Archive for the ‘PyongSu Pharma’ Category

Pyongsu to open new pharmacy in Phyongsong

Sunday, September 8th, 2013

According to Yonhap:

A joint venture between North Korea and Switzerland will open its first chain drugstore in a provincial city in the communist country by the end of this year, according to the company’s website Sunday.

The new store will be situated in Pyongsong, South Pyongan Province, where many of the North’s well-off people who can afford medicine live, the Pyongsu Pharma J-V Co. said.

Launched in 2004 as a joint venture between Parazelsus, a Swiss investment and management company with a focus on healthcare, and Pyongyang Pharmaceutical Factory under the North’s health ministry, Pyongsu Pharma has since opened nine chain stores in Pyongyang to provide North Koreans with essential medicine, such as aspirin and digestive aids.

Pyongsong, located just north of Pyongyang, is the capital of North Pyongan Province. It was developed into a science-research city, housing many research institutes in the 1960s, but now is a hub of logistics for distributing everyday goods all over the country.

Last month, the North Korean authority opened the city to foreign tourists, according to a Chinese tourism agency specializing in tours to the North.

“Since medicine is as precious as rice in North Korea, Pyongsong will be crowded with people coming to buy medicine from other parts of the country if a drug store opens in the city, which has a relatively well-developed traffic network with other cities,” a source well informed on North Korea said.

Read the full story here:
N.K.-Swiss joint venture to open drugstore in N.K. provincial city
Yonhap
2013-9-8

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North Korean products in department stores on the rise

Friday, February 22nd, 2013

Institute for Far Eastern Studies (IFES)
2013-2-22

The number of North Korean made products is increasingly on the rise at North Korean department stores. Reportedly, 70 percent of the merchandise on the shelves in North Korea’s largest department store, Pyongyang Department Store No. 1, is North Korean made.

Japan-based pro-North Korean newspaper Choson Sinbo reported on February 13 that the bestselling item is apple juice made from the Taedong River Combined Fruit Farm, sold from the kiosk located on the first floor of Pyongyang Department Store No. 1. Sonhung Food Factory products, especially bread and confectionaries, are also said to be very popular.

The newspaper commented that the regularly held product exhibition shows at the department store have created competitive environment for local factories and companies and contributed to the production of high-quality products. They also emphasized that exhibition of products began on account of recommendations of the former North Korean leader, Kim Jong Il.

It further added, “The product exhibition invites participation from light industry factories and enterprises and its affiliated units from central and regional areas as well as department stores in Pyongyang and general stores that sell industrial products.” It commended the expos to be well received by the local people for filling the shelves with local products.

The first exhibition began in December 2010, and the second and third exhibitions were held in July 2011 and January 2012, respectively. Selling of Taedong River Combined Fruit Farm products began from the third exhibition.

In an interview with Choson Sinbo, Kim Miyoung, commerce director of Pyongyang Department Store No. 1, said the following: “Employees of the department stores and our patrons never imagined a day like this would come where our department store shelves are filled with North Korea made products, especially when we were going through the difficult economic times.”

The news also reported the opening of North Korea’s first 24-hour pharmacy. Pyongsu Pharmaceutical, a joint venture company between North Korea and Switzerland, has claimed to have opened North Korea’s first 24-hour pharmacy, called Taedongmun Pharmacy, in Pyongyang last August. Pyongsu pharmaceutical joint venture company was established from September 2004 between InterPacific Group of Switzerland and Pyongyang Pharmaceutical Factory under the Ministry of Health of the DPRK. They both produce and sell pharmaceutical products in Pyongyang. Its homepage introduces nine operating pharmacies in Pyongyang. (See Pyongsu’s website for details: www.pyongsu.com.)

The first pharmacy by Pyongsu was built near the Pyongyang’s Arch of Triumph in 2006 and expanded the number of pharmacy to nine, including the Taedongmun Pharmacy. In addition, Kangan Pharmacy was highlighted in its website, boasting that all the pharmacists working at this pharmacy are graduates of Kim Il Sung University. It also boasts that it is the first pharmacy to have been equipped with blood testing equipment.

