Interview with Felix Abt – Hermit Kingdom from within

During the last Google Hangout, my first guest, Felix Abt, whom I interviewed this month, has sent me his answers to my questions as we didn’t have time to cover all the topics. He took a huge effort to answer to every one of my questions about North Korea. If you missed the live interview or you prefer reading than watching Youtube, you might find this interesting.

1) Tell us a little about yourself and how did you find your way to North Korea

I already took an interest in foreign countries and cultures when I was a boy. Unsurprisingly, during much of my adult life as a businessman I was involved in dealing with many foreign countries and I have even been living in a number of different countries in Europe, Africa and Asia. Being a business man in my native Switzerland didn’t appear very challenging and exciting to me, but doing business with one or two more dimensions to it in the most unusual of places was a truly thrilling experience.

When there was talk about upcoming reforms in North Korea I could not refuse the job offer by the ABB Group, a global leader in power and automation technologies, who sent me as their country director to Pyongyang to build up their business. I liked to work for ABB as it used to have a tradition of great pioneerdom: it was one of the very first companies to move into China and Vietnam when these countries opened up and the executive I was then reporting to at ABB’s executive committee was a Swedish engineer who had set up ABB’s first factory in China. Subsequently this group built up more than two dozen manufacturing joint ventures there.

2) What did you do there?

My seven years in North Korea became one of the busiest periods of my life. I sold a wide variety of products, at the beginning only for ABB, later also for many other companies I represented, worth millions of dollars and sourced others, negotiated over a dozen joint venture contracts of which a few materialized and advised others in a variety of ways. For example I advised the Russian railways on the set-up of their first JV.

3) Any particular highlights?

Highlights were for example the recognition by the WHO of the pharmaceutical company I was running as the first in North Korea to comply with global industry quality standards and the first North Korean company ever to win contracts in competitive bidding against foreign competitors, or the co-foundation of the first foreign software company that produced award-winning medical software or the country’s first e-commerce which I set up together with North Korean painters. I also co-founded the first business school that instilled new thinking and entrepreneurship and the first foreign chamber of commerce. As president of that chamber I received the first delegations of European parliamentarians, talked to the media and stubbornly lobbied – domestically – for a more business and investor-friendly environment and – internationally – against sanctions that hurt legitimate businesses.

4) Some of your critics say you are biased because of your business interests.

First, unlike some of my fiercest critics, I don’t make a living on North Korea. Secondly, my stakes in North Korean joint venture companies are small and profits are modest which means I could write them off easily. Thirdly, I always defended my own views and was never shy of an argument in Pyongyang.

5) Some people claim you interacted only with the country’s elite

So, do the doctors and pharmacists who couldn’t afford a bicycle, who I was dealing with on a daily basis, qualify as members of the country’s elite? Or the factory cleaners and machine operators employed by me. What about the mining engineers and workers I supplied with safety and other equipment and had trained in its use? The electrical engineers at power stations and the engineers at cement factories with whom I discussed the rehabilitation of dysfunctional installations; the managers and workers at garment factories whom I familiarized with new techniques and products; and the farm workers I met in remote provinces.

Not only did I deal with hundreds of ordinary North Koreans throughout the country, I also helped North Koreans to interact with foreigners. For example on behalf of Sandvik, a mining equipment company that I represented, I once organized a large workshop in Pyongyang’s Cultural Palace for North Korean mines. Mining engineers from mines all over the country flocked to Pyongyang to attend and could meet and talk with foreign peers for the first time. Similarly, on behalf of Dystar, a global leader in dyestuff, I organized seminars for textile and garment factories from all over the country. Many of their technicians also came for the first time to Pyongyang because of this event.

6) Other critics accuse you of collaborating with and propping up a brutal regime

Let me reply in three parts:

  1. Thanks to the business school many jobs and new promising businesses were created. That kept more families afloat and reduced poverty.
  2. While the elite can have imported brand pharmaceuticals, I as the CEO of the most advanced domestic pharmaceutical enterprise allowed to share our know-how with our local competitors to help them produce better medicine, thereby saving real lives.
  3. The elites don’t work in hazardous mines. I sold equipment and safety gear to mines which must have saved many miners’ lives.

