Archive for the ‘Nosotek’ Category

Can North Korea embrace Chinese-style reforms?

Thursday, October 28th, 2010

According to China Economic Review:

Could North Korea be saved by Chinese-style reforms? In return for its continued support, China is pushing the rogue state to liberalise its economy, and Chinese firms are making inroads into various sectors, especially infrastructure and mining. Earlier this week, I interviewed Felix Abt, a Swiss business consultant who was appointed managing director of a pharmaceutical joint venture in Pyongyang with a brief to turn around the loss-making company, about his experiences over the last eight years.

How open is North Korea to foreign investment, and how many foreign companies are operating on the ground?

In 1992 the Supreme People’s Assembly adopted three laws allowing and regulating foreign investment — the Foreign Investment Law, the Foreign Enterprise Law, and the Joint Venture Law.

Since then, foreign investors have become active in a variety of industrial and service industries. There are a few hundred foreign-invested companies operating at present, mainly smaller sized ventures ($100,000 to $3 million) and of Asian origin (with China ranking No.1).

There are a few very large foreign investments, mainly in the telecom and cement industries. Western multinationals have been shying away from North Korea for fear of ending up on a sanctions list in the world’s largest economy. BAT sold its highly profitable tobacco factory due to political pressure in Great Britain to a Singaporean company a few years ago.

What sort of person sets up business in North Korea? What sort of industries have arrived and what sectors are not represented?

The domestic market is still very small and limited and and not much growth can be expected in the foreseeable future. So to talk about a promising emerging market at present would be a silly exaggeration.

However, North Korea is a very interesting location for the processing of products from garments to shoes to bags where you send the cloth or the leather and the accessories and they send you the finished products back.

The same goes for the extraction of minerals and metals, abundantly available in North Korea, in which case you would send equipment and get the mining products.

In addition, the manufacturing of low to medium technology items is very competitive and such products are already being made with foreign investment in North Korea from artificial flowers to furniture to artificial teeth. I was involved in making the business plan for the artificial teeth joint venture and know therefore that such products can be manufactured with a much better profit margin than for example in the Philippines where the artificial teeth had been produced before.

A particularly promising industry is IT due to the extraordinary quantity and quality of mathematicians unmatched by other countries. The first and only software JV, Nosotek, has seen remarkable successes within a very short time from its foundation and could become a subject of interest to investors who would never have thought of putting any money in North Korea until now.

How easy is it to do business there? Are most foreigners concentrated in Pyongyang or are they spread around?

It depends on the expectations, on the choice of the local partner and on the expatriate staff a company sends there. You need to thorougly select the most suitable local partner and an expatriate manager that is not only professionally competent but also can adapt to and cope with a demanding business environment.

The success of the pharmaceutical joint venture I was running in the past depended on a fast capacity building of the Korean members of the board of directors, managers and staff. I brought them to China where they visited the first foreign and Chinese invested pharmaceutical JV and I convinced its Chinese octogenarian architect to become a member of our company’s board of directors.

Since he faced very similar problems decades earlier he could convince the North Koreans quite easily why certain things had to be done in a certain way to make the business successful. We visited a great number of pharmaceutical companies, wholesalers, pharmacy chains in China and some of our staff even worked in a Chinese factory for some time.

When I wanted to set up the marketing and sales function I was first told that “companies in the DPRK usually don’t have a sales dept.”. I was asked to send a letter to the cabinet to explain my reasons to get the permit for doing so. The visits in China were surely important eye openers and helped getting things organised like in any other country.

The Korean managers and staff quickly acquired all the necessary skills and were able to run the day to day business (factory, import and wholesale of pharmaceuticals, pharmacies) alone when my term ended as managing director.

Many foreign business people are based in Pyongyang, but there are also many working in different places throughout the country, e.g. near mines in the mountains.

Hu Jintao has urged North Korea to speed up its economic reform, using China as a model. Could North Korea open up in the same way over the next few years?

The Chinese are better informed than the scholar and North Korea expert who recently wrote in the Wall Street Journal that the country’s elite would never agree to reform its economy as they fear the system would then collapse.

Together with the Chinese, I believe the risk of a collapse is much bigger if no reforms are carried out than if there are slow and controlled changes.

