by Felix Abt
From my own experience doing business, ethnic Koreans in China had a huge advantage over everybody else. They spoke both Korean and Chinese, and had contacts and understand the customs of both countries. Of the 138 Chinese companies officially registered in 2010 as doing business in North Korea, the majority took advantage of this group to enter the challenging and closed off North Korean market.
Foolish Western companies trying to exploit opportunities in those same areas could have taken a queue from their Beijing-based counterparts: they often arrived with the help of Western and, occasionally, Asian consultants who had a superficial knowledge of North Korea and usually one contact in the country, namely that of their sponsoring organization.
The West European companies took down their unverifiable claims, on the assumption that they were receiving top services for their money. But the so-called “consultants” introduced their clients to sub-optimal local business partners who were scratching the backs of their acquaintances. It was a common mismatch, and I witnessed countless businesses collapse on poor arrangements within a few years. Of all the Chinese executives I met, far fewer of them failed when working through Chinese-Korean fixers.
A garment company from Liaoning province set up a successful operation with hundreds of North Korean workers with the help of Chinese-Korean fixers, while another Chinese company from Jilin province started a profitable fish-breeding farm with the help of ethnic Korean Chinese. Unlike other countries in Asia, where it’s easier to cross-check the advice of consultants, North Korea remains opaque and information often unverifiable.
Here’s one story that illustrates the point. A famous European textile company wanted to profit from the low production cost in North Korea and export its products from North Korea to Europe and China, among other markets. They hired a European consultant who claimed to have extensive North Korea experience and a wide network of contacts in Pyongyang. His local contact and facilitator was an employee of a ministry, who introduced the foreign company to a garment factory.
What unraveled was basically a Ponzi scheme. He told the foreign investors that it was the best garment factory in the country. Neither the investors nor the consultant were aware of the fact that there were other, better garment factories in the country, because the information was hard to find. The recommended factory belonged to the same ministry, and the boss of the factory was his relative.
Unlike other factories, it was in a desperate state and urgently needed to be upgraded. The foreign investors prematurely agreed to set up a joint venture and started pouring money into it. A chronic shortage of power, plenty of misunderstandings and diverging interests between the foreign and domestic partners and, on top of this, a venture that became a barrel without a bottom, made the foreign investor abandon the project. Had they had the same intermediaries as the Chinese textile company, things most likely would not have unraveled.
The perils of South Korean ownership
Some businesses tried to run their North Korean operations out of Seoul, an arrangement that was usually a disaster given the perilous relationship and economic blockages between the two countries. I saw the uneasy diplomacy unfold when I attended the only international trade fair where the ABB group opened a booth in 2002. Mr. Sohn, a senior South Korean engineer and the head of an ABB factory in South Korea was dispatched to show ABB-products made there. In particular, he wanted to display a new type of oil-free and therefore eco-friendly power transformer made in his factory. Other multinationals also sent staff from their subsidiaries in South Korea to this exhibition in Pyongyang.
Of course, the situation didn’t go as planned. At our booth, about five or six eerily vague North Koreans showed up, who I had never seen before and after this exhibition and whose legitimate interest in trade was questionable. The government probably saw muddy waters in the prospect of South Koreans having direct contact with North Koreans required a record number of minders. I noticed that some prospective customers, seeing the swarm of security types, avoided the booth—making the set-up terribly bad for business.
The political views South Koreans like Mr. Sohn didn’t really matter to the government. They saw a challenge in the way they dressed, their looks and their relaxed behavior. The South Korean attitude, embodied in Mr. Sohn, wouldn’t fit into the official North Korean storyline that Seoul was repressed by the Yankee and Japanese invaders.
About a year later, when the company promoted Mr. Sohn to manage the business across several Asian countries, the North Korean government denied him a visa to visit Pyongyang alongside a business delegation. As the chief representative from his group, I was informed that all group members who were not Koreans were given a visa except him, leaving him heartbroken. I never found out the precise reason authorities barred him entry; he did a superb job and even North Korean colleagues liked him.
He was also a diplomatic fellow, understanding how to behave in the country of his supposed “enemies” so he didn’t stir up trouble. Some of my most ardent North Korean friends loved him. After work one day, I was touched when my staff and Mr. Sohn went out to karaoke together. The North and South Korean guests sang together, and they even held hands and hugged. From the heartfelt display, I knew his visa refusal wasn’t directed against him personally. He was probably just a victim of the sporadic spats between the two countries; around the same time, the US accused North Korea of secretly pursuing a uranium enrichment program.
Mr. Sohn, a senior manager at ABB South Korea, chats with North Korean customers at the ABB exhibition booth in Pyongyang—an unusual direct encounter between South and North Koreans. In the photograph to the right, he similarly poses alongside North Korean counterparts, standing in the middle, during a trip to the countryside.
The official rhetoric on China is far different. According to the party line, Pyongyang and Beijing share an unbreakable friendship—lauded with the official slogan that the two countries are “as close as lips and teeth.” The bond arises out of a sort of communist brotherhood that goes back to when three divisions of Korean communists, from all over the peninsula, joined Mao Zedong’s forces to defeat the nationalist Guomin Dang army in China in 1949.