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Felix Abt interview

Wednesday, January 16th, 2013

Felix Abt, author of A Capitalist in North Korea and founder of the DPRK’s Pyongsu Pharmaceutical Factory, did an online interview in which he discusses  some of the surprising quirks of living in North Korea…such as getting locked out of your LinkedIn account (we blogged about this back in March 2009).

Here is a blurb:

Is North Korea Now Open for Business?

Not quite. But Abt tells me he believes opening up to commerce has “become a more important priority” for the North Korean government over the past ten years.

“I’m getting a lot of proactive proposals from the North Koreans, which we haven’t experienced in the past, so there is quite a big change on that front,” Abt says. “My business partners in Pyongyang can use [file-sharing service] Dropbox, they can travel more often now, and more North Korean companies have been allowed, particularly in 2012, to interact with foreign ones.”

Still, obstacles exist for anyone seeking to do business in this most frontier of frontier markets.

Power cuts are frequent, infrastructure is crumbling, and sanctions remain strict. On the other hand, Abt says the hardships he encountered cemented deep personal bonds between him and his colleagues.

“We had to solve practical problems every day; it was a daily struggle that brought us close,” Abt recalls. “We worked hard together, but we also partied together, went to karaoke, had good dinners, went on excursions, and had fun together. I never had the feeling that I was an alien in their eyes or a potential enemy or a spy — the relationship was quite relaxed and friendly, driven by our joint goals.”

Abt and staff members celebrate International Women’s Day in Pyongyang (Photo: Felix Abt)

So, would he do it again?

“I like to go back from time to time to eat some good food and have a merry evening, but otherwise, of course, I am happy where I am now,” Abt says.

“Seven years is a long time.”

Read the full interview here.

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Felix Abt’s advice on starting JV company in the DPRK

Thursday, September 3rd, 2009

German Asia-Pacific Business Association
Ausgabe 3/2009
Download the full publication here (PDF)
Download Mr. Abt’s article here (PDF)

North Korea – doing business in a demanding environment
Despite political obstacles within the system and internationally, it is possible to set up successful business in North Korea, says Felix Abt. Identifying partners and exploring market potentials are difficult tasks. Having completed them, one can count on a dedicated workforce.

The Right Local Partner: The Most Important Requirement to Succeed First, you need a Korean partner for your business as you cannot do any business without one and, second, you do have to find the right one if you want to succeed. When you start with your fact finding mission you come across people who want to introduce you to a specific business partner or they want you to do business with themselves. Of course, they have a vested interest and, most likely, they will not introduce you to alternative and potentially more suitable business partners. But you need to know that in every industry there are companies of different sizes, competence, ranges of products, competitiveness etc.

(more…)

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PyongSu Rx advertisement

Sunday, July 19th, 2009

From YouTube:

pyongsu-advert.JPG

(Click on image to see video)

According to the video description:

This was PyongSu’s introduction to donor organisations and individuals that have been purchasing pharmaceuticals abroad and shipped them to North Korea. PyongSu’s promotional presentation explained to them why they should place their orders with PyongSu rather than with pharmaceutical companies abroad.

As PyongSu had no budget to mandate a professional advertising company with the task its managing director Felix Abt made the concept, the script and produced it in-house towards the end of 2005, with the help of North Korean IT and designing students and their Canadian trainer Ian Lee as well as teacher Michael P. Spavor, then giving language courses in Pyongyang, who was the “voice” in this clip. Thus, this unique advertising clip was made in its entirety in Pyongyang (and by people who are not advertising professionals). Check it out and add your comment!

Longer videos on investments in the DPRK can be found here.