Once the economy starts taking off and people’s living standards rise the people will hardly challenge the system and the leadership even though the North Korean people know that South Korea’s economy is much more advanced.

Read the full story here:
Can North Korea embrace Chinese-style reforms?
China Economic Review
Malcolm Moore


German entrepreneurs in DPRK

Friday, September 17th, 2010

The German version of the Financial Times has published an interview (of sorts) with Volker Eloesser and his DPRK JV technology firm, Nosotek. Below I have posted an English translation of the article.

FT: You think the economy in North Korea is starving. That is right! Nevertheless, it attracts entrepreneurs there like Eloesser Volker from Germany. He tells Anna Lu the story of his life in the land of Kim Jong-il.

North Korea is one of the most isolated and inaccessible countries in the world. Nevertheless, there are millions of university trained Koreans and entrepreneurs living in the country. Volker Eloesser is one of the entrepreneurs. Eloesser runs a company in Pyongyang. The IT company is known as Nosotek and is a joint venture with the North Korean state. It is not very simple to talk to Eloesser about his life and work in North Korea. The lines are too unstable to North Korea, with numerous eavesdroppers. Not everything can be talked about openly. The following article is the outcome of countless emails between Pyongyang and Hamburg.

VE: “Why do we work in North Korea? There are signs that the country can develop into a booming region. Recently, a short report about the iPad was broadcast. Videos from South Korea are widely circulated amongst students. The policy change may not be imminent, but it is unstoppable. Once that happens, property prices will increase.

This is the strategy of most foreign companies here: Real estate speculation, even if the permits for foreigners are only granted in a joint venture status. Many of the companies produce products as a matter of form and do not make any significant profits. Other opportunities include buying up restaurants, shop buildings and swimming pools. Just imagine if someone would have built a restaurant in China in 1985 in Tiananmen Square. Or at Alexander Platz in East Berlin. Opportunities like these do not happen often in the world.

FT: Volker Eloesser operates an IT company in Pyongyang, North Korea and hopes the country develops into a booming region.

VE: Naturally, we only invest very little into production. Nosotek develops software and apps for the iPhone. We are quite successful. One time, we were even in the top ten in the App Store. Our customers do not want us to mention the name of our company or our employees’ names on the product. Although it is going well, we do not generate profits yet. Our headquarters is located in one of the most sought after residential areas in Pyongyang, not far from the center. The area boasts multi-story, stucco houses and easy metro access. These are some of the best conditions possible, so we are optimistic.

Unfortunately, many things are expensive here. The bulk of the goods are imported and therefore, cost twice as much as they would in China. Power, logistics and communications are almost prohibitive. However, wages are way below Chinese standards, which is a key benefit if you get good people. There are plenty here, all with a university degree in computer science or mathematics, some have doctorates. They seem to wait for an announcement of a job opening. I only have to ask my Korean partner and 14 days later new people are coming in for a trial. I can say nothing about the wages.

FT: In fact, the average salary in Pyongyang is around 3,000 Won a month. After a devastating currency reform and crop failures in recent years, this affords an employee about three kilos of rice. Eloesser does not say it, but we hear such things from aid workers in the region. The aid workers do not wish to be identified. Eloesser further:

Eating together in the common area.

VE: “In total we have 45 Korean employees, including five women. I, am the only European. We all eat in the company common area every single day. I particularly like the octopus salad and will miss it if I relocate. After work, colleagues remain a little longer and often sing songs to the guitar. The atmosphere is friendly. Nevertheless, it is not always easy. Koreans are very proud people who love their country and their culture and know nothing else.

It is not easy to convince them to do something differently. For many it is difficult to recognize a foreigner as an authority, and if they do not understand the meaning of a statement it is often not performed. However, the biggest difficulty is much different: We have an IT company without access to the internet. We solve this problem by delegating the development of online components to partner companies in China. Here in North Korea you can only do things offline. At home I have true internet access, but it is very slow and rather expensive.”

FT: In fact, one can only get on the internet via a satellite dish in North Korea. The acquisition cost to use the internet according to a local charity is the equivalent of 11,000 euros. The monthly expense may be up to 700 euros, depending on how many users share the connection.