In October 1950, Beijing repaid the favor. About a month after the official start of the Korean War in June 1950, North Korean soldiers overran nearly all of South Korea down to Pusan, but were pushed back when General MacArthur’s American forces landed at the port city of Incheon in September 1950. The United Nations troops, mostly comprising of an American contingent, swiftly fought back the beleagured northern army; it even appeared that the complete end of the DPRK was near under a unified Korean peninsula. Yet even to the surprise of President Truman, Mao Zedong ordered a million Chinese troops into North Korea to protect its strategic northwestern flank.
In a speech to the Central Committee of the Chinese Communist Party, Mao justified China’s intervention: “If the lips are destroyed,” he proclaimed, “the teeth get cold!” His government named the campaign the “war to resist U.S. aggression and to aid Korea,” but the country paid a high price for its brethrens’ independence: 183,000 Chinese soldiers died out of an army of 1 million, a significant toll that included Mao’s own son Anying. Eight years after the fighting was halted, China and the DPRK signed the 1961 “Mutual Aid and Cooperation Friendship Treaty,” the time frame of which has been extended until 2021. Its contents are significant for any American or Japanese maneuver around the peninsula. China pledged immediate military assistance to Pyongyang against any action deemed an attack.
Yet, despite the official propaganda portraying their relationship as close as teeth and lips, it was a far cry from being anything close to a “love affair.” Chinese businesspeople and diplomats who I met strongly resented that the enormous support China offered during the Korean War was barely acknowledged, and was driven by self-interest.
It was in 2009 that an editorial published by the party-run and conservative Chinese newspaper Global Times used the term “ungrateful�
� for the first time, in a reference to North Korea. It wrote, obviously in an outburst of anger after North Korea conducted two nuclear tests against China’s advice that, “If the hundreds of thousands in the Chinese People’s Volunteer Army hadn’t gone over and helped the Korean People’s Army fight their bloody war shoulder to shoulder, there wouldn’t be a North Korea today.”2
North Korea wanted to correct its image of a “naughty, ungrateful child” in the eyes of the Chinese when, suddenly, car number plates beginning with 727 started emerging in the streets. The change coincided with a sharp rise of badly needed fresh Chinese investment in North Korea. The number 727 stands for July 27 (called “victory day” in North Korea) which was the day the armistice agreement was signed. It’s a belated, highly visible token of recognition for the Chinese.
But in a guise that went less noticed by foreigners, a China chapter was added to the Arirang Mass Games in 2008, repeated during the performances over the next four years. They expressed a kind of gratitude to China and the recognition of China’s successful reform path. One of the sharpest North Korea observers, Andray Abrahamian, explained that it “explicitly encourages the audience to see China as both friendly and as a successful model that could be an option for Korea.” “One party ‘socialism’”, he continued, “is paying dividends in the People’s Republic of China and the people of the DPRK might reasonably expect something similar in their country.”
Not only the Chinese had a grudge against their northern neighbor. Anti-Chinese sentiment has run high in North Korea for reasons dating back much longer than the Korean War, due to a thousand-year-old relationship that included wars and occupation. Some staff made me understand that, as they said, “The Chinese cannot be trusted.” Mr. Pang, a senior diplomat, told me at a cocktail party, “We Koreans have a long history of ups and downs with China, and we know how much we can trust them.”
Because we were chatting informally, I asked him a pointed and very undiplomatic question: “Who of the two countries is the lips and who is the teeth?”
The official, who always wore a stern face, burst into a laughter and almost spilled his wine. “I’m sorry, Mr. Abt,” he said. “I cannot answer this intrusive question, but ask yourself: who would like to be the lips and who would not prefer to be the teeth?”
His answer was, of course, as diplomatic as it could be and very clear despite its subtlety.
I could feel the strong urge by North Koreans, like the diplomat, to outline a sharp national identity unmistakably distinguishing Korea and China from each other. That’s despite, or perhaps because of, China’s strong footprints on Korea’s culture. Mr. Kim, the chief mining engineer mentioned that he recently had visited China. He spoke Chinese. I tried to engage him and the other Koreans in a discussion on China and the Chinese language. I said that with 70% of all Korean dictionary entries being of Chinese origin, the Chinese language shouldn’t be too difficult for Koreans to learn Chinese.
That was too much of a provocation and they could not hide their irritation. One of them answered, “Kim Il Sung’s father left for China to organize the anti-Japanese resistance, Kim Il Sung accompanied him. There the latter went to school and learnt Chinese. But our Great Leader Kim Il Sung, then a boy of 11 years, was told by his father Kim Hyong Jik, himself a great revolutionary and patriot, that he wanted him to continue his studies in Korea as he wanted his son to know his homeland, its culture and master its language and be aware of the suffering of the Korean people under Japanese rule.”
He went on. “When he was back in Pyongyang and joined a school there, his schoolmates knew that he had been living for several years in China and that he was fluent in Chinese. They often asked him therefore to speak Chinese to them but he refused and answered ‘Why use Chinese when we have our own language?’”
