Archive for the ‘SEK Studio’ Category

‘Pororo’ (뽀로로) a joint-Korean creation

Monday, May 16th, 2011

According to Reuters:

Pororo, who first debuted in 2003, is ubiquitous in South Korea, featured on everything from stick-on bandages to coffee mugs. Stamps with his image have sold more than those bearing the image of Olympic figure-skating champion Kim Yu-na, according to local media.

But few knew that North Korean cartoonists worked with their Southern counterparts to jointly produce part of the first two seasons of the television series that launched the bird to fame.

“This isn’t something that needs to be secret but by accident people found out that Pororo was partly produced in the North,” said Kim Jong-se, a senior official at Iconix Entertainment, the South Korean production company that developed Pororo.

“They gave us many responses, from very negative to very positive — we are a collaborator of the North or, it is great that both Koreas made the show together.”

After the leaders of North and South Korea signed a landmark peace pact in 2000 pledging new cooperative steps, Pororo was one of the inter-Korean businesses that developed, Kim said.

South Korean technicians went to the North to train their colleagues there. Production hit a snag when the North suddenly replaced its staff for the second season, forcing Kim’s company to repeat the teaching process, Kim said.

The North Korean participation took place between 2002 and 2005, ending when ties deteriorated between the two nations and the North could no longer join the project.

Pororo was probably developed at the Scientific and Educational Film Studio (SEK) or its affiliated April 26th Children’s Film Studio in Central District.  Guy Delisle worked there on an animation contract as well.  You can read about his experience here.

Read the full story here:
Iconic South Korean penguin character actually half-North Korean
Reuters
Ju-min Park
2011-5-6

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PUST update

Monday, November 1st, 2010

Richard Stone writes in 38 North:

The curtain is rising on a bold experiment to engage North Korea’s academic community—and possibly shape the country’s future. On October 25, 2010, Pyongyang University of Science and Technology, or PUST, opened its doors to 160 elite North Korean students. By improving North Korea’s technical prowess, PUST might nudge the country’s tattered manufacturing-based economy toward an information-based economy.

“Our purpose is the globalization of North Korea through PUST. In that way, their economy can gradually develop, which will make it easier for reunification later,” says Park Chan Mo, former president of the National Research Foundation of Korea and one of four founding committee chairs of PUST. More initiatives are in store after South-North relations improve, says Oh Hae Seok, Special Adviser on Information Technology (IT) to South Korea’s President Lee Myung Bak. “The South is ready to assist the North by building an IT infrastructure and supporting IT education, as long as the North opens its door,” he says.

PUST will test North Korea’s appetite for engagement. Perhaps most discomfiting to the North is that the new university is led and bankrolled by devout Christians. The North Korean government espouses atheism and takes a dim view on South Korean evangelists, particularly for their role in an “underground railway” in northeastern China that steers defectors to safe havens. PUST leaders and professors, primarily ethnic Koreans, have promised not to proselytize.

PUST’s main mission therefore is to lead North Korea out of a scientific wilderness. The North is light-years behind industrialized nations in many areas of science and technology. It excels in a few spheres. For instance, North Korea is notorious for its skill at reverse-engineering long-range missiles and fashioning crude but workable plutonium devices. Less well known, the North has developed considerable expertise in information technology—and has staked its future on it. “North Korea has chosen IT as the core tool of its economic recovery,” says Park. But it has a poor grasp on how to translate knowledge into money. “Instead of just giving them fish, we will teach them how to catch fish,” Park says.

There are serious risks in giving North Korea a technical assist, according to PUST’s critics. Opinion in South Korea is split on PUST; many people have voiced concerns. The chief worry is that PUST students could feed information or lend newfound expertise to the North Korean military. To minimize these risks, PUST’s curricula have been vetted by government and academic nonproliferation experts.

To proponents, the new venture’s benefits far outweigh the risks. PUST has been promised academic freedom, the likes of which has been virtually unknown in North Korea, including campus-wide internet access. “We hope that PUST will open channels to the outside,” says Nakju Lett Doh, an assistant professor of electrical engineering at Korea University in Seoul and member of PUST’s academic committee.

Few people of university age or younger can imagine a world without internet. But it’s rare a North Korean of any age has tasted this forbidden fruit. The government takes infinite care to shield innocent minds from corrosive facts about the Korean War, descriptions of life in modern South Korea, and western notions of freedom of expression, among other things. Instead, the Garden of Juche offers Guang Myung, or Bright Light: an Intranet not connected to the outside world.