VE: “Pyongyang itself has changed in the last few years. Since 2005, the first time I was here, the traffic has doubled. The days of empty roads are long gone, such images only haunt the internet. Instead of old taxis or Ladas, North Korean Pyonghwas and Malaysian Proton sedans are on the road now. Bicycles are hardly center. They may only drive on the sidewalks. There are lots of military jeeps or SUVs from Russian, Chinese and local manufacturers.

You meet uniformed people everywhere in North Korea, but not all are military. Civilians bear just as many olive green suits with no weapons or rank insignias. The rest are soldiers. Soldiers are often used to harvest and help with road and house construction. I never feel threatened by the military presence as a foreigner. I feel I am treated with respect. People think; if he was not important for our country, he would not be here. Nevertheless, I am of course aware that somebody writes reports about me. Wherever I go, if I am at a restaurant or at work, somebody knows me. He notes when and where I parked my car and statements like this interview will be read by the authorities. At first I thought they listened to me at my apartment. However, even if they have actually done this, I think it has become boring for them.

Sometimes I can understand their suspicions; the reports by many Western media outlets are biased. Recently, the North Korean government printed a picture of children splashing around in Wonsan. People abroad believed the picture was staged, but this type of activity is common in the summertime heat.

FT: Sense of unwritten prohibitions

VE: The authorities are particularly suspicious of journalists and tourists because they do not know their true intentions. We are entrepreneurs and largely left alone. We are not required to go to political events or memorials. As a business man you have one clear goal, business. It is understood and supported. Life would be easier if we knew what we can and cannot do. Unfortunately, this is not written anywhere. It is better to hold back. Over time, you develop a sense of unwritten prohibitions. I have my own opinion about the policy, but I will keep it to myself. I make sure I never have a camera with me, not even on my phone. I do this so no one thinks I want to photograph something without permission. I live in the Bulgarian Embassy because there are no mixed residences. I never visit North Koreans at home and do not talk to them on the street. I do talk to children occasionally. They are not afraid of foreigners and like to try out their English vocabulary. They will say things like; “How old are you?” Where do you come from? Bye-bye.” Then they run away giggling.

Basically, I lead a fairly normal life here. I can move around in my free time and go to the mountains and play golf or tennis. There is a night life in Pyongyang with bars and karaoke. More precisely, there are two types of night life, one for locals and one for foreigners. For example, I do not get tickets to the local cinema. Today I went to an amusement park that many North Koreans visit. The park was built in 2010 and is equipped with fair attractions like the kind they have once a year in small German towns.

Shopping is not a problem. There are no signs of a food shortage as the shops are packed. Curiously, a kilo of chicken on the market is often cheaper than a kilo of vegetables. This may be because chickens can live in backyards and on balconies. Vegetables cannot, that would require offseason greenhouses, which are not found in North Korea. Imported goods usually have astronomical prices. For example; a Hungarian salami costs the equivalent of 42 euros. Other products like yogurt cannot be found in the summer because the refrigeration is inadequate. Sometimes I shop at the diplomatic supermarket and buy things like Haribo, Mosel wine and milk chocolate.”

FT: Of course, the well-equipped shops have a catch; purchases must be paid for in euros.

VE: “By the way, last Saturday night something strange happened. I had an accident. A man ran out in front of my car. He was in dark clothing and came out of nowhere across the eight-lane main road. I slammed on the brakes, but the car hit him, and he fell onto the road. When someone came to help him up, he quickly departed from the scene of the accident. You call that a victim’s escape?

A short time later, three police officers arrived on motorcycles. They were friendly and professional, and they even offered me a cigarette. In some other countries, I would have been imprisoned or would have been asked to pay an exorbitant bribe. Here I was only given a warning, because I had forgotten my passport and driver’s license and the technical inspection (also here) was outdated by nine months. That was all. There was not a victim. Only screeching tires in the night.”

The original German verison can be found here:
Unser Mann in Pjöngjang
Financial Times (German edition)


DPRK software exports

Monday, September 6th, 2010

According to Bloomberg:

North Korean leader Kim Jong Il has found an unlikely ally to help raise cash for his impoverished regime: The Dude, the pot-smoking underachiever played by Jeff Bridges in the movie “The Big Lebowski.”

Programmers from North Korea’s General Federation of Science and Technology developed a 2007 mobile-phone bowling game based on the 1998 film, as well as “Men in Black: Alien Assault,” according to two executives at Nosotek Joint Venture Company, which markets software from North Korea for foreign clients. Both games were published by a unit of News Corp., the New York-based media company, a spokeswoman for the unit said.