North Korea is a popular tourist destination for the Chinese, because they see it as a time machine back to their own socialist past. Older Chinese like to bring their children and grandchildren to North Korea to show them how they lived before Deng Xiaoping opened up the country in the late 1970s. The consumerist younger generation, though, doesn’t take the pomp and circumstance as seriously as their grandparents. One youthful Chinese tourist posted North Korean photographs on Flickr and said, “I am grateful to Deng Xiaoping that we are not like them.” North Korean tour guides retort that North Korea is a ruritarian paradise: “You can never see blue skies like this in Beijing!” one of them said.
From the first time since the peninsula was divided de facto in 1945, the first 100 South Koreans visited Pyongyang in September 2003. An unlikely business empire had organized the tour: Moon Sun-myung’s Unification Church, which ran the pioneering travel company Pyeongwha, along with the Pothongang Hotel in Pyongyang. Just opposite the hotel, Moon’s conglomerate ran a large building for meetings and events called the Pyongyang Peace Embassy. The five-day tour cost $2,000 per person, and included a visit of monuments, a “model” farm, a kindergarten and a railway station.
In 2000, the landmark inter-Korean summit between Kim Jong Il and South Korea’s then-president Kim Dae-jung paved the way for Moon’s tourism project. Its other effect was to allow for the reunions of families split by the north-south divide. Over 20,000 Korean families were permitted brief reunions since that year. The few lucky ones had to wait more than half a century to meet their family members, and once the opportunity has passed, they probably won’t see them ever again. Time, unfortunately, is short for those who haven’t had a reunion yet and are in their 80s and 90s. About 4,000 people on the South Korean waiting list pass away each year.
The cross-border exchanges were cut short in 2008, when the conservative administration of Lee Myung-bak won the election and abandoned his predecessor’s engagement policies. The Red Cross-brokered family reunions, too, have also been hostage of the unpredictable tussles between Seoul and Pyongyang. Pictured above, South Korean lawmaker Choi Sung visits the PyongSu booth at an international trade fair in Pyongyang, a time when visits were on the rise thanks to the “Sunshine” policy.
Purity
One December, I got a taste of the frigid winter life near the Chinese border. In the process, I came to understand how triumphantly North Koreans hold their sense of national purity. On the train from the Chinese border town of Dandong to Pyongyang, I had to wear a thick winter coat and warm shoes, covering my feet with three layers of socks. The train was not heated, and the outside temperature had fallen far below the freezing point; there were also frequent power outages and, to top it off, the ride was delayed past the frigid midnight hour.
The North Korean passengers huddled around in the cabin with their heaps of luggage traveling back home. Most of them were diplomats and business people, plus a couple of children. The poor weather brought us closer together, and we started chatting away. Thanks to us hitting it off, we quickly began sharing food and drinks, an entrée that included the typical meat, fish, eggs, salad, rice and kimchi for 6 Euros. It was good entertainment that spiced up what would otherwise have been a dull journey.
The Koreans were curious about me, my family, my life in Pyongyang, and about what I was doing in their country. I told them about my wife and my little daughter. Then, thinking my wife was from Switzerland, they asked if it was not too difficult for my wife to adapt to North Korea. I explained, in what turned out to be a faux pas, that my wife was not Swiss but a Vietnamese woman born in Hanoi. I went on, perhaps to their discomfort, that Vietnam and North Korea were full of similarities in their eating habits and culture.
The conversation came to an abrupt halt, and I wondered if I had offended my new acquaintances. Of course I did, I thought. North Koreans are proud of the purity of their race and their culture, which they believe to be untainted by decadent foreign influences. They thought that only puppet South Koreans married foreigners, who were inferior to themselves, and that these nuptials were a consequence of Western oppression.
My friends were uneasy that a comrade from t
he capital of the Vietnamese socialist revolution, an event Americans call the “Vietnam War,” married a foreigner from a non-socialist European country. The revelation must have startled them: it was the latest evidence that the DPRK’s ally betrayed its revolutionary roots.
After an awkward bout of silence, I relaunched the conversation with a joke. “It is a known fact that mixed children pick the best genes from both parents and tend, therefore, to become superior to their parents,” I said. A new theory of superior races was instantly born. One fellow traveller, apparently challenged in his beliefs, responded politely, “Is that so? Interesting!” The conversation then resumed, though they didn’t touch on family matters.
Historians pretty much concur that, in prehistoric times, the ancestors of present-day Koreans migrated from North Asia. But this theory would have been heresy in the eyes of my fellow travelers. North Koreans consider their nation to be one cradle of humanity, which gave birth to the ancestors of all of humankind. The North Korean government, of course, does not give much thought to the archaeological evidence that countless tongues were spoken here, all bearing little relation to today’s Korean language.
To be fair, though, the idea of racial purity stretched beyond Pyongyang and even into the so-called decadent American fiefdom of South Korea. Until 2006, biracial South Koreans were not allowed to serve in the military even if they held South Korean citizenship; nevertheless, all other citizens were required to serve for two years in the armed forces.