When I visited Pyongyang on invitation from the DPRK Academy of Sciences in July 2004, my hosts gave me a tour of the Central Information Agency for Science and Technology’s computing center and showed me the Guang Myung home page, which reminded me of Yahoo. They claimed the system has tens of millions of records, including digital tomes on agriculture and construction as well as the complete writings of Kim Il Sung.

Since then, fiber optic cables have spread Guang Myung to the far corners of the nation. “The main purpose is to disseminate scientific and technological information,” says Lee Choon Geun, chief representative of the Korea-China Science & Technology Cooperation Center in Beijing. On a visit to Pyongyang a few years ago, Lee, an expert on North Korea’s scientific community, witnessed Guang Myung in action, including a live lecture broadcast over the Intranet. At the time, he says, Kim Chaek University of Technology had around 500 Pentium 4’s and 5’s connected to the system. He estimates that nationwide, tens of thousands of computers of all types are now linked in. However, it’s not clear how effective Guang Myung is outside Pyongyang, where clunky routers funnel information to ancient machines—remember 386s and 486s? Another major woe is an unstable electricity supply that regularly fritzes electronics. Lee, who has visited North Korea 15 times, says that when he asks what scientists need most, they request laptops, whose power cord adaptors and batteries can better handle electrical fluctuations.

Indeed, it’s a formidable job to erect an IT infrastructure inside a cocoon. South Korea has lent a hand. With the government’s blessing, private organizations in the South have sent approximately 60,000 IT publications—periodicals and books—to North Korean universities, and IT professors from the South have visited the North for lecturing stints, says Oh. South Korean groups have also helped train North Korean computer scientists in Dandong, China, just across the border from North Korea. The training center had to close earlier this year due to budget cuts, says Lee.

The juche philosophy embraces self-reliant efforts to gather technical information from abroad. North Korean diplomats are one set of eyes and ears. They collect journal articles, textbooks and handbooks, surf the Web and ship any seemingly useful information to Pyongyang, where analysts evaluate it and censors clear it for posting. When sent via internet, information is routed primarily through Silibank in Shenyang in northeastern China. North Korea has also deployed abroad around 500 IT specialists in the European Union and dozens more to China—in Beijing, Dalian, Shanghai, and Shenyang—to acquire knowledge for the motherland. “Through them a lot of information goes to North Korea,” says Park.

Such activity may seem like a packrat cramming its nest with equal portions of usable materials and shiny baubles. But it has paid off in at least one area: software development. “They are developing their own algorithms,” says Doh, an expert on control system theory. Even though North Korea’s programmers are almost completely isolated from international peers, they lag only about 5 to 6 years behind the state of the art in South Korea, Doh says. “That’s not that bad.” The Korean Computing Center and Pyongyang Information Center together have around 450 specialists, and universities and academy institutes have another 1,000 more experts on computer science, says Lee. And all told there are about 1,200 specialized programmers.

The programmers have enjoyed modest commercial success. The state-owned SEK Studios in Pyongyang has done computer animation for films and cartoons for clients abroad. And software developers have produced, among other things, an award-winning computer version of the Asian board game Go. “Their software is strong,” says Park, a specialist on computer graphics and simulation. “They are very capable.”

But the resemblance to IT as we know it ends there. “In North Korea, IT is quite different from what most people think,” says Lee. Most computing efforts these days are focused on computerized numerical control, or CNC: the automation of machine tools to enable a small number of workers to produce standardized goods. “Their main focus is increasing domestic production capacity,” says Lee. North Korea’s CNC revolution is occurring two to three decades after South Korean industries adopted similar technologies. And North Korea is struggling to implement CNC largely because of its difficulties in generating sufficient energy needed to make steel—so its machinery production capacity is a fraction of what it used to be—and it lacks the means to produce sophisticated integrated circuit elements.

Antiquated technology may be the biggest handicap for North Korea’s computer jocks. North Korea “doesn’t have the capacity to make high technology,” says Kim Jong Seon, leader of the inter-Korean cooperation team at the Science and Technology Policy Institute in Seoul. North Korea is thought to have a single clean room for making semiconductors at the 111 Factory in Pyongyang. Built in the 1980s—the Stone Age of this fast-paced field—the photomask production facility is capable of etching 3 micron wide lines in silicon chips. South Korean industry works in nanometer scales. The bottom line, says Kim, is that in high technology, “they have to import everything.”