Did my detractors save ordinary North Korean lives?

7.) Still, the debate between those who prefer total isolation and those who favour engagement with North Koreans is fierce. The most extreme views are even against tourism. You are a prominent pro-engagement advocate. What is your point of view?

Tourism is a highly-labor intensive industry which means it can bring food to the table of countless North Korean families. And indeed, foreign tourists are coming across more and more people that sell home-made sweets and souvenirs, post cards and so on to them. It’s quite pervert and sad when activists call to boycott tourism making lives of ordinary people (and certainly not the elite) miserable.

Let’s quickly look at the bigger picture:

There is an irreconcilable contradiction between those who are pro-engagement and for incremental change and those who are against it. Those who are against tourism and any kind of interaction with North Korea want to isolate North Korea and use coercive means like sanctions. They are not interested in change as they believe North Korea cannot and will not change. So they work for a collapse which would provide large conglomerates in South Korea with huge natural resources for nothing and a huge cheap sweat-shop labor pool in the North. On the other side of the fence you have those who want to engage North Korea who do this because they believe that this is the only peaceful way to help North Korea change and integrate into the world community. Their detractors want to freeze North Korea into a state of isolation and merely cement the status quo and prolong the sufferings of ordinary North Koreans.

8) When did you first think about writing a book? And why?

I’m not a gifted writer and English is not my first language. All I had published in the past were a few business-related pieces, mostly for specialized management and business magazines. Given my relatively narrow “business focus” and the lack of real writing ability, especially in a foreign language, it would never have crossed my mind to write a book. But the longer I lived in North Korea the more I realized that there was a wide gap between what was published in books and by newspapers around the globe and what was the reality on the ground. I felt reporting was mostly based on opinion rather than facts, speculation rather than certainty, and often driven by sensationalism. At the beginning I was just slightly irritated to read all the nonsense about my host country, but over time I became more annoyed at the apocryphal spouting and felt compelled to write a book to give balance to the one-sided reporting. I was determined that it wouldn’t become another partisan publication, but would be an impartial, though bluntly honest account, based on objective information and a true portrayal of what I observed.

9) How long were you writing it?

My various business activities kept me busy and therefore I wrote mainly at weekends. It took me more than a year to finish it.

10) Was anyone in North Korea unhappy about you writing about their country? Can you still go to NK freely?

Since I wanted to protect friends and sources I redacted some names and details.

And no, I wasn’t arrested when I went to Pyongyang after the book was published. Senior cadres knew of course that I wouldn’t write a propaganda book for them, on the other hand I was fair as I didn’t exclusively focus on negative aspects like almost every other North Korea book that trashes the country.

11) Is your book banned in North Korea? :)

All I know is that it’s not sold in North Korea and I guess it will not be available in libraries there any time soon…

12) How do people react when they hear your story?

If I was a defector and had some gruesome stories to tell people would of course believe everything I’d say. My not so spectacular story as a business man is often received in disbelief.

13) Do you face hostility from some people who hear that you worked in NK?:

Plenty! People love to talk about brainwashed North Koreans but I realized how much brainwashed people outside North Korea are after my book was published. Numerous people who have never been there lecture me about North Korea and tell me that my story is completely wrong and that North Korea is a single gulag with everybody being executed or starving to death with the exception of the elite. In short, we’ll have to expect that apart from the top 1% there will be no more living people there soon…

14) Did any shop take down your book because it shows NK in a different light than usual?

There are shops that don’t sell it because they expected another harrowing North Korea tale which should have been even more brutal than the many published before. Last week, an American friend sent me a picture of my book with the comment: “First time I saw it prominently displayed in a Barnes and Noble bookstore!” But then he added:

Of course, as is typical, at the same bookstore at the Mall of America in Minneapolis, the haunting memoir of an American-Korean teaching English for six months in Pyongyang was more prominently displayed.” He saw a written recommendation for shop assistants that customers should read that book (rather than mine) to find out why North Korea will never change. Of course, if they read that book instead of mine they will never learn that North Korea is actually changing.