They represent a growing software industry championed by Kim that is boosting the economy of one of the poorest countries in the world and raising the technological skills of workers. Contracting with North Korean companies is legal under United Nations sanctions unless they are linked to the arms trade.

“From the government’s point of view, foreign currency is the main reason to nurture and support these activities,” said Andrei Lankov, an academic specializing in North Korea at Seoul- based Kookmin University. “These activities help to fund the regime, but at the same time they bring knowledge of the outside world to people who could effect change.”

The technological education of graduates from North Korean universities has “become significantly better,” Volker Eloesser, a founder of Pyongyang-based Nosotek, said in an e- mail. Companies with “hundreds or even thousands of staff each” operate in North Korea, he said.

Double-Edged Sword

Better trained programmers may also bolster the regime’s cyberwarfare capabilities, said Kim Heung Kwang, who taught computer science at universities in the north for 19 years before defecting to South Korea in 2004. South Korea’s presidential office said July 28 the nation had received intelligence that North Korea may plan an Internet-based attack.

Won Sei Hoon, director of South Korea’s National Intelligence Service, told lawmakers last October that North Korea’s postal ministry was responsible for cyber attacks in July 2009 on dozens of websites in South Korea and the U.S.

President Barack Obama widened U.S. financial sanctions on North Korea on Aug. 30, freezing assets of North Korean officials, companies and government agencies suspected of “illicit and deceptive activities” that support the regime’s weapons industry.

Seeking Capability

“Any sort of transaction that gives cash to the North Korean government works against U.S. policy,” said James Lewis, a senior fellow at the Center for Strategic and International Studies, a Washington-based policy group. “The coding skills people would acquire in outsourcing activities could easily strengthen cyberwar cyber-espionage capabilities. Mobile devices are the new frontier of hacking.”

North Korea’s information technology push began in the 1980s as the government sought to bolster the faltering economy, said defector Kim. That drive also led to the creation of a cyber-military unit in the late 1990s, he said. He runs North Korea Intellectuals Solidarity, a group composed of defectors who have graduated from North Korean universities.

Nosotek’s Eloesser disputed any connection between programming for games and cyber-espionage.

“Who could train them, as neither me nor the Chinese engineers who are cooperating with the Koreans have those skills ourselves?” he asked in an e-mail. “Training them to do games can’t bring any harm.”

Joint Venture

Nosotek is a joint venture between the science and technology federation and foreign investors, company vice president Ju Jong Chol said in an e-mail. He said federation members developed both “Big Lebowski Bowling,” set in a rendition of the bowling alley where The Dude spent much of the movie drinking White Russians, and “Men in Black,” in which players battle invading aliens. Eloesser confirmed his comments.

Both games were published by Ojom GmbH, a unit of a company called Jamba that was bought by News Corp. and later renamed Fox Mobile, according to Fox Mobile spokeswoman Juliane Walther in Berlin. They came out after News Corp. took a controlling interest in Jamba in January 2007 and before it bought the remainder in October 2008. Ojom was eliminated in a May 2008 reorganization, Walther said.

When asked whether Fox Mobile distributes games developed in North Korea, Walther said that the unit “has extensive partnerships with content producers in all areas, with operators, and with the biggest media companies worldwide, including various Asian companies.”

No More Details

She said the company could not provide more details on where partners are based or confirm “if and how” North Korean companies were involved in development for Ojom. Dan Berger, a News Corp. spokesman in Los Angeles, declined to comment further. News Corp. is controlled by Chairman and Chief Executive Officer Rupert Murdoch, 79.

Eloesser founded Elocom Mobile Entertainment GmbH in 2003, which later became a subsidiary of Ojom. He said he first visited North Korea in 2005 and helped found Nosotek in 2007.

Nosotek offers clients billing through either a Hong Kong or Chinese company, according to its website, which promises “skills, secrecy, dedication.”

Such practices allow the funds to flow to North Korea, said Paul Tjia, director of Rotterdam, Netherlands-based GPI Consultancy, which helps companies outsource overseas, including to North Korea. Other companies contract with Chinese firms that then subcontract to North Korean companies, he said.

It is “impossible to estimate” how much revenue North Korea earns through software development, he said.