That’s a challenge, because no country—China included—openly flouts UN sanctions on high-tech exports to North Korea. Any advanced computing equipment entering the country is presumably acquired through its illicit missile trade and disappears into the military complex. North Korea’s civilian computer scientists are left fighting for the scraps. One of only five Ph.D. scientist-defectors now known to be in South Korea, computer scientist Kim Heung Kwang, fled North Korea in 2003 not for political reasons or because he was starving—rather, he hungered to use modern computers.

To help North Korea bolster its budding IT infrastructure and not aid its military, PUST will have to walk a tightrope. School officials have voluntarily cleared curricula with the U.S. government, which has weighed in on details as fine as the name of one of PUST’s first three schools. The School of Biotechnology was renamed the School of Agriculture and Life Sciences because U.S. officials were concerned that biotech studies might be equated to bioweapons studies, says Park. North Korean officials, meanwhile, forbid PUST from launching an MBA program—a degree too tightly associated with U.S. imperialism. “So we call it industrial management,” Park says. “But the contents are similar to those of an MBA.”

Besides cleansing PUST of any weapons-grade information, Park and university representatives are working with the U.S. Commerce Department to win export licenses for advanced computing equipment and scientific instruments not prohibited by dual-use restrictions. Approval is necessary for equipment consisting of 10 percent or more of U.S.-made components. “You can attach foreign-made peripheral devices and reduce U.S. components to less than 10 percent, but that’s a kind of cheating,” Park says. “We want to strictly follow the law.”

This improbable initiative in scientific engagement was a long time in the making. PUST’s chief architect is founding president Kim Chin Kyung, who in 1998 established his first venture in higher education: Yanbian University of Science and Technology in Yanji, the capital of the Yanbian Korean Autonomous Prefecture in northeastern China’s Jilin Province, just across the border from North Korea. A businessman who studied divinity in university, Kim, who goes by his English name James, was accused of being a spy on a visit to North Korea in 1998 and imprisoned there for six weeks. He stuck with YUST, however, and in 2001, North Korean education officials visiting the university stunned Kim by inviting him to establish a similar university in Pyongyang. Kim got a rapturous response when he pitched the idea to YUST’s sponsors.

Progress came in fits and starts. PUST was originally envisioned to open in 2005, but work on the initial 17 buildings of the $35 million, 100-hectare campus in southern Pyongyang’s Rakrang district was completed only last year. North Korean education officials have promised the school academic freedom and internet access. Such startling privileges will be doled out byte by byte. “In the beginning, they are allowing us to do emailing,” says Park. Full internet access is expected to come after PUST earns their keepers’ trust. “To do research, really you have to use the internet. The North Korean government realizes that. Once they know students are not using the internet for something else, it should be allowed,” Park says.

While YUST and PUST may both have ardent-Christian backers and cumbersome acronyms, the atmosphere on the two campuses will be markedly divergent. In Yanji, encounters outside the classroom are common: faculty and students even dine together in a common hall. “YUST professors and students are like one family,” says Park.

In contrast, PUST students and faculty will inhabit two entirely different worlds that only merge in the classroom. The North Korean government handpicked the inaugural class of 100 undergraduates and 60 graduate students, including 40 grads who will study IT. All will study technical English this fall, then in March a wider roster of courses will become available after key professors and equipment arrive on campus. A student leader will shepherd students to and from class to ensure that no lamb goes astray. “There will be no way to teach the gospel,” says Doh.

PUST professors expect to be impressed with the students, selected from Kim Il Sung University and Kim Chaek University of Technology. “These are the most brilliant students in North Korea,” says Doh. PUST plans to ramp up enrolment to 2,000 undergrads and 600 graduate students by 2012. To expose these young, agile minds to a wide range of ideas, PUST plans to fly in a number of visiting professors during the summer terms. They also intend to seek permission for students from other Pyongyang universities to attend the summer sessions. As trust develops, PUST hopes that some of its students will be able to participate in exchange programs and study abroad.