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European insurers and LinkedIn nervous about the Swiss

Friday, March 20th, 2009

Over the last few years, the European Union has pursued an engagement policy with North Korea.   MEP Glyn Ford makes regular trips to Pyongyang to facilitate diplomatic progress; the German Freidrich Naumann Foundation runs economic education courses; European donors founded the Pyongyang Business School; and a small group of European ex-pat businessmen formed a de facto chamber of commerce, the European Business Association in Pyongyang.  Although European companies have experienced mixed success in the DPRK they continue to look for new opportunities

This morning, however, Felix Abt, a Swiss director of the PyongSu Pharmaceutical Joint Venture Co. in Pyongyang informs me that his life insurance policy (purchased from a European company) has been cancelled. 

“A European life insurance company cancelled my life insurance because I am a dangerous person living in a dangerous country. Credit card organisations cancel credit cards for such persons in such countries, health insurance companies come up with other reservations and limitations and the latest organisation that has just expelled me is LinkedIn with a very curious explanation.”

I am unsure how the cancellation of life insurance policies could impact other Europen investments in the DPRK, but the marginal effect cannot be positive.  Mr. Abt has been a resident of Pyongyang for years where he manufactures Western-quality pharmaceuticals.  Needless to say, the DPRK is very much in need of his services, so it is a shame that after all this time he is now considered a liability by his insurer.

Mr. Abt also forwarded his rejection from the business networking site LinkedIn, which is posted below:
 

linkedin.JPG

Apparently LinkedIn‘s legal department considers logging into the server as “receiving goods of US origin” (the software I presume), and so it prohibits account holders, or even logging in, from Cuba, Iran, North Korea, Sudan and Syria—even if they are Swiss.

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PyongSu Joint Venture Company

Sunday, November 9th, 2008

From Wikipedia:

PyongSu Joint Venture Company, Limited is a pharmaceutical company jointly founded in 2002 by Pyongyang Pharmaceutical Company in North Korea and a company headquartered in Hong Kong which is a market leader in pharmaceuticals distribution and contract manufacturing in Asia. The corporate headquarters of PyongSu are in the Songyo district in Pyongyang. PyongSu started trial production in 2004 and, as of 2005, engaged in manufacturing mainly painkillers and antibiotics. At the end of 2006 the foreign-invested stake was sold to another investor. Felix Abt, the 3rd managing director (or president) managed to avoid the closure of the company by turning the heavily loss-making operation into a profit-making one. PyongSu became the first North Korean pharmaceutical factory to reach GMP (a universally recognized quality standard in the pharmaceutical industry as defined by the WHO), repeatedly inspected and confirmed by the WHO. It also became the first ever North Korean company to participate in tender competitions and to win contracts against foreign competitors from China, India, Germany and elsewhere. With an increasing cash-flow generated by itself, the company has even become able to buy and profitably operate pharmacies and other sales outlets in the country. Towards the end of 2008 managing director Felix Abt explained that the company now enjoys 1) a portfolio of products made by itself including an anti-helmintic and an anti-hypertensive drug that meets the patients’ needs well 2) a good reputation as a quality and service-minded company in the DPR Korea and the recognition as the “model company” of the domestic pharmaceutical industry. 3) a good market penetration thanks to wholesaling (that includes a variety of complementary products at affordable prices imported directly from reliable GMP-manufacturers) and its own profitable retail outlets (i.e. pharmacies) and 4) a healthy growth (including a high amount of orders on hand for 2009), sustainability and profitability.

Click here to read a recent interview by Mr. Abt in Interview Blog.

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Interview Blog: Felix Abt, European Business Association

Wednesday, September 10th, 2008

Interview Blog
How a hopeless pharmaceutical joint venture was turned into a success story, why and how humanitarian aid and economic development mostly follow conflicting interests, how foreign business people challenge and survive an environment overshadowed by heavy geopolitical influences including arbitrary sanctions imposed by foreign powers, how North Korean managers prepare themselves to get fit for export and international competition, and what the dos and don’ts are for those who want to successfully start a business in this very special country.

