Archive for July, 2008

Pyongyang Autumn International Trade Fair announced

Tuesday, July 8th, 2008

From the European Business Association (EBA) web site:

4th Pyongyang Autumn International Trade Fair
September 22nd – 25th, 2008, 9:30am-6:00pm
Further details here

Information flyer here: eba.pdf
Registration flyer here: registration.doc

The European Business Association (EBA) in Pyongyang issues this bulletin in order to inform about special conditions for participation by European businesses in the upcoming international trade fair in Pyongyang.

EBA Pyongyang and Korea International Exhibition Corporation (KIEC) will co-organise a special collective booth to host European businesses for the third time.

European companies interested in taking advantage of this opportunity are invited to visit the EBA website www.eba-pyongyang.org to see reports about the EBA booths in October 2007 and May 2008, which both were very successfull. Please also click through to membership and consider becoming a member of EBA.

The collective EBA booth has proven to be a convenient and cost-effective way to introduce European companies to the North Korean market. The participation fee is 600 or 700 Euro.

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(Updated) Inter-Korean trade up this year

Tuesday, July 8th, 2008

According to Yonhap (citing a Ministry of Unification report), trade volume between the two Koreas increased 23% to US$880 million (up from $718.2 million) in the first half of 2008.  This is due to an increase in commercial trade (not official exchanges), which were up 47% to $823.6 million from $558.7 million.  Commercial trade comprises 94% of trade volume, up from 78% last year. The number of firms conducting inter-Korean trade reached 526, up from 324, and and they manufactured 736 items (up from 686).

Goods traded in larger volume than a year ago: plate glass, clams, brackens and textiles from the Kaesong complex.

(UPDATE) Much of this is due to brisk activity in the Kaesong Industrial Zone, which employs 30,084 North Koreans (as of July 4, 2008), up from 225 in 2004.  The zone comprises 72 South Korean firms. 

Total production at the complex has been on a steady rise from US$15 million at the end of 2005 to $373.8 million as of the end of May, up 147 percent from last year, the Kaesong Industrial District Management Committee said.

“Such a rise in production is notable in that 33 of the 72 firms in the complex are start-ups operating there for less than one year,” said Kim Min-kyong, a public relations official of the committee.

To learn more, read the full articles below:
Number of N.K. workers at Kaesong complex tops 30,000
Yonhap
Shim Sun-ah
7/8/2008

 Inter-Korean trade rises sharply in first half despite political chill
Yonhap
Shim Sun-ah
7/7/2008

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Korea Business Consultants Bulletin: June 2008

Monday, July 7th, 2008

Korea Business Consultants publishes a monthly newsletter.  The June issue has languished in my “inbox,” but I have finally gotten around to posting the PDF.

The articles are on the following subjects:

Bush Responds to DPRK Nuclear Gesture
China Urges ROK to Loosen US Military Ties
“NK Orchestra May Play in US”
Foreign Funds Boosting NK Schools
Russia Donates Flour to DPRK
China Surges Ahead of ROK in DPRK Trade, Aid
DPRK Wants Japanese Funds for Gas Plant
DPRK, ROK, Russia to Build Power Project
“Lack of Fertilizer NK Farmers’ Biggest Headache”
N, S Educators Meet
Low–Key Celebrations of June 15 Summit
ROK Eyeing DPRK Iron Ore
ROK Offers Corn Aid to DPRK
“N-S Trade Surging”
“Solar Energy Park for DMZ”
China’s VP Xi Jinping Visits DPRK
NK Women Defend Boxing Titles
NK Bans Tobacco Ads
Golf Course Opens at Mt Kumgang
Striker Jong Dubbed “NK Wayne Rooney”
NK Women Win Asian Soccer Cup
Kumsusan Memorial Palace

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Aid Agencies to Deliver U.S. Food Assistance to DPRK

Sunday, July 6th, 2008

UPDATE: Below is a list of organizations that are distributing US aid in the DPRK:

Mercy Corps works amid disasters, conflicts, chronic poverty and instability to unleash the potential of people who can win against nearly impossible odds. Since 1979, Mercy Corps has provided more than $1.5 billion in assistance to people in 106 nations.

