A Capitalist in North Korea

by Felix Abt

  COPYRIGHT

  A CAPITALIST IN NORTH KOREA

  My Seven Years in the Hermit Kingdom

  Felix Abt

  Copyright © 2012 by Felix Abt. All rights reserved.

  No part of this publication can be reproduced or transmitted in any form or by any means, electronic or mechanical, without permission from the author.

  ISBN (ePub Edition): 978-1-937572-92-1

  All images in this book are the property of the author, unless otherwise mentioned.

  For Permissions, please contact the author via the website:

  www.a-capitalist-in-north-korea.com

  A Capitalist in North Korea

  My Seven Years in the Hermit Kingdom

  by

  Felix Abt

  ABOUT THIS BOOK

  A Capitalist in North Korea: My Seven Years in the Hermit Kingdom is the memoir of Felix Abt, a Swiss entrepreneur who worked in the world’s most isolated, “Stalinist” fortress over the past decade. Abt offers in-depth portraits of the thrills, adventures, hurdles and even accusations of spying while working behind the world’s last Iron Curtain. He finds a side of North Korea that is far from sinister—one that has been lost in the flood of accounts from defectors, journalists, activists, and politicians who have pummeled the nation into isolation.

  Few outsiders have been granted such wide access to the mysterious hermit kingdom. Abt visited seven out of nine provinces and more than two dozen cities, interviewing hundreds of high-ranking communist officials and ordinary North Koreans. He became a figurehead in bringing capitalism to North Korea through all sorts of whimsical and unexpected projects: the Pyongyang Business School, the European Business Association in Pyongyang, and ventures in pharmaceuticals, precious metal extraction, and bottled water.

  Did you know, for instance, that plastic surgery and South Korean drama shows are all the rage among the women of Pyongyang? That the capital offers a line-up of decent hamburger joints? That young North Koreans are eagerly signing up for business courses in preparation for market reforms? And that United Nations sanctions are the biggest obstacle to doing legitimate business in the DPRK? With more than 200 photographs taken by the author, A Capitalist in North Korea offers an account of the unknown aspects of North Korea, looking beyond tales of famine and suffering.

  PRAISE FOR A CAPITALIST IN NORTH KOREA

  “This inside account of life as a Western businessman in North Korea is uniquely first-hand and up-to-date. Combining general insights and precise examples drawn from seven years as a foreign businessman in Pyongyang and from his interaction with the North Korean elite and middle class, Felix Abt supplements and balances important works on the suffering of ordinary North Koreans during the great famine of the 1990s and on the dangerous nuclear gamble played by the country’s leadership. The author offers a multifaceted insight into a facet of reality in North Korea that is often either not seen or deliberately ignored in the West. This book challenges many of our views of an allegedly isolated and static country. It is a must-read for everyone who is seriously interested in understanding important aspects of the inner dynamics and the development of North Korea in the 21st century.”

  — RÜDIGER FRANK, NORTH KOREA EXPERT AND ECONOMICS PROFESSOR, UNIVERSITY OF VIENNA

  “This new book on North Korea is the extraordinary one. The sudden influx of analytical and documentary literature on the DPRK, which the world has seen from the late 1990s, can be broadly divided into the texts that show how terrible life in North Korea is, and the works that speculate on what is wrong with North Korea. Felix Abt, a Swiss entrepreneur who lived and worked in the last communist Hermit Kingdom for seven years, attempts to depict life in North Korea as “normal” despite the huge ideological pressure from inside and harsh treatment from outside. To date only famed historians, Bruce Cumings and Gavan McCormack, succeeded in showing North Korea from such unusual angle. As a business entrepreneur, Felix Abt prefers to stay apolitical and impartial when sharing his thoughts and memories of the seven-year sojourn. From the book we can see that he loves Korea and cares about its people. In his assessments of North Korea’s past and present the author approaches all issues from a human (and humanistic) perspective, trying to show life in the country without political or ideological colouring.”