(click here for other North Korea-related interviews)

Klaus-Martin Meyer: Felix Abt, you came as country director for the ABB group to North Korea in 2002 where you have been resident since. ABB closed its representation just about 2 years after your arrival but you have successfully been involved in a number of other businesses since then. What happened?

Felix Abt: At the time the Swiss-Swedish ABB, a global leader in power and automation technologies, not only faced huge asbesto claims in the United States but also large debts versus a tiny equity that culminated then into a matter of life or death for the group. To survive it decided to immediately save 800 million USD cash expenses, making the closure of a number of factories and offices around the globe unavoidable.

Though we at ABB Pyongyang fully covered our cost through sufficient sales with a good margin the funds and other resources necessary to set up the planned joint ventures I had been negotiating, however promising they may have become, were definitely not available any longer. In addition the pre-contracts I secured for ABB – including one for a 9-digit USD infrastructure project I signed at the dismay of the competitors in presence of the Swiss foreign minister, the Swedish ambassador and the North Korean minister of power and coal industries – would have required even more substantial funding. Given ABB’s critical financial condition that I, far from the headquarters, grew aware of only later, neither ABB could have provided this in the form of supplier credits nor commercial banks in the absence of sufficient export risk cover nor institutions like the Asian Development Bank or the World Bank from which North Korea remained excluded as a member due to US and Japanese opposition.

It led ABB to shut down its country representation. The speculations put into circulation suggesting political rather than economic reasons or the failure of its local business operation for the shutdown were all wrong. ABB’s case also drew more attention than it deserved because this company and British tobacco giant BAT were then the only multinational groups active with resident expatriate staff in North Korea.

After the closure of ABB’s offices I continued to work in Pyongyang as an agent for ABB and added other firms to a strategic agency portfolio which comprised first-rated companies in promising key sectors like mining (e.g. Sandvik) and light industries (e.g. Dystar). On behalf of the companies represented by me I realized multi million USD sales in the following years. I was also involved in setting up mining operations.

Klaus-Martin Meyer: From heavy involvement in infrastructure and mining business to raising a North Korean pharmaceutical factory to world standard – how come?

Felix Abt: The PyongSu Pharma J.V. Co. Ltd. in Pyongyang is the first pharmaceutical joint venture between North Korean and foreign investors and the largest operational European investment at present. The foreign investors that had been holding the majority equity stake sent first a Philippino production pharmacist to Pyongyang to build up and run the joint venture. After he had been in Pyongyang for some time he decided some day not to return to Pyongyang from a holiday. The project suffered a setback and got stuck until a second one from Germany was found who stayed some years until he decided to retire. Both of them were excellent production experts and successfully set up and run pharmaceutical operations elsewhere before. And yet, PyongSu’s situation still looked desperate when the second one left and when I was asked to become managing director and the third one to, so to speak, try his luck: A WHO-sponsored international inspection had just come up with 75 objections, rejecting Good Manufacturing Practices (GMP) acknowledgement, a universally recognized production quality standard in the pharmaceutical industry as defined by the WHO. In addition from being far from reaching the necessary standards, the company had no sales but only expenses, large quantities of Aspirin and Paracetamol nearing their expiry dates were stockpiled at its warehouse, and last but not least both investors, unwilling to give the company any more support, and staff were discouraged and they had little confidence left in the company’s future.

Having had the unique chance of getting to know North Korea and gaining, unlike other foreign business people, a pretty good insight and understanding of the way business is done here during the previous years of my stay thanks to my multi-faceted business activities and having worked and survived for a large multinational pharmaceutical group as country director and regional director before in no much less challenging places in the Middle East and in Africa, I thought I should dare it. At the beginning I felt really lonely in the belief that PyongSu had a fair chance of succeeding and many told me straightforward I was a day dreamer. But already recognizing the impressive potential of the Korean staff when I was a member of the board of directors before taking over as chief executive and the ability to recruit more of the industry’s best talents I believed that with proper management that included coaching and training in all business aspects good results were achievable.

