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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 (www.nosotek.com). 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 (www.eba-pyongyang.org) 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.

Posted in Banking, Computing/IT, European Business Association, Finance, General Federation of Science and Technology (GFST), Intellectual Property, Labor conditions/wages, Nosotek | 2 Comments »

Air Koryo and DPRK tourism update

Friday, April 18th, 2008

This morning the International Herald Tribune published an interesting AP story on Air Koryo, North Korea’s state airline.

As has been mentioned before, Air Koryo recently began upgrading its fleet–but guess who will seemingly be on the first flight?

The airline also has taken delivery of its first new jet in years. South Korea’s Yonhap news agency, quoting diplomatic sources in China, reported Thursday that North Korea’s reclusive leader Kim Jong Il was likely to fly to Vietnam and China on the new plane next week.

Kim is widely believed to shun air travel. His previous trips abroad by luxurious special train were shrouded in secrecy and reports speculating on his destinations beforehand were not always accurate.

And although the economy at large is not doing so well, Air Koryo business is brisk.

“The golden days are now[.] They’re busier than ever,” says Nick Bonner of Koryo Tours. (paragraph edited)

In 1998, his Koryo Tours — which despite being similarly named for an ancient Korean dynasty is unrelated to the airline — escorted just 98 tourists to North Korea. The number doubled to 200 in 2006 and last year jumped to a still minuscule 1,100. Some of his customers also get into the country by train, a much longer trip.

Bonner said a roundtrip ticket on Air Koryo between Beijing and Pyongyang costs 2,550 Chinese yuan (US$365; €230) for economy and 4,340 yuan (US$621; €390) for business class.

What are Air Koryo’s most recent routes:

Air Koryo now has just three regularly scheduled international routes. Domestic service is said to be virtually nonexistent.

It flies roundtrip three times a week between Pyongyang and Beijing and twice a week to the northeastern Chinese city of Shenyang, an important source of trade for North Korea.

The other is return service once a week to Vladivostok. A flight to Khabarovsk, another city in the Russian Far East, stopped in 2005. The airline also had flew to Bangkok and Macau in recent years.

About the fleet upgrade:

Perhaps illustrative of Air Koryo’s improving fortunes, in December it acquired a twin-engine Tu-204-300 jet manufactured by Russia’s OAO Tupolev, adding to its fleet of other Tupolev, Antonov and Ilyushin jets and turboprops.

Tupolev mentions the deal on its Web site, though did not disclose financial terms when asked.

A non-North Korean with intimate knowledge of the airline, who refused to be identified, confirmed the deal, adding North Korean pilots were receiving training in Russia with the craft set to begin operations at the end of April.

Although the article insinuates that economics are largely behind the fleet upgrade, a little nudging by China certainly did not hurt. China gave Air Koryo a deadline to meet Beijing safety standards. But despite China’s concern for air safety, Air Koryo still has one of the best records in the business:

Though concerns about safety have been raised — Air Koryo is banned from flying in the European Union — the carrier has apparently had just one major accident, a crash in West Africa in 1983 when the airline was known under a different name.

The plane, an Ilyushin 62 carrying 23 people, was en route to Conakry, the capital of Guinea, on an “international non-scheduled passenger” flight, when it went down in the Fouta Djall mountains, according to the Aviation Safety Network Web site. All aboard perished.

Air Koryo made its first flight to South Korea in August of 2000 to ferry 100 separated family members for temporary reunions with long-lost relatives in the South. The airline has made occasional flights to South Korea for special purposes as relations have warmed in recent years.

The article does not mention the other (minor) mishap in 2006:

On August 15, 2006 aircraft from Air Koryo (Tupolev 154B-2) on an international scheduled passenger flight from Beijing, China (Beijing Capital Airport) to Pyongyang, North Korea (Sunan International Airport) experienced a runway mishap (exited runway) during landing rollout after landing in bad weather at Sunan International Airport. No injuries were reported and damage to plane was minor. (Wikipedia)

Read the full article here:
North Korea’s quirky Air Koryo survives and, increasingly, appears to thrive
International Herald Tribune (AP)
4/18/2008

Posted in Aviation, Koryo Tours, Russia, Tourism, Transportation | Comments Closed

Muted birthday celebration

Tuesday, April 15th, 2008

Rumors of food shortages in North Korea seem to be popping up everywhere (even on this website), so now any change in Pyongyang’s standard operating procedure is interpreted in the media as a direct result of this condition. Changes in regime behavior might be related to food shortages, but then again, we are talking about the DPRK, and we don’t really know how or why many decisions are made.