World Vision is a Christian humanitarian organisation dedicated to working with children, families and their communities worldwide to reach their full potential by tackling the causes of poverty and injustice. We serve all people, regardless of religion, race, ethnicity or gender.

Samaritan’s Purse provides immediate, no-red-tape response to the physical and spiritual needs of individuals in crisis situations, especially in locations where few others are working. The organisation is working in more than 100 countries to provide aid to victims of war, disease, natural disaster, poverty, famine and persecution.

Global Resource Services is dedicated to going beyond charity to find real solutions to complex global crisis where peace and security are in jeopardy. Our mission is driven by an end vision of reconciliation. Relationships, respect and reconciliation are the common threads that empower our cause.

Christian Friends of Korea (CFK) has been working since 1995 to bring hope and healing to the people of North Korea. To date, CFK’s efforts to build trust and relationships and meet real human needs at tuberculosis and healthcare facilities have resulted in the delivery of over $35 million USD in humanitarian assistance to the DPRK.

From the World Vision web page:

Five aid agencies today announced that they have signed an agreement with the Democratic People’s Republic of Korea to deliver U.S. government food assistance to North Koreans suffering from severe food shortages. The partnership will distribute 100,000 metric tons of food to more than a half-million needy people over a twelve-month period.

Mercy Corps is leading the programme, with World Vision as co-lead, pending final agreement. Partner agencies are Samaritan’s Purse, Global Resource Services and Christian Friends of Korea. Daily rations will be provided for approximately 550,000 vulnerable people – mostly children, the elderly and pregnant and nursing women – in two North Korean provinces. The programme, funded by the U.S. Agency for International Development’s (USAID) office of Food for Peace, is the first U.S. food assistance programme for North Korea since 2000.  

ORIGINAL POST:
From the Mercy Corps web site (July 1, 2008):

Mercy Corps is taking the lead in a yearlong distribution of 100,000 metric tons of food to quell rampant hunger in North Korea.

We have been asked by the U.S. government to spearhead a partnership of five non-governmental organizations (NGOs) that will implement a major food assistance program for North Korean families. Distribution of the food aid – provided by the U.S. government and funded by the U.S. Agency for International Development’s (USAID) Food for Peace program – is taking place over the course of twelve months beginning in June 2008. Alongside our partner organizations, we will distribute food such as cereal grains, vegetable oils and beans through schools, hospitals, orphanages and other institutions.

Our food distribution programs are expected to reach more than 550,000 people – primarily children, the elderly and the extremely poor – in two provinces. We will have staff residing in North Korea to visit families, monitor distribution and assess impact.

Since 1996, Mercy Corps has promoted cross-cultural exchange and worked with the country’s vulnerable families and communities to help meet health and nutritional needs, as well as collaborate on long-term agricultural and economic solutions. Our late co-founder, Ells Culver, reached out to the North Korean people in the aftermath of drought, flooding and food shortages. That cooperation was strengthened last year when we hand-delivered $13 million of medicines for flood survivors, and earlier this year when we received a USAID grant to install emergency generators and medical equipment in six county hospitals.

Your gift to our Global Food Crisis fund will help us deliver assistance to even more families in some of the world’s most challenging places.

To learn more, visit their website (link).

To make a donation, click here.

To read the press release, see below:
Aid Agencies to Deliver U.S. Food Assistance to North Koreans
Reuters Alert Net
7/2/2008
Contact: Geraldine Ryerson-Cruz, +1.202.572.6302, [email protected]

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US ready to pay for more cooperation. DPRK claims it is owed arrears…

Saturday, July 5th, 2008

According to the Associated Press, the Bush administration is ready to pay $20 million to North Korea to complete the last 3 steps (of 12—not to be confused with these 12 steps) to permanently disable its Yongbyon nuclear reactor.

North Korea for its part, says it does not want to address future dismantling work until it receives the goodies it was promised for the first nine stages of Yongbyon decomission.

