TUMEN, CHINA — Setting up a brewery in North Korea seemed like a good idea to Harry Kim and his Chinese friends two years ago. Everyone likes beer, even in one of the world’s most closed and least understood countries, they believed.

Mr. Kim and his partners managed to start production after workers strapped brewing equipment to a truck in the Chinese border town of Tumen and drove it to the North Korean coastal city of Chongjin. Chinese engineers taught the locals how to brew. City officials loved the taste, he said.

But the small Chinese-North Korean venture ran aground within months after failing to get final approval from the authorities in Pyongyang.

Mr. Kim’s experience is an illustration of both the challenge and the potential of doing business in North Korea, which has grabbed global attention in recent weeks with its threats to wage nuclear war on South Korea and the United States.