PUST’s success may hinge on the disposition of North Korea’s leader in waiting. Kim Jong Un was tutored privately by a “brilliant” graduate of Université Paris X who chaired the computer science department at Kim Chaek University of Technology before disappearing from public view in the early 1980s, says Kim Heung Kwang, who studied at Kim Chaek before working as a professor at Hamhung Computer College and Hamhung Communist College. After defecting and settling in Seoul, Kim founded North Korea Intellectuals Solidarity, a group of university-educated defectors that raises awareness of conditions in North Korea.

According to internal North Korean propaganda, Kim Jong Un oversees a cyberwarfare unit that launched a sophisticated denial-of-service attack on South Korean and U.S. government websites in July 2009. South Korea’s National Intelligence Service blamed the North, which has not commented publicly on the attack. Kim Jong Un’s involvement cannot be confirmed, says Kim Heung Kwang. “But Kim Jong Un is a young person with a background in information technology, so he may desire to transform North Korea from a labor-intense economy to a knowledge economy like South Korea is doing.”

Another big wildcard is North-South relations. After the sinking of the Cheonan, South Korea froze assistance to the North. In the event of a thaw, “the South wants to build a digital complex” in the Demilitarized Zone (DMZ) or in South Korea similar to the Kaesong industrial complex, says Oh. This, he says, “would be the base camp of North Korea’s IT industry development.” North Korea has reacted lukewarm to the idea: It would prefer that such a venture be based in Pyongyang, says Lee. To facilitate denuclearization and help skilled North Korean workers adapt to market economics, the Science and Technology Policy Institute in Seoul has proposed the establishment of an Inter-Korean Science and Technology Cooperation Center modeled after similar centers established in Kiev and Moscow after the Soviet breakup.

Such projects, if they were to materialize, along with well-trained graduates from PUST, may help pull North Korea’s economy up by its bootstraps. “We are trying to make them more inclined to do business, to make their country wealthier,” says Park. “It will make a big difference once they get a taste of money. That’s the way to open up North Korea.”

Additional information:
1. Here are previous posts about PUST.

2. Here are previous posts about the DPRK’s intranet system, Kwangmyong.

3. Here is a satellite image of PUST.

Read the full story here:
Pyongyang University and NK: Just Do IT!
38 North
Richard Stone
11/1/2010

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US cartoons ‘made in North Korea’

Wednesday, March 14th, 2007

Asia Times
Sunny Lee
3/14/2007

North Korea is well known for its nuclear ambitions. But it is relatively little-known fact that the country is a hidden outsourcing mecca for the international animation industry, producing such well-known movies as The Lion King.

Even while North Korea has been under US-led sanctions that include a ban on commercial trade, several US animated films have allegedly been outsourced to the country, according to Beijing-based businessman Jing Kim, who says he was involved with American animation producer Nelson Shin’s filmmaking business in the Stalinist pariah state.

Shin, a 67-year-old Korean-born American, is best known for the television cartoon series The Simpsons, which was actually drawn in Seoul by a team of animators led by him since its premiere in 1989.

Shin and Kim first met in Singapore in 1999 at an international animation film fair, where Kim led the North Korean delegation. There, Shin asked Kim to help him to connect with the North Korean animation industry, Kim said.

China-born Kim, 47, has been doing business with North Korea for nearly 20 years and owns a restaurant in Pyongyang. Through his company in Singapore, where he holds a resident permit, Kim used to sell North Korean products to South Korea during a period when direct commerce between the two ideologically opposed neighbors was not possible.

After seven years of cooperation with North Korea’s state-owned SEK Studio, employing as many as 500 North Korean animators out of its staff of 1,500, and 18 visits to the country, Shin finally completed Empress Chung in 2005, a famous Korean folk tale about a daughter who sacrifices herself to a sea monster to restore her blind father’s eyesight. It was the first cartoon jointly produced by the two Koreas.

Apparently, however, according to Kim, Empress Chung was not the only film made by North Korean cartoonists. Shin, who heads Seoul-based AKOM Production, a unit of KOAA Film in Los Angeles, allegedly outsourced to North Korea part of the animation contracts that his firm had originally received from the United States.

On one occasion, for example, North Korean animators employed by Shin came to Beijing from Pyongyang to work exclusively on several US animation movies, staying there for months, according to Kim.

When asked whether any of the movies were actually broadcast in the US, Kim said, “Oh, a lot, a lot. The ones that I participated in were as many as seven.”