The North Korean Foreign Ministry said in a statement that it had disabled 80 percent of its main nuclear complex, but that the six countries involved in disarmament talks had made only 40 percent of the energy shipments they had promised. North Korea said it would move to the next phase of the denuclearization process, abandoning and dismantling its nuclear weapons programs, only when it has been awarded all the energy and political benefits it had been promised.

Read the full articles here:
US has $20M to disable NKorean reactor
Associated Press
7/4/2008

North Korea: Foreign Quid Wanted Before Providing the Nuclear Quo
Associated Press (via the New York Times)
7/5/2008

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DPRK small-scale private commerce and industry growing

Friday, July 4th, 2008

Institute for far East Studies (IFES)
NK Brief No. 08-7-4-1
7/4/2008

It appears that the number of people involved in handmade goods manufacturing, trading, and other small-scale, individual businesses is steadily increasing among North Korean citizens.

According to a source inside North Korea on June 30, ever since North Korean authorities announced the ‘Market Stimulation Measure’ in March 2003, the number of small-scale private businesses employing between 1~8 people has continued to grow as citizens in the North have taken to markets aggressively in order to earn money,

As the North’s economic woes continue to stretch over time and the government is unable to provide basic living necessities, the people are looking for other ways to support themselves.

In March of 2003, North Korea expanded farmers’ markets into general markets, allowing not only the sale of agricultural goods, but of manufactured goods as well. At the same time, the state introduced ‘market use fees’ for vendors wishing to rent space to hock their wares, thus bringing about a tax-like ‘state payment’.

Small-scale commercial and industrial businesses took on the form of family manufacturing or collaboration between factories, enterprises and engineers working together, but ‘Chinese-model’ small enterprises hiring just one or two workers also appeared.

In-home food preparation or handmade goods manufacturing, restaurants, bus services, repair work and other service-related industries grew. There also appeared examples of those leasing import rights from organizations or enterprises and making a living through trade.

Authorities have given these businesses tacit permission to operate, recognizing their role in increasing public revenue and supplying the people with daily necessities, but at the same time, they have laid down some restrictions, criticizing those “bitten by the capitalist bug, working only to make money for themselves.”

Small-scale private commerce and industry has the positive benefit of expanding the provision of daily necessities and absorbing unemployed labor in the North, but on the other hand, anti-socialist side effects such as the increasing gap between the rich and the poor and mammonism are also on the rise.

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Kim Jong il steps up economic activities

Wednesday, July 2nd, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-7-29-1
7/29/2008

Of North Korean leader Kim Jong Il’s public appearances during the first half of the year, fully half of them were to military installations or other defense-related sites, making it the most frequented sector, but compared to previous years, the number of visits to sites related to the economy rose considerably.

According to North Korean media sources, from January through June, Kim Jong Il made a total of 49 public visits. Of these, 25 (51%) were to military facilities, while 15 (31%) were to factories, cooperative farms, and other sites related to the nation’s economy. 3 (6%) public appearances were meetings with foreign dignitaries, and 6 (12%) were to public performances and other events.

In January, Kim made five on-site visits to economically important areas, after which there was a lull until May, when Kim appeared at six sites, and then made another 4 economy-related visits in June. In July, Kim has already made three visits to Jangan and North Pyongan Provinces, showing up at production facilities in those areas.

Between January and July of 2007, Kim made only six visits to sites related to the economic sector, less than a third the number of visits this year. In fact, with only 19 site visits for all of 2007, Kim’s appearances in the first half of this year have almost surpassed last year’s total, which itself was an increase over the 16 visits made in 2006.

The first public appearance made by Kim Jong Il in 2008 was at the Yaesung River Power Plant construction site on January 6, and was followed up by an appearance on January 21 the ‘18th National Program Contest and Exhibition’, emphasizing the government’s drive to resolve economic difficulties.