Nosotek’s wares are “of similar good quality to those from other companies in Europe or America,” according to Marc Busse, digital distribution manager at Potsdam, Germany-based Exozet Games GmbH, which has distributed games for Nosotek.

Foreign companies that are reluctant to do business in North Korea need to understand that investment there can help the country modernize and reduce its isolation, Tjia said.

“Most companies are still reluctant, which we think is unfortunate,” he said. North Koreans “need investment, like China in the 1970s.”

Read the full story here
Kim Jong Il Bowls for Murdoch’s Dollars With Korean Video Games
Matthew Campbell and Bomi Lim


Nosotek developing popular software in DPRK

Thursday, August 12th, 2010

Volker Elosser of Nosotek gives an interview in German here.

Here is a translation of the article by Google Translate:

Click on the images to read the article.  I apologize for using these awkward images, but Google Translate only allowed me to copy/paste the original German.  This was the only fast/easy solution I could come up with.

The article references an article in PC World by Martyn Williams.  You can read this here.


The DPRK’s internet, business, and radio wars

Friday, June 11th, 2010

Martyn Williams releases three DPRK stories this week all covering interesting issues…

North Korea Moves Quietly onto the Internet

North Korea, one of the world’s few remaining information black holes, has taken the first step toward a fully fledged connection to the Internet. But a connection, if it comes, is unlikely to mean freedom of information for North Korea’s citizens.

In the past few months, a block of 1,024 Internet addresses, reserved for many years for North Korea but never touched, has been registered to a company with links to the government in Pyongyang.

The numeric IP addresses lie at the heart of communication on the Internet. Every computer connected to the network needs its own address so that data can be sent and received by the correct servers and computers. Without them, communication would fall apart.

It is unclear how the country’s secretive leadership plans to make use of the addresses. It seems likely they will be assigned for military or government use, but experts say it is impossible to know for sure.

North Korea’s move toward the Internet comes as it finds itself increasingly isolated on the world stage. The recent sinking of a South Korean warship has been blamed on the insular country. As a result, there are calls for tougher sanctions that would isolate North Korea further.

“There is no place for the Internet in contemporary DPRK,” said Leonid A. Petrov, a lecturer in Korean studies at The University of Sydney, referring to the Democratic People’s Republic of Korea. “If the people of North Korea were to have open access to the World Wide Web, they would start learning the truth that has been concealed from them for the last six decades.”

“Unless Kim Jong-Il or his successors feel suicidal, the Internet, like any other free media, will never be allowed in North Korea,” he said.

The North Korean addresses were recently put under the control of Star Joint Venture, a Pyongyang-based company that is partly controlled by Thailand’s Loxley Pacific. The Thai company has experience working with North Korea on high-tech projects, having built North Korea’s first cellular telephone network, Sunnet, in 2002.

Loxley acknowledged that it is working on a project with Pyongyang, but Sahayod Chiradejsakulwong, a manager at the company, wouldn’t elaborate on plans for the addresses.

“This is a part of our business that we do no want to provide information about at the moment,” he said.

A connection to the Internet would represent a significant upgrade of the North’s place in cyberspace, but it’s starting from a very low base.

At present the country relies on servers in other countries to disseminate information. The Web site of the Korea Central News Agency, the North’s official mouthpiece, runs on a server in Japan, while Uriminzokkiri, the closest thing the country has to an official Web site, runs from a server in China.

North Korean citizens have access to a nationwide intranet system called Kwangmyong, which was established around 2000 by the Pyongyang-based Korea Computer Center. It connects universities, libraries, cybercafes and other institutions with Web sites and e-mail, but offers no links to the outside world.

Connections to the actual Internet are severely limited to the most elite members of society. Estimates suggest no more than a few thousand North Koreans have access to the Internet, via a cross-border hook-up to China Netcom. A second connection exists, via satellite to Germany, and is used by diplomats and companies.

For normal citizens of North Korea, the idea of an Internet hook-up is unimaginable, Petrov said.

Kim Jong-Il, the de-facto leader of the country, appears all too aware of the destructive power that freedom of information would have to his regime.

While boasting of his own prowess online at an inter-Korean summit meeting in 2007, he reportedly rejected an Internet connection to the Kaesong Industrial Park, the jointly run complex that sits just north of the border, and said that “many problems would arise if the Internet at the Kaesong Park is connected to other parts of North Korea.”