But Kim declined to name the US films, citing the sanctions imposed on North Korea. “If the names of the US companies are known, they will be screwed,” said Kim.

Kim said “many people will be hurt” if he went into details, adding, “We worked very carefully.”

When asked whether the US film companies involved actually knew that their cartoons had been made by North Koreans, Kim said: “They don’t want to know. If they knew, it wouldn’t be fun. After they make contracts with the South Koreans, they just assume that it is made there. They only care about the delivery [of the products] and their quality. It is too much for them to ask where they were actually made. We don’t have the obligation to tell them, either. The only thing they claim is the copyright.”

However, Nelson Shin denied the allegation. “There were no American cartoon movies made in North Korea,” Shin said from Seoul. “As far as I know, there were some Italian and French movies made in North Korea. But I am not aware of any American cartoons made in North Korea.”

Shin also noted the technical difference of production origination between “made in” and “made by”. He took the example of The Lion King. “It’s a Disney film. However, if Disney Europe, not the Disney company in the US, gave North Korea the production order, then it is not a deal placed by an ‘American’ company.”

Kim in Beijing, however, said his cooperation with Shin led them to employ eight North Korean animators in 2005 to come to Beijing, where the North Koreans stayed for six months, from June 10 to November 18. That was followed by a second group of North Korean animators, who came to Beijing and stayed for much of 2006, returning to Pyongyang on December 27-28, according to Kim.

When it was noted that Kim mentioned all these dates without referring to any written memo, he tersely said: “That’s how I make my living.”

Kim said he didn’t pay the North Korean artists in person for their work. Rather, he wired US$170,000 to North Korea directly for their 2006 assignments.

Kim said most North Korean animators are highly educated, including graduates from the prestigious Pyongyang College of Arts.

Animation involves the grueling job of grinding out tens of thousands of drawings for a single 22-minute cartoon. “They worked without complaint,” Kim said, while also praising the quality of their work. He said hiring North Korean artists meant that the usual company benefits, such as medical insurance, welfare and overtime, did not need to be provided.

“It’s a system that is doable,” Kim said.

North Korea’s cartoon industry has become quite sophisticated as a result of its cooperation with France and Italy in their animation projects since 1983. North Korea’s animation skills now rank among the world’s best, experts say.

“They are highly talented. That’s something I can say,” said Shin in Seoul.

South Korea itself was once the largest supplier of television animation in the world during its peak in the 1990s, churning out more than 1,000 half-hour episodes. However, its status has since declined with the rise of labor costs there, pushing animation companies to find alternatives such as India, the Philippines and North Korea. The Chronicles of Narnia, for example, used Indian animators for some characters. It’s unclear how much North Korea contributes to the world animation market today.

Meanwhile, when asked about the similarity of cartoon characters between Empress Chung and the ones seen in recent US animation movies, Shin said, “It’s inconvenient to talk about it on the phone.”

However, Shin said he is working on a new joint North-South Korea animation movie called Goguryeo, the title a reference to an ancient Korean kingdom that existed until AD 68. He expects it will take about two years to complete.

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North Korea supplies laughs as well as lethal weapons

Monday, February 5th, 2007

AFP (Hat tip DPRK Studies)
Park Chan-Kyong
2/5/2007

Nuclear-armed North Korea is notorious for selling its missiles overseas but the hardline communist state also has a more improbable export — cute cartoon figures.

South Korean experts say the North’s animated movie industry brings the isolated country both precious hard currency and access to global IT expertise.

“Animation is one of the rare sectors where North Korea is following the global trend,” said Lee Kyo-Jung, an executive at the Korea Animation Producers’ Association (KAPA).

“It has been subcontracted to produce animation for North America, Europe and Asia,” Lee told AFP. Among the major clients are studios in France, Italy and China, he added.

Lee has visited the North to discuss the feasibility of the two Koreas jointly producing animated features, with North Koreans providing manpower and the South supplying equipment and finance.

The North for decades has used cartoons to imbue its own children with socialist ethics. Other cartoons screened there also bring some fun into drab everyday life.

“Tom and Jerry” is a prime-time hit in the communist state, Lee said. “They just love it. They see the US in the headstrong cat and North Korea in the wise mouse.”

The centre of North Korea’s animation industry is the April 26 Children’s Film Production House, known to the outside as SEK Studio. Its 1,600 animators have been downsized to 500 with the introduction of computerised equipment.