Business in NK

15) Tell us a little bit more about the PyongSu pharmacy that you’ve set up in NK.

While I was CEO it became an enterprise obsessed with quality. Training and coaching were at the top of the agenda and were often aimed at changing traditional behavior patterns, particularly when it came to customer service.

I was afraid of having sullen, passive, uninterested shop assistants like in other shops that I saw when I opened the first four pharmacies. Yet, soon you could see active, helpful, competent and friendly PyongSu pharmacists smiling with their customers and, unsurprisingly, more and more customers flocking into our shops.

16) What was the biggest challenge in setting up a company in North Korea?

I wouldn’t want to generalize as challenges have been different from one venture to another. It’s certainly very important that both sides make their expectations crystal-clear from the beginning to avoid frictions at a later stage.

17) What’s the difference between negotiating with North Koreans and other Asian countries? Any tips you can share?

There are more things North Koreans business people have in common with Chinese and other Asian business people than things that are different. Trust building which is important takes place in an informal setting like elsewhere in East Asia, during dinners, in Karaoke rooms and sometimes even on the golf course.

18) Can you tell me a little bit more about the oldest join-venture company in North Korea – Polish-North Korean shipping company – Chopol.

The then Polish Chopol CEO was a friend of mine with whom I regularly played tennis at the Russian embassy and elsewhere. He was also a co-founder of the European Business Association, the first foreign chamber of commerce in Pyongyang. A Polish business delegation headed by a vice minister attended the foundation ceremony. I don’t want to talk in public about things I learned in private about the company, but it seemed to me it did fairly well over many years. As it was sailing under a DPRK flag and as the U.S. did its best to hinder any business from North Korea, it also felt the negative consequences.

19) Have you met any Polish businessman during your work in North Korea? Have you heard of any Polish investments there?

When I was president of the European Business Association we had another Polish member who set up a butcher enterprise. Soon the enterprise were selling Polish sausages and other products to hotels and shops. They were quite successful and planned to export sausages and other products to Chinese border towns like Dandung. They only wanted to sell fresh sausages, without any conservation chemicals. But that became a health hazard in a country with lack of sufficient refrigeration and a lack of respect for expiry dates. Also they sent their equipment to Pyongyang and started running the business before they agreed on a contract with their local joint venture partner. Disagreements led to a dispute. Eventually, the promising project was given up.

20) Have you ever met any Japanese businessman doing business in North Korea?

I have met Korean business people who reside in Japan.

21) How does the problem of abducted Japanese inlfluenced the NK-Japan relations?

It certainly blocks opportunities for both Japanese and North Korean businesses.

22)How did the sanctions impact your business? How do sanctions influence ordinary people’s life?

Business became more expensive as it proved to be more difficult to find suppliers and service providers prepared to work with a North Korean companies. The remaining few suppliers took advantage of this and massively overcharged their North Korean clients. Buyer and purchaser also had to figure out how to make and receive payments since the West cut North Korea off the international bank system which means a simple bank payment transfer is no longer possible. Also life for manufacturers has become harder because there are so many products now banned. In particular so called dual-use products that are used both for the production of weapons and civilian products. The use of such products however is unavoidable in numerous civilian industries, from the extraction of mines, to car manufacturing to food processing and pharmaceutical production to name a few. Last but not least sanctions are an important obstacle for the emerging middle class to develop and to buy products and services. It’s also therefore a stumbling block to the development of a vigorous domestic market.

23) What would be a better way than sanctions to deal with NK?

Sanctions didn’t stop the nuclear program, hurt only ordinary people and not the elite and worsen the human rights situation. Regardless of how sanctions advocates present them: they are an act of war against innocent people and not a mere collateral damage and a crime against humanity and should therefore be lifted.

24) How is the infrastructure changing? We’ve heard about plans to build for example new airport near Wonsan.

Some of these projects are meant to support the development of tourism

25) We’ve all heard about blackouts in NK. What’s the situation right now? How Pyongyang differs from the rest of the country? What can NK do to repair their energy network?