Kim himself has made no secret of the Internet access that he enjoys, and famously asked then-U.S. Secretary of State Madeleine Albright for her e-mail address during a meeting in 2000.

The government’s total control over information extends even as far as requiring radios be fixed on domestic stations so foreign voices cannot be heard.

The policy shows no signs of changing, so any expansion of the Internet into North Korea would likely be used by the government, military or major corporations.

The World’s Most Unusual Outsourcing Destination

Think of North Korea, and repression, starvation and military provocation are probably the first things that come to mind. But beyond the geopolitical posturing, North Korea has also been quietly building up its IT industry.

Universities have been graduating computer engineers and scientists for several years, and companies have recently sprung up to pair the local talent with foreign needs, making the country perhaps the world’s most unusual place for IT outsourcing.

With a few exceptions, such as in India, outsourcing companies in developing nations tend to be small, with fewer than 100 employees, said Paul Tija, a Rotterdam-based consultant on offshoring and outsourcing. But North Korea already has several outsourcers with more then 1,000 employees.

“The government is putting an emphasis on building the IT industry,” he said. “The availability of staff is quite large.”

At present, the country’s outsourcers appear to be targeting several niche areas, including computer animation, data input and software design for mobile phones. U.S. government restrictions prevent American companies from working with North Korean companies, but most other nations don’t have such restrictions.

The path to IT modernization began in the 1990s but was cemented in the early 2000s when Kim Jong Il, the de-facto leader of the country, declared people who couldn’t use computers to be one of the three fools of the 21st century. (The others, he said, are smokers and those ignorant of music.)

But outsourcing in North Korea isn’t always easy.

Language can be a problem, and a lack of experience dealing with foreign companies can sometimes slow business dealings, said Tija. But the country has one big advantage.

“It is one of the most competitive places in the world. There are not many other countries where you can find the same level of knowledge for the price,” said Tija.

The outsourcer with the highest profile is probably Nosotek. The company, established in 2007, is also one of the few Western IT ventures in Pyongyang, the North Korean capital.

“I understood that the North Korean IT industry had good potential because of their skilled software engineers, but due to the lack of communication it was almost impossible to work with them productively from outside,” said Volker Eloesser, president of Nosotek. “So I took the next logical step and started a company here.”

Nosotek uses foreign expats as project managers to provide an interface between customers and local workers. In doing so it can deliver the level of communication and service its customers expect, Eloesser said.

On its Web site the company boasts access to the best programmers in Pyongyang.

“You find experts in all major programming languages, 3D software development, 3D modelling and design, various kind of server technologies, Linux, Windows and Mac,” he said.

Nosotek’s main work revolves around development of Flash games and games for mobile phones. It’s had some success and claims that one iPhone title made the Apple Store Germany’s top 10 for at least a week, though it wouldn’t say which one.

Several Nosotek-developed games are distributed by Germany’s Exonet Games, including one block-based game called “Bobby’s Blocks.”

“They did a great job with their latest games and the communication was always smooth,” said Marc Busse, manager of digital distribution at the Leipzig-based company. “There’s no doubt I would recommend Nosotek if someone wants to outsource their game development to them.”

Eloesser admits there are some challenges to doing business from North Korea.

“The normal engineer has no direct access to the Internet due to government restrictions. This is one of the main obstacles when doing IT business here,” he said. Development work that requires an Internet connection is transferred across the border to China.

But perhaps the biggest problem faced by North Korea’s nascent outsourcing industry is politics.

Sanctions imposed on the country by the United States make it all but impossible for American companies to trade with North Korea.

“I know several American companies that would love to start doing IT outsourcing in North Korea, but because of political reasons and trade embargoes they can’t,” Tija said.

Things aren’t so strict for companies based elsewhere, including those in the European Union, but the possible stigma of being linked to North Korea and its ruling regime is enough to make some companies think twice.

The North Korean government routinely practices arbitrary arrest, detention, torture and ill treatment of detainees, and allows no political opposition, free media or religious freedom, according to the most recent annual report from Human Rights Watch. Hundreds of thousands of citizens are kept in political prison camps, and the country carries out public executions, the organization said.