“SEK is one of the largest hard currency earners in North Korea,” said Nelson Shin, a North Korea-born US producer who worked on “The Simpsons”.

“SEK is a rare North Korean company that can directly engage in foreign trade and deploys representatives overseas,” said Shin, a frequent visitor to the North.

The state-run company worked for Shin’s US-South Korean studio KOAA Films on his 6.5-million-dollar animated feature “Empress Chung,” a Korean equivalent of the Cinderella story.

The movie was screened simultaneously in Seoul and Pyongyang in August 2005, becoming the first feature film jointly produced by the two nations.

“I was taken by surprise at their manual skill. I dare say the North Koreans are better than their peers in the South in terms of their hand skills,” Shin said.

Shin said Disney had subcontracted the TV series made for European viewers of the “Lion King” and “Pocahontas” to SEK.

North Korea’s animation industry began years before South Korea’s own in the mid-1960s. It dates back to the mid-1950s when it sent young artists to what was then Czechoslovakia to learn the craft, according to Lee of KAPA.

But South Korea has come from behind on the strength of its plentiful animators and computer technology. It earned some 120 million dollars through subcontracted work when the subcontract trade was at its peak in 1997.

Latecomers China, Vietnam and India are taking a growing share of the subcontracting market while South Korea is graduating from the labour-intensive work into creative products.

The growth in North Korean animation reflects the patronage of all-powerful leader Kim Jong-Il, a movie buff whose personal archive is said to comprise tens of thousand of films.

The country, becoming priced out of the lower-end work by latecomers, is now seeking to go upmarket to focus more on computer-assisted animation.

“For North Koreans, animation is not only a source of hard currency but also technology from the outside world. They are really keen on obtaining things like graphics technology,” said Kim Jong-Se, marketing director of Iconix Entertainment.

Iconix trained North Koreans in 3D animation when it subcontracted work to a company called Samcholli. The firm produced part of a cartoon series entitled “Pororo the Little Penguin” in 2003 and 2005.

The series turned out to be a big hit, selling in more than 40 countries.

Kim in late 2001 also helped produce “Lazy Cat Dinga,” the first animated series short of a full-length movie co-produced by the two Koreas.

“North Koreans are very good at doing what they are told but they have problems in using creativity,” Kim said.

Iconix Entertainment CEO Choi Jong-Il said both sides could benefit from splitting their roles.

“Joint projects will certainly bring benefits to both sides, with the South doing the overall planning and the North carrying out the main production,” said Choi.

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North Korea: an upcoming software destination

Tuesday, October 10th, 2006

Paul Tija
GPI Consultancy
October 10, 2006

IN PDF: IT_in_NKorea.pdf

Surprising business opportunities in Pyongyang

Dutch companies are increasingly conducting Information Technology projects in low-cost countries. Also known as offshore sourcing, this way of working means that labor-intensive activities, such as the programming of computer software, are being done abroad. Asia is the most popular software destination, and Indian IT firms are involved in large projects for Dutch enterprises such as ANB Amro Bank, KLM, Philips or Heineken. More recently, we notice a growth in the software collaboration with China.

As a Dutch IT consultant, I am specialized in offshore software development projects, and I regularly travel to India and China. Recently, I was invited for a study tour to an Asian country which I had never visited before: North Korea. I had my doubts whether to accept this invitation. After all, when we read about North Korea, it is mostly not about its software capabilities. The current focus of the press is on its nuclear activities and it is a country where the Cold War has not even ended, so I was not sure if such a visit would be useful. And finally, such a trip to a farshore country would at least take a week.

Nevertheless, I decided to visit this country. This decision was mainly based on what I had seen in China. I had already traveled to China five times this year, and the fast growth of China as a major IT destination was very clear to me. China is now the production factory of the world, but China’s software industry has emerged to become a global player in just 5 years. Several of the largest Indian IT service providers, including TCS, Infosys, Wipro and Satyam, have established their offices in China, taking advantage of the growing popularity of this country. However, I also noticed that some Chinese companies themselves are outsourcing IT work to neighboring North Korea. And since my profession is being an offshore consultant, I have no choice but to investigate these new trends in country selection, so I accepted the invitation to visit Pyongyang, the capital of North Korea. I happened to be the first Dutch consultant to research the North Korean IT-sector ever, and the one-week tour turned out to be extremely interesting. Quite surprisingly, the country offers interesting business opportunities for European companies.