Indeed, power shortages, in particular outside the capital, are clearly visible. Although some new power stations were built over the last decade and existing power stations were repaired, it remains a significant bottleneck for economic development. Unlike other developing countries that have received loans worth billions of US$ from the World Bank and from the Asian Development Bank, North Korea was refused such vital loans due to opposition by the U.S. and Japan. Also we at ABB noticed that a significant part of the electricity generated in power plants is lost in the transformation and distribution system that needs substantial repair and upgrading. The situation there is similar to that in agriculture: a significant portion of agricultural produce is rotting on the fields in North Korea because of a lack of vehicles, fuel and good roads preventing it to be distributed to the cities in time. As ABB’s country director I therefore signed a pre-contract with the Ministry of Energy Production and Coal Industries to rehabilitate and upgrade North Korea’s power distribution grid. However, when tensions were rising between North Korea and the U.S., ABB like many other multinational groups stopped doing business with the country as they feared being caught in the middle of a bitter conflict and risk losing a much larger business in the U.S. As a result, that project didn’t materialize…

26) What about trading foregin currency on the black markets? Is it common?

There was already a sizeable and growing black market for foreign currency when I lived in North Korea

27) When foreign companies do business in NK is it common to give bribes? Of course I’m talking about other companies:)

I don’t want to make detailed public comparisons between countries but North Korea is certainly one of the cleanest countries in Asia when it comes to bribes required for foreign businesses to get things done.

28) How to look for a business partner in NK? Whom to contact? What do you need to have for North Koreans to be interested in doing business in NK?

Finding the right partner is a very challenging task, particularly when you’re not living in the country and therefore don’t have the network to scrutinize potential business partners and business proposals. To newcomers I would recommend to ask the DPRK Chamber of Commerce (under the Ministry of Trade) to help find a suitable local partner.

29) Does knowing Korean help doing business in NK?

Not necessarily. There is a heightened fear of being listened to and spied upon, making North Koreans more hesitant and less spontaneous when interacting with you.

30) Have you ever met Michael P.Spavor who is behind Dennises Rodmans visit to North Korea? How do people like him create such close relations with NK authorities?

Michael is a friend of mine whom I have known for many years. He is highly intelligent, knowledgeable (a fluent Korean speaker), sociable and likeable. These qualities made him an outstanding networker.

Pyongyang Business School

31 How did you come up with the idea of setting up the school?

When I arrived in Pyongyang in 2002, North Korea had just emerged from a huge crisis which led to the lay-off of millions of workers. The socialist Public Distribution System which clothed and fed the population had just collapsed to a large extent. Over night informal markets sprung up to fill the gaps and even managers of state enterprises had to adjust to these new developments to help their enterprises survive. They were used to getting production targets ordered by the state planning commission; however the new circumstances obliged them to research their markets, set up marketing strategies, introduce customer service, streamline supply chains, lead with reliable figures provided by a new finance and controlling unit in their company and so on. At regular seminars for senior executives we taught them these basic competences. Students of the business school excelled at their work places by successfully turning around their enterprises, some even became innovators and pioneers, for example by introducing the first bank debit cards or running the first advertising company. By North Korean standards this was a truly revolutionary change as advertising was considered ‘capitalist’ and banned before. In short, the seed for a new breed of entrepreneurs were planted, jobs were created and new ideas were experimented with. Since then, more and more old acquaintances of mine, including former staff, have started running their own businesses.

32) What was the reaction of North Korean authorities? Were they suspicious?

Of course, there was some suspicion at the beginning. But we could convince them that we provided know-how necessary for enterprises to perform better and become able to compete, starting on domestic shop shelves overcrowded with Chinese and then also Japanese products.

33) What did you teach to the students there?

It was some basic MBA knowledge

34) How did you find foreign teachers for the school?

Most lecturers were internationally experienced executives, often with a university lecturer’s background, from outstanding companies and from some universities. At that time it was not so difficult to find companies and universities to send outstanding lecturers to Pyongyang.

35) How did the students react to this foreign knowledge? Did they understand it?