The results of the new approach are quickly told: PyongSu did become the first North Korean pharmaceutical factory to reach international GMP-level confirmed by the World Health Organisation. It also became the first ever North Korean company to participate in tender competitions and to win contracts against foreign competitors from Germany, China, India, Thailand and elsewhere. With an increasing cash-flow generated by ourselves, we have even become able to add significant value to the company by buying and profitably operate pharmacies and other sales outlets in the country.

Being recognized as a model pharmaceutical company PyongSu has, at the request of the government, also made itself socially useful by sharing know-how with other pharmaceutical companies to help raise their standards.

Klaus-Martin Meyer: You have been the initiator and the first president of the European Business Association (EBA) in Pyongyang, the equivalent of a European chamber of commerce. What was the motivation for its foundation and what has been the result of it so far?

Felix Abt: I always felt that there are plenty of misconceptions about North Korea and the way business is done here. Not only was the country underreported and often misunderstood but when Western media did report about it they tended to repeat old, mostly negative stereotypes. Thus, I saw a need to provide the business world with more accurate information, ideally by competent business people on the ground themselves. I also thought an entity should be created that could serve as a bridge between European and North Korean enterprises to accelerate investment and trade between them and to break the isolation the country was pushed into by the powers who have been trying to overthrow it ever since the DPRK or, in full, the Democratic People’s Republic of Korea (North Korea’s official denomination) was founded 60 years ago. I also thought it could some day become a welcome medium for European businesses and North Korean authorities to hold dialogues in order to learn to understand one another’s problems, concerns and thinking which would strongly benefit both sides. I could, by the way, also imagine a larger meeting and communication platform not just limited to few European businesses but open for enterprises around the globe interested in investing and doing business in North Korea.

Since its foundation the EBA Pyongyang made some headway into the direction described before. However, my presidency was marked and overshadowed by an avalanche of arbitrary economic and financial “sanctions” imposed on the host country which kept me busy to find ways and means to keep (legitimate) business going.

As things have stabilized and as we have learnt how to deal with obstacles to our businesses in the meantime and, last but not least, in order to save time for existing business projects as well as new business opportunities in North Korea and Vietnam including those your readers may approach me with I decided a few months ago that I would no longer be available as president or committee member for a second several-year-term.

But having closely experienced Vietnam’s economic adjustment process and the way it so successfully attracted foreign investment where I have been living and working for many years before I moved to Pyongyang I would still be prepared to spend time and share experience and know-how with the competent North Korean authorities should they be interested in it.

Klaus-Martin Meyer: One of the many hats you are wearing is the one as director of the Pyongyang Business School. Is capacity building for enterprises a better alternative to sending rice bags in order to prevent hunger and starvation in North Korea?

Felix Abt: Let me explain you first that with the exception of Sweden and Switzerland all European countries, invited by the North Korean government to do development projects in North Korea, have refused to do so until now for political reasons (following largely US-policies) and provide only humanitarian assistance, particularly in times of disaster. It is mainly the United States plus European and certain Asian countries that have been donating rice and other food items instead either directly or through the World Food Programme (WFP) each and every year for more than a decade and they are continuing to do so. This not only allowed donors to get a glimpse into North Korea through the eyes of WFP-food distributors but it also created a culture of dependency which I suspect was not entirely without political intentions by the donor countries and which economists and development experts claim to also have prevented necessary economic adjustment measures that would have allowed the DPRK to get on its own feet faster.

Recently, for example, I saw that an NGO bought a large quantity of cookies fortified with vitamines in China with taxpayers’ money from a European country for malnourished kids in North Korea. They thought that European hygiene, safety and quality standards of food items can be met in China but not in North Korea. Instead of helping the North Korean food companies with some capacity building reach these standards they were in fact undermining the efforts that the North Korean food processing industry is undertaking to catch up with the rest of the world. How do these do-gooders imagine that domestic factories can thrive and feed their workers and their families if they place their orders with competing industries just across the border? I can illustrate my point also with PyongSu’s example. Some organizations like the WHO and the IFRC have supported and sincerely honored PyongSu’s efforts to reach international quality and safety standards and competitive prices. They were fully aware of the fact that by purchasing quality pharmaceuticals made in the DPRK they would help raise the quality and safety of pharmaceuticals and save additional lives! And yet there are still many NGO’s and countries that prefer to buy pharmaceuticals to be donated abroad rather than from us, directly undermining efforts of PyongSu and the rest of the North Korean pharmaceutical industry to reach and maintain high international standards. This proves that there is a lot of politics, self-interest and hypocrisy involved in what I would call the foreign aid industry which literally beats the domestic manufacturing industry.