In the same month, Kim Jong Il visited a poultry and pork processing plant, a mushroom plant, a food processing facility, a rabbit breeding farm, and a youth mine, directly inspecting sites related to the lives and livelihoods of the people, appearing to emphasize the slogan announced in this year’s New Year’s Joint Declaration, “Prioritization of the People’s Lives”. Kim’s ‘economic walk’ was seemingly put on hold by a flurry of negotiations between the United States and North Korea regarding the North’s declaration of its nuclear programs and the attempt by the new South Korean government’s revamped policy towards North Korea between February and April, but then regained traction in May, with a visit on the 4th to a mountain orchard in Kangwon Province.

This year, Kim Jong Il’s on-site instructions at facilities related to building the economy and improving the lives of the people appear to be focused on stressing the need to resolve food shortages and ensure that everyone is fed.

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Factory in Kaesong complex closed down over dispute

Tuesday, July 1st, 2008

Excerpt from Yonhap:

A South Korean factory operating in the joint industrial complex in Kaesong has been closed for nearly 20 days over a feud with a North Korean controller, government and company officials said Monday.

The company, which employs around 300 North Korean workers, took the measure on June 12 after South Korean employees and North Korean officials scuffled over supplies, they said.

The firm demanded the North Korean authorities replace the North Korean controller who allegedly assaulted South Koreans in the fight, but the demand was not met.

It was not known exactly what caused the fight.

A total of 28,277 North Koreans were working for 70 South Korean labor-intensive manufacturers in Kaesong as of the end of May, according to the Unification Ministry.

Read the full article here:
Factory in Kaesong complex closed down over dispute
Yonhap
Shim Sun-ah
6/30/2008

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Price of DPRK rice drops

Tuesday, July 1st, 2008

Institute for Far Eastern Studies (IFES) 
NK Brief No. 08-6-26-1
6/26/2008

One kilogram of rice in North Korea, the price of which shot up to as much as 4,500 DPRK won last month, has reportedly fallen in price this month by up to 2000 won.

According to a North Korean source, on June 10, one kilogram of rice was selling for between 2,500 & [] 2,700 across the country, quoting prices from cities such as Horyong and Chongjin (North Hamgyong Province), Wonsan (Kangwon Province), Sinuiju (North Pyongan Province), Kangye (Changang Province), Kangso (South Pyongan Province), and Haeju (South Hwangae Province). The source explained, “as soon as rice prices skyrocketed, smuggling in the border region picked up and permission to export 100,000 tons [of grain] came from the Chinese government, and as this occurred, the import food eased a little.”

The source also said that spreading news of food aid from the United States was also an important factor in the falling grain prices.

However, the source stressed, “While the price is falling, food prices are still more than three times what they were last year, so citizens with no money have a hard time feeding themselves…in agricultural regions with no money, famine is spreading regardless of falling grain prices.”

It was also reported that on June 11, a shipment of corn arrived at Chongjin Port (North Hamgyong Province) and distribution to workers has begun, while on the 12th, polished rice, corn, and other grains entered Heungnam Port (South Hamgyong Province) was distribution began the next day. Corn was priced at 800 won per kilogram, easier to purchase than the 1,200 & [] 1,300 won prices found in markets, but more than two times as expensive as market prices at this time last year.

Good Friends, an organization working to aid North Korean people, reported in its newsletter, “Between the end of June and beginning of July, workers in Pyongyang will receive 2 kg of polished rice, 7 kg of milled corn, and 5kg of Southeast Asian rice, for a total of 14 kilograms of rations per person…in the areas surrounding Pyongyang many people cannot work due to starvation,” and they had a hard time swallowing news of these rations.

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Interview with president of Nosotek, JV company in DPRK

Tuesday, July 1st, 2008

Via Interview Blog:

UPDATE: Here is an interview with Jürgen Bein about the Kaesong Industrial Zone (In German)

Klaus-Martin Meyer: Mr. Eloesser, you recently became the President of Nosotek Joint Venture Company in Pyongyang, the capital of North Korea. In which the field of business is Nosotek operating?

Volker Eloesser: We do general IT outsourcing. This includes data base applications, 3D technology development as well a games production. Nosotek’s customers come from all over the world and some of our products are even used in the US.