  — LEONID PETROV, LECTURER IN KOREAN STUDIES, THE UNIVERSITY OF SYDNEY

  “Very few Westerners can match Felix Abt’s depth of hands-on business experience in North Korea. Not only similarly adventurous would-be investors and traders in the ‘Hermit Kingdom’ but also members of my own fraternity of Pyongyang-watchers will want to peruse his useful new book for the otherwise unavailable details and unique insights it provides. Don’t look for apologies here. The author strongly believes, and argues, that the use of international sanctions to isolate the country from the global economy is a counterproductive policy.”

  — BRADLEY K. MARTIN, LONGTIME ASIA NEWS CORRESPONDENT AND AUTHOR OF UNDER THE LOVING CARE OF THE FATHERLY LEADER: NORTH KOREA AND THE KIM DYNASTY

  “Before there was Orascom there was Pyongsu Pharmaceutical Co. In this book Swiss businessman Felix Abt discusses a cross section of topics related to North Korea, a country about which the author has gathered a great deal of information and business know-how as one of the country’s first western resident investors and social entrepreneurs. The strongest parts of the book are those that deal with the author’s first-hand experiences in solving problems that come along with establishing and running a firm that produces high-quality pharmaceuticals in North Korea. Although many expected and unexpected obstacles business persons must address in the areas of operations, logistics, management and finance within the DPRK are discussed, the book is also peppered with interesting anecdotes and stories about cultural and private life in the DPRK that do not typically receive attention in the western media (at one point the author offers a North Korean joke about adultery).”

  — CURTIS MELVIN, BLOGGER, NORTH KOREA ECONOMY WATCH

  “In certain respects, this book may be compared to Peter Olszewski’s Land of a Thousand Eyes. The Subtle Pleasures of Everyday Life in Myanmar (Crows Nest, NSW: Allen & Unwin, 2005). Both authors describe their colorful personal experiences in countries whose coverage in the Western mass media has been mostly confined to stories about the repressive practices and military ambitions of their ruling autocrats, and about the political, social, and economic hardship suffered by ordinary citizens. Both Abt and Olszewski seek to counter these simplified and often sensationalist images by more or less skirting subjects of a political and security nature, and instead drawing attention to other, less martial aspects of life in North Korea and Burma, such as cultural traditions, gender relations, social customs, education, forms of entertainment, and – last but not least – the art of making business.”

  — BALÁZS SZALONTAI, AUTHOR, KIM IL SUNG IN THE KHRUSHCHEV ERA

  ABOUT THE AUTHOR

  Felix Abt is a Swiss entrepreneur and expert on business in North Korea. From 2002 to 2009, he worked as one of the few Western businessmen in Pyongyang. He was co-founder and first president of the European Business Association in Pyongyang, a de facto European Chamber of Commerce and the first foreign chamber of commerce. He also co-founded the Pyongyang Business School, imparting market skills in the next generation of leaders.

  Previously, Abt worked all over Europe, Africa and Asia as a senior executive for multinationals such as F. Hoffmann-La Roche and the robotic company, ABB Group. In 2002, ABB appointed him first as resident country director in North Korea. He went on to become a point man for Western investments in the country, representing several multinational corporations and even founding a business of his own.

  Abt is
currently living with his family in Vietnam, where he runs a business specializing in corporate incentive travel, team building activities and events. He is a shareholder in several North Korean joint ventures, and a member of the boards of directors of SMEs of several countries. He is also a columnist at RBC, Russia’s leading business magazine.

  PRAISE FOR FELIX ABT

  “Point man for Western investments in – of all places – North Korea.”

  — TIME

  “Doing business on the most difficult ground despite the nuclear crisis, economic sanctions and payment transfer obstacles.”

  — FRANKFURTER ALLGEMEINE ZEITUNG, GERMANY

  “Well-known North Korea affairs specialist.”