With this reputation some companies might shy away from doing business with the country, but Exonet Games didn’t have any such qualms, said Busse.

“It’s not like we worked with the government,” he said. “We just worked with great people who have nothing to do with the dictatorship.”

Radio Wars Between North and South Korea (YouTube Video)


Ulrich Kelber interview on recent trip to DPRK

Tuesday, June 8th, 2010

The interview (in German) can be found here. A reader, however, sent in an English version:

Klaus-Martin Meyer: Mr. Kelber, you were recently in North Korea for the first time. Was this trip in what is certainly a totally different world consistent with your expectations?

Ulrich Kelber: Though I prepared myself with both oral and written accounts, there were things, both positive and negative, that surprised me. Among the negative things were the uniformity and control; among the positive were how well educated the people are, and their effort to bring the country forward.

Klaus-Martin Meyer: The political climate of the Korean peninsula is currently more tense than ever. The North Koreans described their version of the fall of Cheonan. How realistic is it?

Ulrich Kelber: I’m not an expert on these sorts of questions, which prevents a very detailed assessment. North Korea’s November threats of retribution alone aroused suspicions. But, in fact, South Korea has to allow questions. Why can’t an independent commission examine the evidence? Why aren’t the survivors permitted to testify publicly?

Klaus-Martin Meyer: In Pyongyang you also visited a German joint venture with the company Nosotek. As a member of the Bundestag, what are your impressions of the working conditions and day-to-day work of software developers in this sector of the North Korean economy? Are you convinced that Nosotek is actually developing for the international market?

Ulrich Kelber: Yes, we saw typical products for the international market, which, as a computer scientist, greatly interested me. The programmers and graphic designers are obviously very highly trained, with technical equipment up to Western standards. One significant exception to this is the lack of internet access in the company itself. Of course, this makes business and customer support more difficult, but isn’t an obstacle for actual software development.

The working conditions were the same as I have seen at German start-ups or in developing countries. No one could comment on the wages, which is also the customary rule in Germany. However, I had the feeling that the employees were part of the middle class, to whatever extent it exists in North Korea.

Klaus-Martin Meyer: How do you rate the opportunities and risks for foreign entrepreneurs in North Korea?

Ulrich Kelber: That’s hard to say after a single visit, but at Nosotek there seems to be little standing in the way of economic success. Possible risks would be the regime further shutting the country off, or wider-reaching sanctions. The well-trained employees, which I also can affirm in other areas such as the trades and agriculture, represent a great opportunity for all businesses.

Klaus-Martin Meyer: As usual in closing, our standard question (not just in interviews about communist countries.) Where do you see North Korea being in five years?

Ulrich Kelber: If the regime doesn’t open up economically, the country will barely progress, in spite of any efforts, for example, to maintain their infrastructure. Even with a little more openness, North Korea could make enormous economic gains, since both infrastructure and well-trained workers are available. The possibility of a political thaw depends both on the ability of the North Korean regime to resolve the succession issue, as well as whether or not South Korea’s hardliners keep calling the shots.


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.




Wednesday, September 2nd, 2009

UPDATE 2:  The Nosotek staff have produced a short video of the staff at work on their computers.  You can see it on YouTube here.

UPDATE 1: Here is a list of Nosotek’s services and prices.  Click here to read in PDF.

ORIGINAL POST: Nosotek is the first western IT joint-venture company in the DPRK.  According to their web page:

nosotek.JPGIn DPRK, software engineers are selected from the mathematics elite and learn programming from the ground-up, such as assembler to C+, but also Linux kernel and Visual Basic macros.

Among them, Nosotek has attracted the cream of local talent as the only company in Pyongyang offering western working conditions and Internet access.

In addition to the accessible skill level Nosotek was set-up in DPRK because IP secrecy and minimum employee churn rate are structurally guaranteed.

Nosotek sells direct access to its 50+ programmers jointly managed by western and local managers.

Services can be invoiced through a Hong Kong or Chinese company.

Benefit from North Korea’s opening, outsource to Nosotek

Our special application development service offerings include:

1. Tailor-made eBusiness solutions
2. Integrated Content Management solutions
3. Application Development
4. Research & Development
5. Special Component Based Software Development
6. Videogame Development

Interestingly, Nosotek has a YouTube channel where you can see demos of the videogames being produced in the DPRK for mobile phones.  Check out their video demos here.