Klaus-Martin Meyer: According to your CV, before you were heading to North Korea, you’ve been the general manager of Elocom, a subsidiary of a German Joint Venture between News Corporation (NWS.A) and Verisign (VRSN). It’s quite unusual for a high-ranking manager of a US based public company to move to North Korea.

Volker Eloesser: That’s true. But I don’t see my job as a political mission. At Elocom, I was managing a company producing mobile phone software technology. Neither my old job nor my new one is a political one.

Klaus-Martin Meyer: What’s your opinion about the demolition of the nuclear cooling tower in Yongbyon and the announcement of the US President George W. Bush to remove the country from the terrorism blacklist?

Volker Eloesser: This was great news. I think that both parties, the Korean and US government, took wise decisions which hopefully help giving peace a chance through diplomacy. For our business, lifting the sanctions will have a very positive impact, as well as for the People in the DPRK. North Korean Companies, domestic and foreign-invested, were suffering a lot under the sanctions. Foreign trade was very difficult and many potential customers feared to get trouble when making business with the DPRK.

Klaus-Martin Meyer: When did you first get interested into the DPRK? Did you already do active business with North Koreans before?

Volker Eloesser: Of course I did. In the beginning of 2005, I held lectures at the Pyongyang Business School. The Korean participants of my lectures were great people really interested into international business.

Klaus-Martin Meyer: Who are the shareholders of Nosotek? Is it a state-run company?

Volker Eloesser: Nosotek is a joint-venture between a European owned private holding company and the General Federation of Science and Technology of DPRK, a non-government organization.

Klaus-Martin Meyer: Along being the president of Nosotek, you are Chairman of the Supervisory Board of Next Generation Entertainment N.V. (NGE), a Dutch public company. Are there any links between NGE and North Korea?

Volker Eloesser: NGE’s management is highly interested in investing into the DPRK software industry. The CEO Dr. Stefan Heinemann believes that the DPRK will become a very important sourcing market in the near future, which has many advantages over China and India. Having this in mind, it makes a lot of sense for NGE to have a board member with experience in dealing with North Koreans.

Klaus-Martin Meyer: How would you describe the difference of outsourcing software in the DPRK compared to China or India?

Volker Eloesser: The DPRK’s software industry is already very well developed, but only for the demands of the domestic market. Although the skill level of the engineers is as high as the skill level in China or India, most DPRK software companies never made successful international business in large scale. The Korean engineers usually have no experience with western culture, habits and taste. But of course you’ll experience the same, when working with some small Indian or Chinese companies. One major advantage of the Korean engineers is that they don’t move to a new job frequently, like the Chinese. In this matter, you can compare the Koreans with Japanese staff, who usually never leave the company to move to another job. The result is obvious: the experience and knowledge stays within the company and there is no risk of IP leak.

Klaus-Martin Meyer: Are you personally living in North Korea or can you do your job remotely?

Volker Eloesser: It’s definitely required to have western management in a company dealing with western customers. Every attempt of people trying to do this remotely has failed. I’m planning to live in Pyongyang most of the year. I have a nice apartment in the city centre.

Klaus-Martin Meyer: Living in Pyongyang sounds hard. How are the living conditions for foreigners in Pyongyang? What about your family?

Volker Eloesser: Well, it’s not as hard as western readers may think. Of course the hardest thing is to live separated from my wife, but she promised to visit me frequently. Generally, the living conditions for westerners in Pyongyang are good: The air is totally clean, there is no risk of becoming a crime victim, there is a lot of green in the city and the Korean people are generally very friendly .

Klaus-Martin Meyer: Usually, western media has almost no idea about the real working and living conditions of the people in North Korea. Can you tell us something about the working conditions of your local staff?

Volker Eloesser: One of my goals is to achieve working conditions according to German standard. The staff is equipped with the latest computer hardware and enjoys a lot of incentives from the company to make their live comfortable. For example, the company is providing free lunch for the whole staff, which is delicious and nutritious. I myself have lunch together with my engineers every day, and I like it very much. Additionally to the large number of public holidays, the company even sponsors a one-week holiday trip. This is the way we appreciate the performance on the job.