The latest North Korean “Kremlinology” comes from Yonhap:

With neither foreign artists singing in praise of Kim, who is dubbed the “Sun of mankind” by the communist state, nor the standard massive gymnastic display performed by about 100,000 people on show, North Koreans started the two-day holiday in a low-key manner.

The North traditionally spends a lot on celebrating one of the nation’s biggest holidays on a grand scale, inviting many foreign musicians and art groups to perform in the “April Friendship Art Festival” that marks the birthday of the nation’s founder and unveiling large public monuments.

Pyongyang, however, has scaled down the previously annual event to a biennual in what analysts said is a measure to save badly needed foreign currency because of worsening hardships facing the country.

and as for Arirang…

The Koryo Tours website claims that Arirang will take place from August to the end of September. This could change, but it is 2-4 weeks shorter than the last couple of years (although those were interrupted by floods!).

Read the full story here:
N. Korea marks late leader’s birthday amid economic hardship
Yonhap
Shim Sun-ah
4/15/2008

Posted in Agriculture, Civil society, Food, General markets (FMR: Farmers Market), Koryo Tours, Price liberalization, Tourism | Comments Closed

Good Friends publishes price data

Tuesday, April 15th, 2008

North Korea Today No. 119 Apr 2008
End of March, Price of Rice and Maize Reaches Highest Level in History

(click on image for more legible version)

The price of foodstuffs is increasing at an incredible pace. On March 30th, for the first time in the country, the price of rice went over the 2,000won per kilogram mark and was traded for 2,050won in the city of Nampo. In the case of maize, the situation is even more extreme. The rumors that the price of maize would go over 1,000won in April became a reality and was being sold for 1,000won in places like Pyongyang, Chungjin, and Hamheung, while in Nampo, it was being traded for 1,050won. In other outlying regions, maize was still being traded at high prices ranging from 900won-950won. Only in areas like Onsung, Hoeryung, and some border areas in North Hamgyong Province was rice being traded at the comparatively low price of 1,600won for rice and 650-750won for maize.

Posted in Agriculture, Black markets, Food, General markets (FMR: Farmers Market), Good Friends, Price liberalization | 1 Comment »

South Korea continues imports of DPRK coal

Monday, April 14th, 2008

From Yonhap:

A North Korea-registered cargo ship carrying coal arrived in South Korea’s port city of Ulsan Sunday amid increased cross-border tensions, according to maritime police.

The 2,496-ton freighter Changseong carrying a 29-member crew docked at the port, South Gyeongsang province, around 10:20 a.m. earlier in the day.

The ship carried 4,000 tons of coal, the first batch of 12,000 tons to be delivered by April 25, the police said.

And how much are they paying? IFES has the answer…

North Korea, in keeping with rising international coal prices, appears to have hiked up the export price of heating briquettes twice in the last three months. A North Korea insider in Shenyang, China recently reported, “North Korea’s Trade Bureau Price Control Division raised export prices at least twice as this month came around, so the export price soared up to 50 USD per ton,” and, “As the rising international coal price trend continues, there is a high probability that North Korean heating briquette prices will also rise further.”

Last year, North Korean heating briquettes were exported at 30 USD per ton, but as 2008 rolled around and international prices suddenly shot up, DPRK coal prices rose by over 50 percent, putting a significant burden on Chinese importers. However, Chinese importers still prefer DPRK briquettes as shipping costs from alternatives such as Vietnam or Indonesia still make North Korean imports relatively inexpensive.