A former country director of the Swiss governmental Development and Cooperation Agency (SDC) and I thought food security could only be established by promoting adequate economic development leading to increasing income in domestic and hard currency, job creation etc. Since, of course, we would not have been able to mobilize finance for the upgrading of the infrastructure, or to buy spare parts and raw materials for enterprises, we thought that a very cost-effective means of helping North Korean companies is capacity building for senior officials and managers to enable them to make the best out of their existing enterprises and to prepare them to get fit for export and international competition.

I made a concept for approval by the sponsor SDC and the DPRK-government and then I started organizing the business school seminars (including some essential elements of an MBA-course) with lecturers from different countries with an outstanding theoretical knowledge and practical international experience. Having gained a good idea of the state of North Korean enterprises, their environment and a fair understanding of the needs of their managers when doing business with them I was not only able to select the most suitable lecturers but also brief them in such a way as to have their lectures tailored to the students’ real needs – something other foreign economic training organizers have failed to do. The students at the seminars are North Korean senior officials and company executives. It was therefore not surprising that they expressed great satisfaction with what they learnt and with the practical benefits they drew from it for their businesses. Since SDC did not pay my work and my expenses during the first two years I was not only a co-initiator but also a co-sponsor. In addition I could convince some large foreign companies to send senior executives and experts to hold seminars in Pyongyang at their own expense.

Western media like The Financial Times were quick at speculating that we were about to challenge the socialist system but that, of course, is non-sense. It’s very simple: If a country, regardless of whether it is capitalist or socialist, wants its enterprises to successfully export they need to get to know and apply the corresponding marketing tools. Or irrespective of whether an enterprise is privately or state-owned it needs to have a strategy and a business plan. So the company managers have learnt such basics at our seminars and, to stay with the example, know that if they fail to plan they plan to fail.

This year most of the lecturers have been coming from Hong Kong. They have an academic teaching background and, in addition, international management experience of 20 years on average. A further asset they have, and that’s another reason why I have chosen them, is that most of them also built up subsidiary companies in mainland China on behalf of Western companies. Thus, they are not just teaching knowledge acquired from books but have a lot of highly useful hands-on experience and are also well aware of the different business worlds and of the very different economic, cultural and political aspects in East and West, which is essential to know when interacting with businesses of other countries. Needless to say that they can understand and empathize with North Korea better than European and other Western lecturers who would have to overcome much more than just a wide geographical distance.

Klaus-Martin Meyer: With your unique and large wealth of experience in North Korea what do you recommend to business people who want to start a business in North Korea.

Felix Abt: This is your toughest question since it would take me at least a full evening to give some really useful reply.

Perhaps I would summarily try to answer that if you want to understand why and how certain companies succeed you have to know first why certain other foreign companies fail. Those who fail are quick at blaming North Korea, its system and so on, and, of course, never recognize their own shortcomings.

But it’s worthwhile having a closer look at them to learn how to avoid costly errors. From my observations these are the five main causes of their failure:

- lack of basic knowledge of the country due to a lack of due diligence (no or little home work done before traveling to Pyongyang)
- advice by ignorant and/or biased advisors and sponsors (all advisors belong to this category to at least a certain extent)
- choice of random, suboptimal business partner based on a recommendation (see above) rather than a systematic selection (i.e. asking for a range of alternative business partners from which to choose the most suitable one)
- no identification of a leverage for a long-term joint venture (e.g. lasting technological advance, ownership of unique loyal customer base etc.)
- appointment of unsuitable project manager (with lack of technical and/or social and/or cultural competence as well as lacking patience, stamina and flexibility and/or a background difficult to accept for the North Koreans)

A larger number of Chinese but also some European business people have successfully started businesses in North Korea in recent years. Readers of yours may join the growing foreign business community and I wish them good luck and success, too!