Korea Computer Center
My study tour was organized by KCC (Korea Computer Center), the largest IT-company in the country. Established in 1990, it is state-owned and has more than one thousand employees. It is headquartered in Pyongyang and has regional branches in eleven cities. My accommodation has been arranged at the KCC campus, which comprises of several office buildings. It also has iown hostel, with a swimming pool, for foreign guests. These guests are mainly Asian (during my stay, there were Chinese delegations), so I had to get used to having rice for breakfast. In the evenings, the restaurant doubled as a karaoke bar, and some of the waitresses appeared to be talented singers. The campus is located in a rather attractive green area, and the butterflies flying around were the largest I had ever seen. It also has sporting grounds, and basketball was during my one-week visit the most popular game among KCC staff. An internal competition takes place during lunch hours.

Korea Computer Center is organized in different specialized business units. Before their representatives started with presentations, I received a tour through the premises. As is the case in India and China, the programmers at KCC also work in cubicles. KCC develops various software products, of which some are especially designed for the local market. Examples are a Korean version of Linux and translation software between Korean, Japanese, Chinese and English. They also produce software for Korean character and handwriting recognition and voice recognition. Other products are made for export, and North Korean games to be used on mobile phones are already quite popular in Japan. There are also games for PC’s, Nintendo and Playstation; their computer version of Go, an Asian chess game, has won the world championship for Go games for several years. The games department has a display showing all the trophies which were won during international competitions.

For several years, KCC is active as an offshore services provider and it works for clients in China, South Korea and Japan. For these markets, North Korea is a nearshore destination, and quite a few North Korean IT-staff do speak Chinese or Japanese. KCC also has branch offices in various Chinese cities, including Beijing and Dalian. It works for both foreign software product companies and end user firms, such as banks. For these clients, different types of applications have been developed, for example in the field of finance, security or Human Resources. Europe is a relatively new market for the North Koreans, and some of their products have been showed for the first time at the large international IT-exhibition CeBIT, in 2006 in Hannover, Germany.

The level of IT-expertise was high, with attention to quality through the use of ISO9001, CMMI and Six Sigma. KCC develops embedded software for the newest generation of digital television, for multimedia-players and for PDA’s (Personal Digital Assistants). Surprisingly, it also produces the software for the mobile phones of South Korean Samsung. I was shown innovative software which could recognize music by humming a few sounds. In less than a second, the melody was recognized from a database of more than 500 songs. Also applications for home use were developed, such as accessing the Internet by using a mobile phone to adjust the air conditioning. KCC also Photo: KCC campus in Pyongyang made software to recognize faces on photographs and video films. They gave me demonstrations of video-conferencing systems, and applications for distance learning. There was a separate medical department, which made software to be used by hospitals and doctors, such as systems to check the condition of heart and blood vessels.

Supply of IT-labor In countries such as The Netherlands, the enrollment in courses in Information Technology is not popular anymore among the youth, and a shortage of software engineers is expected. This situation is different in many offshore countries, where a career in IT is very ‘cool’. Also in North Korea, large numbers of students have an interest to study IT. I visited in Pyongyang the large Kim Chaek University of Technology, where there are much more applications, than available places. Although my visit took place during the summer holiday, there were still students around at the faculty of Informatics. In order to gain experience, they were conducting projects for foreign companies. I spoke with students who were programming computer games or were developing software for PDA’s. A large pool of technically qualified workforce is now available in North Korea. Some of the staff is taking courses abroad and foreign teachers (e.g. from India) are regularly invited to teach classes in Pyongyang.

Business Process Outsourcing
Some companies in Pyongyang are involved in activities in the field of BPO (Business Process Outsourcing), an areas which includes various kinds of administrative work. Because of the available knowledge of the Japanese language, the North Koreans are offering back-office services to western companies engaged in doing business with Japan.

In order to get an understanding of this type of work, I visited Dakor, which was established 10 years ago in cooperation with a Swiss firm. This joint venture is located at the opposite side of Pyongyang, across the Taedong river. It works for European research companies, and it receives from them scanned survey forms electronically on a daily basis. It processes these papers and returns the results within 48 hours to their clients. The company is also conducting data-entry work for international organizations such as the United Nations and the International Red Cross. Their data, which is stored on paper only, is being made available for use online. Dakor is also offering additional services, such as producing 2D and 3D designs for architectural firms, and it is also programming websites.

