco, ca, Ben Blanchard and Gao Liangping, in Beijing, Shanghai newsroom, Sijia Jiang of Hong Kong; Editing by Jonathan Weber and Lincoln’s y.

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