  — YONHAP NEWS AGENCY, SOUTH KOREA

  “His long experience in business is key to know about the North Korean economy. There are no other people who have experience with North Korea as much as he does.”

  — NHK TELEVISION, JAPAN

  “Amazing business pioneer in North Korea.”

  — WWW.INTERVIEW-BLOG.DE

  Kamsahamnida!

  I would like to acknowledge and extend my heartfelt gratitude to the following colleagues who have made the completion of this book possible:

  Dr. René Zeyer, a best-selling author and friend who I have known since we were teenagers. He offered vital encouragement and support, and gave me motivation and invaluable advice.

  Geoffrey Cain, who just finished his M.A. in Southeast Asian studies at the School of Oriental and African Studies, University of London. Geoff is an outstanding journalist writing for some of the world’s most prestigious publications, such as TIME, The Economist, Far Eastern Economic Review, Foreign Policy and The New Republic. Thanks to his background, knowledge and insight he offered me great inspiration and advice. I’m indebted to him for thoroughly editing my manuscript.

  Most especially, I would like to thank my wife Huong and my daughter Linh for their patience, empathy and support.

  Preface:

  On the Verge of Glasnost?

  One year ago, North Korea’s long-time leader, Kim Jong Il, collapsed on a train and died from a heart attack. Western intelligence agencies had been speculating for about two years that the Dear Leader’s health had been deteriorating. Still, by most accounts, the news came as a shock to Korea watchers. His youngest son, Kim Jong Un, immediately took the throne from his strongman father, who was declared, in the unique North Korean tradition of necrocracy, the “Eternal General Secretary” of the Korean Workers’ Party.

  “Lil Kim,” as Time magazine jokingly called him on the magazine cover, set out to reform one of the world’s last five communist countries. Coming off the retrenchment of state-centric conservatism since the mid-2000s, he curbed the power of the military and surrounded himself with top-level civilian cadre interested in a glasnost for the country. “Officials should work with a creative and enterprising attitude… [and] resolutely do away with the outdated ideological viewpoint and backward method and style of work,” he declared before a crowd. John Delury, a China historian at Yale University, compared that rhetoric to Deng Xiaoping’s famous December 1978 speech that launched China’s reforms, in which he called on party members to be “pathbreakers who dare to think, explore new ways and generate new ideas.”

  For seven years, I worked in North Korea, hoping that injecting a business culture could help the regime nudge itself towards the world. But my romantic longing only made life harder. People called me a “useful idiot” for one of the world’s most isolated and militarized governments. They accused me of being an idealist gone blind, or a greedy capitalist trying to fill my pockets at the expense of the suffering of the North Korean people. Yet during my seven years living and working in the capital of Pyongyang, I was given enormous insight into a country better known for its famine and nuclear bombs than all the stories of regular people, and all their hopes and dreams that transcend Washington politics.

  It is hard for Westerners to imagine this, but I became heavily involved as a point man for investments behind the world’s last Iron Curtain. I didn’t deal in arms and drugs as many would jokingly assume. Rather, I was involved in a number of everyday projects that don’t quite match the nutty international image of North Korea. I was involved in the purchasing of domestic goods such as garments, liqueurs, metals and minerals. I sold items ranging from machines to infrastructure items to dyestuff, to foodstuff and pharmaceuticals. I was involved in setting up and running all sorts of representative offices and companies. I advised investors looking into noodle production, mineral water from the country’s “Holy Mountain” of Paekdu, precious metal extraction, software design and medicine production.

  As the co-founder and director of Pyongyang’s first business school, I went on an excursion into the political and business minds of senior cadres. Many of them had given up on the national myth of a pure past and a perfect socialist economy, and were looking beyond North Korea’s tight borders for new ideas that would spur growth and innovation. Part of the new mindset was a response to the famine and economic problems of the 1990s, when the Kim regime could no longer rely on Soviet subsidies to prop up its economy. The institute encouraged the world’s most centrally planned economy to dare to take a few steps into the world of free enterprise.