Here are some intereviews with the company’s directors: Volker Eloesser, Ju Jong Chol


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.


Nosotek: First European software firm based in DPRK

Sunday, April 20th, 2008

 “Nosotek is the first European-invested software development & research company in the DPRK, with the head office in Pyongyang.” – Interview with Mr. Ju Jong Chol (Vice-President of Nosotek)

Klaus-Martin Meyer: Mr. Ju, you are the Vice President of a very interesting company named Nosotek ( Could you please tell us something about this venture?

Ju Jong Chol: Nosotek is the first European-invested software development & research company in the DPRK, with the head office in Pyongyang.

It is founded by the General Federation of Science and Technology (GFST) of DPRK and experienced European IT-entrepreneurs. Felix Abt, the president of the European Business Association ( is one of Nosotek’s directors.

Nosotek is jointly run by European IT engineers together with their Korean counterparts. We have presently 50 engineers and a strong production line. We expect rapid growth thanks to our qualified, experienced and committed staff.

Klaus-Martin Meyer: What are Nosotek’s main products?

Ju Jong Chol: As we specialize on offshore IT outsourcing services we already have produced a large range of software products. Among our finished products, you find scientific software, video games, web applications, embedded software and 3D virtualization tools.

In case our customer needs a field of service where we don’t have experienced engineers in our own staff, the GFST will help us finding good people among the scientists of the universities. We can rely on sustainable DPRK and European engineering and business ressoucces.

Klaus-Martin Meyer: The DPRK is not the Silicon Valley or Bangalore. What are the customer’s benefits to do Business with Nosotek?

Ju Jong Chol: Of course, we’re not Silicon Valley or Bangalore. But we take the challenge to compete with these locations. The DPRK government took the strategic decision to give strong support to our IT industry which now bears fruits.

In the DPRK, software engineers have an average academic math level superior to their western or Indian counterparts.

Computer science education involves understanding of deep low level processes: when was the last time you hired a PHP programmer to realize he was quite at ease in assembler?

Klaus-Martin Meyer: Outsourcing to Asia is often identified with a risk of IP leak. Many western companies are complaining that after outsourcing their partners start copying their technology.

Ju Jong Chol: Then they are all invited to do their outsourcing projects in the DPRK! Our country is well known to have strong laws to protect secrets and we respect the value of IPs. And unlike what is common in other countries like China, there is only very little fluctuation of the workforce. Like in Japanese companies, our employees usually enter the company after university and stay their entire business life with the high personal motivation. This does not only help to keep trade secrets, it also helps to keep the experienced persons, who are needed for long-term partnership.

Klaus-Martin Meyer: How are the working conditions at Nosotek?

Ju Jong Chol: Our employee’s working conditions are far better than average, compared with both domestic and international standards: They work with state-of-the-art hardware, have free lunch, more holidays than in Europe and even a one-week vacation trip to a touristic place every summer, which is completely paid by the company.

Klaus-Martin Meyer: How difficult is it for you to acquire international business? What exactly are the main challenges?

Ju Jong Chol: Currently the main problem is the US sanctions against our country. For example, western customers are threatened by the US to prevent doing business with us. At the moment, it is very difficult to transfer money to DPRK. Luckily, together with our European partners we found good solutions and our customers will make their contracts with companies outside of DPRK.

Klaus-Martin Meyer: Is it possible to name some of your reference projects?

Ju Jong Chol: Unfortunately, this is not possible. Our policy is not only to respect our customer’s trade secrets and software IP, but also not to disclose the names of our customers. But please be assured, that some of our work products are used in large public companies, all over the world including USA.

Klaus-Martin Meyer: There are quite a lot companies from South Korea and also international companies working at the Kaesong special economic zone in North Korea. Are these Companies potential customers for Nosotek?

Ju Jong Chol: We are doing business all other the world. Of course, companies from Kaesong may be potential customers. Currently, our main focus is on Europe and Japan.

Klaus-Martin Meyer: The last question is our famous 5-years-questions. What is Nosotek’s outlook for the next five years?

Ju Jong Chol: Our goal is to create public awareness of the DPRK as a place where IT outsourcing can be done at the best ratio between price and quality. Nosotek will grow and the business volume will highly increase.

Source here.