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North Korea Wants End to Sanctions Before It Makes Nuclear Deal

Thursday, July 26th, 2007

Bloomberg
Bradley K. Martin
7/26/2007

To make painkillers and antibiotics in his factory in Pyongyang, Swiss businessman Felix Abt needs reagents, chemicals used to test for toxic impurities. Abt can’t get them now — because the world refuses to sell North Korea a product that is also used to manufacture biological weapons.

Such sanctions on trade with the regime of Kim Jong Il — some dating back to the Korean War — may be the next diplomatic battleground after North Korea bowed to pressure last week and shut down five nuclear facilities at Yongbyon.

North Korea said July 16 that ending sanctions, and its removal from a U.S. list of countries that sponsor terrorism, are prerequisites for further progress in the negotiations to end its nuclear weapons program. The U.S., meanwhile, says the next step is for North Korea to disclose all its nuclear capabilities, followed by a permanent dismantling of Yongbyon.

North Korea is playing a “tactical game,” said David Straub, a Korea specialist at Johns Hopkins University’s School of Advanced International Studies in Washington. After shutting down Yongbyon and receiving a pledge of 950,000 tons of oil, the reclusive nation will try to “force the U.S. and others to lift sanctions,” Straub said in an e-mail exchange.

While many of the post-Korean war sanctions were lifted between 1994 and 2000 by President Bill Clinton, Americans are prohibited from exporting “dual-use” products or technologies, a wide range of items that might have military as well as civilian applications — including reagents and even aluminum bicycle tubing, which might be used to make rockets.

UN Sanctions

Much of the world joined the sanctions regime after North Korea tested an atomic device last October. The United Nations called on member states to stop trade in weapons, “dual-use” items and luxury goods. Japan went further, stopping used-car exports and banning port calls by North Korean vessels.

Now that North Korea has shut its facilities at Yongbyon and allowed in international inspectors, the haggling will begin on the next steps. If its demands aren’t met, North Korea could kick out the inspectors and restart the plants, as it did in 2002.

“The Bush administration must choose between settling for a temporary closure of the nuclear sites and taking a strategic decision to coexist” with North Korea, said Kim Myong Chol, Tokyo-based president of the Center for Korean-American Peace, who for three decades has encouraged foreign reporters to consider him an informal North Korean spokesman. “Otherwise, the agreement will break up, leaving the U.S. with little to show.”

‘Contentious Issue’

Sanctions represent “a multiplicity of issues that could become contentious,” said economist Marcus Noland, North Korea specialist at the Peterson Institute for International Economics in Washington, in an e-mail exchange. China has already called for the lifting of the UN sanctions imposed Oct. 14.

North Korea agreed with the U.S., South Korea, Russia, China and Japan on Feb. 13 to close its Yongbyon reactor, which produced weapons-grade plutonium, and to eventually declare and disable all of its atomic programs. Working groups will meet in August before another round of talks in September.

If the U.S. insists on a list of all the country’s nuclear facilities without starting to negotiate on sanctions, North Korea might consider that “a spoiler” for the talks ahead, Kim Myong Chol said.

Swiss businessman Abt said that in the past he could get around U.S. sanctions for his North Korean pharmaceutical factory by buying supplies from other countries. The UN sanctions shut off those sources.

Using Old Stocks

“Luckily, we have enough stock of reagents, but when it runs out we would not be able to guarantee the safety of our pharmaceuticals any longer,” he said.