Animation
North Korea is already famous as a production location for high quality cartoons and animation. Staff of the American Walt Disney Corporation described the country as one of the most talented centers of animation in the world. The specialized state corporation SEK Studio has more than 1500 employees, and works for several European producers of children films. New companies are being founded as well, and I visited Tin Ming Alan CG Studio. This firm was set up in early 2006, and is located in a new office building in the outskirts of Pyongyang. Its main focus is in Computer Graphics and in 2D and 3D animation it uses the latest hardware and software, including Maja. Some of the staff of Tin Ming Alan speak Chinese and the company has a marketing office in China. They are hired by Chinese advertisement companies to make the animation for TV-commercials. It also works on animation to be included in computer games.  Several employees of this young company come from other animation studios and have more than ten years of experience in this field.

The North Korean IT sector seems to be dynamic, where new firms are being established, and where business units of larger organizations are being spun-off into new ventures. I visited the Gwang Myong IT Center, which is a spin-off from Korea Computer Center. It is specialized in network software and security, and it produces anti-virus, data encryption, data recovery, and fingerprint software. This firmis internationally active as well; it has an office in China and among its clients are financial institutions in Japan.

Issues of country selection
My study tour revealed that North Korea has specific advantages. The local tariffs are lower than in India or China, thus giving western firms the option of considerable cost reductions. The commitment of North Korean IT-firms is also high, and the country is therefore also an offshore option for especially smaller or medium sized western software companies. Outsourcing work to North Korea could also be used to foster innovation (e.g. developing better products or new applications). This country can be used for research as well (from Linux to parallel processing).  Based from my interaction with Korean managers and software engineers, I do not believe that the cultural differences are larger than with China or India. My communication with them, both formal and informal, was pleasant. Communicating with North Koreans is clearly less difficult than with Japanese.

The North Korean companies have experiences with a wide range of development platforms. They work with Assembler, Cobol, C, Visual Studio .Net, Visual C/C++, Visual Basic, Java, JBuilder, Powerbuilder, Delphi, Flash, XML, Ajax, PHP, Perl, Oracle, SQL Server, MySQL, etc. They can do development work for administrative applications, but also technical software, such as embedded software or PLC’s. North Korea is very advanced in areas such as animation and games, and I have seen a range of titles, including table tennis, chess, golf, or beach volley. The design of many of their applications was modern and according to the western taste.

Over the recent years, North Korea is opening up for foreign business. This process makes offshore sourcing easier, and even investing in an own software subsidiary or joint venture can be considered. This does not mean that North Korea is potential software destination for every user of offshore services. The country is a subject of international political tensions. In addition, a number of circumstances require specific attention, such as the command of the English Language.  As is the case with China, the North Korean IT staff are able to read english bu thtey do not speak it very well.  Another issue is the relative isolation of the country, and in order to arrange an invitation, a visa is required.  The limited number of direct flights is another disadvantage; one can only travel directly from Beijing or Moscow.  If projects will require a lot of communication or knowledge transfer, it might be recommended to do some parts of the work in China, by the Chinese branches of the North Korean companies. Executing a small pilot project is the best way to investigate the opportunities in more detail.

Conclusion
North Korea has a large number of skilled IT professionals, and it has a high level of IT expertise in various areas.  The country is evolving into a nearshore software destination for a growing number of clients from Japan, China and South Korea. An interesting example of their success is the work they are doing for South Korean giant Samsung, in the field of embedded software for mobile phones.

North Korean IT-companies are now also targeting the European market, and the low tariffs and the available skills are major advantages.  Smaller and medium sized software companies can consider this country as a potential offshore destination, and should research the opportunities for collaboration or investment in more detail. Taking part in a study tour, as I have done, is an excellent way to get more insight in the actual business opportunities of a country – not only in the case of North Korea but for all nearshore and farshore destinations.

Paul Tija is the founder of GPI Consultancy, an independent Dutch Consultancy firm in the in the field of offshore IT sourcing. E-mail: info@gpic.nl
GPI Consultancy, Postbus 26151, 3002 ED Rotterdam
Tel: +31-10-4254172 E-mail: info@gpic.nl http://www.gpic.nl

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