  I also helped start and became the first president of the European Business Association in Pyongyang, the country’s first foreign chamber of commerce. The position threw me into the role of lobbyist for investments from Europe and around the world. Part of the job required me to campaign for better investment conditions for foreign businesses, who sought ways to more easily hire employees, reduce their taxes, and gain a more direct access to local suppliers and customers minus red tape. It was both a challenge and an adventure, and the sort of endeavor that could create real change in the North Korean government.

  Some readers will be surprised to learn that the North Korean authorities and my business partners were not brainwashed. They acted as normal and rational people would. In our meetings, they behaved fairly and with pleasant etiquette, and I will keep a good memory of them. On the other hand, perhaps I was fortunate to have dealt with people who were not out to rip me off. I have met other business people distraught over their experiences, and I will discuss this trickier side of expatriate life later. As I don’t want to hurt, anger or offend any of my North Korean or foreign colleagues, I will sometimes redact their real names and details of our meetings. Other facts I will not disclose to protect their reputations.

  Given the growing political tensions in the mid-2000s, all this business appeared to be the wrong thing in the wrong place at the wrong time. In 2002, George W. Bush placed North Korea on his infamous “Axis of Evil” list, and then, after launching the invasion of Iraq, spurred North Korea into developing a protective nuclear program. In 2008, the South Korean government halted all food aid to the regime, distressing relations even more in a way that would lead to tragedy. In response, in 2006 and 2009, the Kim Jong Il regime tested two nuclear weapons. Then, in 2010, North Korea was accused of torpedoing a South Korean naval corvette, the Cheonan, killing 46 sailors—a claim that it continues to deny.

  Both sides have hardened their stances with each confrontation, and the deaths of those sailors would certainly be unforgivable if North Korean forces were indeed behind the attacks. Unfortunately for the hawks, the evidence is still conflicting. In 2012, a prominent Korean seismologist and Israeli geologist suggested, based on an analysis of seismic and acoustic waves, that the ship probably hit a South Korean mine.

  This all plays into a bigger picture of geopolitical bullying. The government, I found in my experience meeting local people, was cornered and needed to protect itself. The regime was reacting to United Nations sanctions and to careless condemnations from the international press, which published daily scoldings for whatever it did and for whatever it didn’t do. Legitimate business in North Korea—the sort that could help the country grow out of its
impoverished rut—was being harmed in an attempt to go after a tinier and perhaps more extreme contingent of hawkish military commanders.

  Those political challenges were among the most difficult of my life, because there’s no other place quite like North Korea. I say that having lived and worked in nine countries on three continents. That’s in addition to the dozens of more places I’ve visited for business and leisure—a smattering of countries throughout Africa, Asia, and the former Soviet Union and its communist allies. My travels gave me insights into the vastness of the human experience, showing me how people are shaped by their diverse cultural practices and political systems. North Korea is one example of how seclusion has shaped the attitudes of a people, and this book will show how war-mongering international politics isn’t reassuring for them.

  That said, Pyongyang may be isolated from the world, but it’s far from the begrimed center of poverty that the world makes it out to be. Pretty much every year, the human resources consulting company, ECA International, releases rankings that place Pyongyang among the least hospitable cities for expatriate business people. The North Korean capital falls into a tier that includes Kabul, Afghanistan and Karachi, Pakistan—a characterization that doesn’t sound reasonable. While the capital can hardly match the glamour of London and New York, it’s nevertheless a decent place to live if you’re a foreigner. Expatriates can sit back and free themselves from worries of crime, terrorism, and the safety of their children. Pyongyang is clean and secure, even if it sometimes lacks reliable electricity and running water. To be fair, those shortages are to be expected of any metropolis in a poor country—including the rising industrial powerhouses of Beijing, Ho Chi Minh City, and Jakarta.