Abt, 52, is president of Pyongsu Pharma Joint Venture Co., an enterprise with ties to the Ministry of Public Health that makes painkillers and antibiotics for humanitarian organizations in North Korea. He is also president of Pyongyang’s European Business Association.

“The same is true in many other civilian industries,” said Abt, who moved to North Korea from Vietnam five years ago. Gold mines are affected too, he said: “If they cannot import cyanide, they can’t extract the gold.” Cyanide is another “dual-use” product, part of the process for making some chemical weapons, he said.

All this has “a highly negative impact” on the economy at a time when the regime has announced it wants to focus on development, Abt said. Foreigners are showing “more and more interest in doing business here,” Abt said, predicting that North Korea will eventually be regarded as a successor to Vietnam as “the newest emerging market.”

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N.K. drug company urges aid donors to `buy local`

Wednesday, April 16th, 2003

Korea Herald
Chris Gelkin
3/30/2007

“It’s not just about making money, at least not from our perspective as a producer,” declared Felix Abt, president of the Pyongyang-based pharmaceutical company PyongSu Pharma. “The profit margins are very small. It is more about supplying a necessary and quality product at a price people can afford.”

Abt was in Seoul earlier this week meeting with South Korean pharmaceutical companies and aid organizations. On the table was a unique opportunity that would allow them to expand their existing humanitarian work, while at the same time helping to lay a solid foundation for the future of the pharmaceutical sector in North Korea.

“One of the main purposes of my visit here is to meet with the people who donate drugs and medicines to North Korea, or their agents who are based here,” Abt told The Korea Herald. The “frontier-businessman” believes substantial savings could be realized if the donor had the drugs produced locally, in North Korea, rather than purchasing them here in the South or overseas and then having them shipped in.

“We have lower production costs in the North, and of course there would be savings on transportation. All of these cost savings would translate into more money being made available for the actual provision of drugs. And after all, that is the whole point of the exercise, isn`t it?” Abt said, posing a very pertinent question.

For each donated dollar, for each dollar spent, he explained, more medicines would actually reach the people who need them.

“So that, from a humanitarian position at the very least, is a very compelling reason for them to buy from us or have us produce them and then organize the distribution.”

PyongSu has been gaining experience through contract manufacturing for charity organizations, donors and pharmaceutical companies, but Abt says there is plenty of scope to do more.

“We have a total staff of about 30 running one full shift,” Abt said, “and obviously we have capacity to expand that.”

Abt said in addition to helping even more North Korean patients in hospitals and clinics throughout the country, aid organizations could also help raise the quality standards of the local pharmaceutical industry.

“Just shipping aid here is all well and good,” Abt explained, “but it has the danger of creating a culture of dependency. So rather than, for example, just giving them fish, we should give them a fishing rod and teach them how to fish.”

By expanding local production in terms of quantity and variety, Abt said, donors would be helping the people to learn how to stand on their own feet.

“This should be particularly interesting for pharmaceutical companies based here in the South,” he said, “it is absolutely in their long-term interests to see a pharmaceutical sector in the North that is developed and meets international standards which could later become a strong and important partner for South Korean companies.”

PyongSu recently underwent an international inspection and has been approved as a producer that meets the highest standards of pharmaceutical producers worldwide.

The company was launched in the summer of 2004 in a joint venture between the Ministry of Public Health and a group of foreign investors. By the end of 2006, PyongSu was producing a range of medications including painkillers and antibiotics among others.

The company`s mission was to reach and maintain production quality and service standards comparable to any pharmaceutical producer elsewhere in the world.

“We are making a direct contribution to the improvement of the local pharmaceutical sector,” Abt said, “through training, education, and our sharing of knowledge with medical professionals and staff at all levels throughout the DPRK.”

PyongSu pharmacists meet regularly with staff from hospitals and clinics to fully understand their needs, and provide them with up to date information on the latest drugs.

Abt said PyongSu has its finger on the pulse of the medical sector in the DPRK, and is in a unique position to serve humanitarian and aid organizations by producing drugs on their behalf and distributing them, “to those who are in need of them.”

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