The students were company executives. Our seasoned lecturers had no difficulty to demonstrate that the teaching content works in practice. Therefore the students embraced most of what they learned.

37) What happened to the school?

The school became a victim of tensions and sanctions after North Korea tested missiles and nukes. Sponsors withdrew their support as they felt pressurized by the U.S.

38) What other NGO have you come accross?

I came across European, American and even South Korean NGOs.

- What is your opinion on the Pyongyang University of Science and Technology? Can it have a positive influence on changes?

It’s a great project that helps develop new future leaders that are familiar with the world and that will contribute to integrate North Korea into the world community.

Tourism in NK

39) Where did you travel for holiday in NK?

Various places but Wonsan was most popular with my staff for a company holiday in summer time.

40) Should foreigners go to NK even though we hear about human rights issues, nuclear tests, labour camps etc? Some people claim that I’m supporting the regime.

I answered that earlier and I believe you are an agent of change and support the North Korean people with tourism.

41) Do you think tourism can be a driving force for change in NK?

Every form of engagement by business people, diplomats, aid workers and tourists is a driving force for change.

42) Do you think that my blogging and educating about North Korea can in the future block me from oppurtunities to work there? I might get banned for this? One day I want to work as a guide in North Korea.

Since you are fair and give a balanced view of North Korea instead of just trashing and demonizing it, you could still work in North Korea.

43) How should someone going to North Korea explain that to his mother, so that she doesn’t freak out?

True, he would have a lot of explaining to do but if his mother is open-minded she can be ‘detoxified’

North Korean daily life

43) Were you able to experience some real interactions with normal North Koreans?

Oh yes, my wife and I had lots of occasions to interact with normal North Koreans, at work, in markets and shops, at sports events and on many other occasions.

44) Where did you do your shopping? Could you go to normal Korean shops?

In markets, in particular at the Tongil market, however my wife could also go to some other markets, we also went shopping in various normal shops.

45) What do North Koreans do for fun?

They do many different things, I have described them in the book A Capitalist in North Korea.

46) What is the role of women in North Korea? Is their position stronger than other Asian countries?

Until the nineties men were offered jobs by the state and they were the families’ breadwinners. But when the socialist public distribution system collapsed during the crisis years, women started doing trade and other businesses and became the breadwinners. More on this in a full chapter of ‘A Capitalist in North Korea’ dedicated to North Korean women.

47) A lot of people think it’s impossible to make a North Korean friend. Do you have friends in NK? How to create a real friendship with a North Korean.

Friendship in East Asia may not have exactly the same meaning as in Europe. Yes, it’s possible to bond with North Koreans and develop a friendly relationship over time.

48) Is the drinking culture very strong in NK? For example in Poland in the past, people would say that those who drink have something to hide. Is there wine in NK? Did you try the alcohol with a snake inside?

Many North Korean men are not only heavy smokers but also heavy drinkers. There is even home-grown wine, there are different alcoholic beverages with a high percentage of alcohol, and yes, I did try alcohol with a snake inside the bottle.

49) Can you explain how money work in a socialist society? If so many things are for free like hospitals and schools, then why not make everything for free and get rid of money? How does it work that some things are free and for some you need to pay.

North Korea was once the most demonetized country in the world. However, after the collapse of the Public Distribution System things have dramatically changed. It has turned into a cash economy where more and more services that were free in the past have to be paid in cash.

50)What are the most popular sports?

Soccer and taekwondo.

51) Is there a football league in North Korea? Where do they play? How many teams there are?

Yes, North Korea has a football league consisting of about a dozen teams playing in Pyongyang and other cities.

52) Is it possible to swim in Taedong river? I would love to see a triathlon taking place in North Korea. where would be a good spot for a swim/bike/run race?

I haven’t seen anybody swimming in the Taedong river in Pyongyang. It would however be relatively easy to find a good place for such an event. North Korea with its rugged topography is indeed an ideal location for a triathlon.

If you’ve enjoyed this written interview, then be sure to check out the Google Hangout with Felix Abt from February. Be sure to check out my blog for further information about upcoming interviews with experts on North Korea!