Klaus-Martin Meyer: What are the most difficult obstacles, western managers are facing in the DPRK? Do you stuffer from political pressure?

Volker Eloesser: I’ve not yet experienced any political pressure, but of course you need to get used to the local security regulations and bureaucracy. When you behave politely, don’t do derogative statements about politics and respect the Korean culture, you won’t face any serious problems. The most difficult obstacle is the absence of international experience of the software engineers, combined with the cultural differences typical to Asian countries.

Klaus-Martin Meyer: How many European businesspeople like you have discovered the DPRK as tomorrow’s sourcing market?

Volker Eloesser: Actually, not many so far. The European community in Pyongyang is very small. After a few weeks, you know every foreigner. Most Europeans who do business in the DPRK are organized in the European Business Association. But I feel that the community is growing since business managers are more and more recognising that doing business in and with the DPRK is of course working with a frontier framework but also with a great potential of highly-skilled people with an impressive work ethic and an attractive cost-performance ratio – and also an emerging domestic market.

Klaus-Martin Meyer: What drives you personally to go there and build up an internationally operating company?

Volker Eloesser: Leading a foreign invested company in North Korea is a great challenge for me. During my lectures at the Pyongyang Business School, I realized that the skilled North Korean IT engineers have a huge potential for successful software development. This potential is almost unrecognized in the world and therefore unused. I like to be the pioneer who builds up this new outsourcing destination. I believe that economic progress will lead to a general improvement of the people’s living conditions and IT business is a key to economic progress. If you ask me, I would tell you that my work will have a greater impact on improving the North Korean living conditions then just sending bags of rice.

Klaus-Martin Meyer: Do you experience economic progress or political changes in North Korea?

Volker Eloesser: The question about political changes should better be answered by the politicians. But indeed you can see economic progress: Compared to my first visit in 2005, there are now much more cars in the street and the number of foreign investment seem to have significantly grown. A group from Hong Kong is building a large shopping and business area along the Taedonggang river and Orascom from Egypt is continuing the Ryugyong Hotel construction as well as investing into a modern mobile phone network. And recently the German-based Prettl Group (Automotive industry) announced that it will be the first foreign non-Korean company to build a factory in Kaesong.

Klaus-Martin Meyer: Nosotek is located in Pyongyang. Do you think things could be easier for companies operating out of the Kaesong free trade zone?

Volker Eloesser: I’ve never been in Kaesong myself. From what I’ve heard, the free trade zone, which has been build with ROK investment, is a modern factory area, mostly targeted to low-cost production of shoes or textile. I don’t know of any software development in Kaesong. Pyongyang, being the economic and cultural centre of the DPRK with large universities, offers a huge number of qualified engineers.

Klaus-Martin Meyer: What are your plans for Nosotek’s future? How do you see your company in five years? What is your strategy?

Volker Eloesser: My plan for Nosotek is a constant growth. First of course, everybody in Nosotek has to understand the demands of our customers; not only the technical demands but also the usual communication style and habits of the western world. At the moment, we’re only fifty people and I’m starting to build up a powerful middle management, who knows their customer’s expectations. After this has been done, we can begin scaling the business volume.

Klaus-Martin Meyer: Are there other western IT companies having operations in the DPRK?

Volker Eloesser: Nosotek still is the only one. But according to Paul Tjia of GPI Consultancy who organizes business missions to the DPRK, the number of people interested into software development in the DPRK is constantly growing. I hope that Paul will bring more people here to operate software companies. With other Foreigners here, working in the same or similar field of business we together can help strengthening the DPRK to become a better known source for software development. Bangalore is still far, but I’m sure the quality delivered by the Korean IT engineers will be convincing, not only to grow Nosotek, but also to grow the country itself as an outsourcing destination.

Klaus-Martin Meyer: Mr. Eloesser, thank you for the interview.

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