It has been reported that the DPRK Trade Bureau has approved the export of briquettes to China at below-official prices of 44~45 USD per ton in cases in which there is Chinese capital or equipment has been invested in the coal mine. These charcoal briquettes are North Korea’s largest export item, with China importing 170 million USD-worth in 2007 alone.

So if South Korea was lucky enough to get China’s price (an assumption that might not be the case): 12,000 tons (by April 25) x USD$50/ton= $600,000

Read the full articles here:
N. Korean cargo ship visits Ulsan
Yonhap
4/13/2008

DPRK coal briquet export prices jump this year
Institute for Far Eastern Studies (IFES)
(NK Brief No. 08-4-10-1)
2008-04-10

Posted in Coal, Energy, Institute for Far Eastern Studies, International trade, South Korea | 1 Comment »

Koryo Tours quarterly update published

Wednesday, April 9th, 2008

Koryo Tours, run by Nick Bonner, Simon Cockerell, and Hannah Barraclough, has published its quarterly report. Read it here.

Inside, readers will learn about the upcoming year in North Korean tourism (Americans likely allowed in for Arirang in the fall) as well as other information on the NY Phil’s performance in Pyongyang and the World Cup qualifier in Shanghai.

Posted in Koryo Tours, Tourism | Comments Closed

North Korean businesses expanding in Russia

Saturday, April 5th, 2008

From the Donga Ilbo:

A black Benz with the red license plate of “087” passed by quickly. 087 is a number used exclusively for the sedans of North Korean diplomats. It was easy to tell that the North Korean embassy located on this street recently purchased the luxurious sedan.

“The North Korean embassy has been full of life since the latter half of 2006 because of the increased number of North Korean workers sent to Russia, diversified businesses and growing efforts to secure energy supplies,“ said North Korean defectors that the Dong-A Ilbo report team met in Moscow.

North Korean workers will construct the next APEC forum venue:

In order to prepare for the APEC, the Primorsky regional government (on the North Korean border) plans to issue work permits to 12,000 North Korean workers in 2008, four times higher than the number of those last year. A foreign national, who has hired North Korean workers, said, “North Korean senior officials are lobbying fiercely in order to increase the quota for laborers. They even arrange free tours of North Korea for Russian government officials.”

North Korea companies revived:

Recently, North Korean companies, such as Daedong River, Neungra, Baekdu and Goonpyo, have established their offices in many parts of Russia.

A 39-year-old North Korean defector who has stayed in Russia for 12 years said, “I believe, out of the 49 Russian provinces, North Korean firms have established their offices in about 30 provinces. Some 90 percent of them are responsible for overseeing North Korean workers.”

Joint ventures between Russia and North Korea, which went into hibernation after the United States froze North Korea’s account at Macau’s Banco Delta Asia in 2005, have recently resumed their activities. “Joint companies, which were active in the early 1990s, such as Dongbang Seafood and Far East Marine Transportation, have resumed their businesses,” said one Korean-Russian residing in Nakhodka.

Wages and Taxes:

“North Korean companies, which are spread across Russia, have been collecting about $400 to 500 from each North Korean worker every month. It is then used as high ranking officials’ business expenses,” said a 46-year-old North Korean defector.

“The discontent of workers is growing because high ranking officials dine out at fancy restaurants and their wives purchase expensive clothes with money earned by them,” added the defector.

(Uncle Sam is the only other government I know of that also taxes the income its citizens earn outside of its territory)

The story also makes a big deal out of the fact that the North Koreans pay huge bribes to do business in Russia, but who doesn’t?

Big players, who deliver a large sum of bribes to Russians, have also recently emerged. A captain of a North Korea freight ship was caught March 12 on site while shipping 100 tons of crude oil without reporting to customs at the Slavyanka shipyard, southern Vladivostok. It was found that the captain gave $45,000 to the president of the crude oil storage company as a kickback.

Read the full sotry here:
N.Korea’s Businesses Thriving in Russia
Donga Ilbo
4/4/2008

Posted in Baekdu Company, Daedong River, Dongbang Seafood, Economic reform, Far East Marine Transportation, Goonpyo, Joint Ventures, Labor conditions/wages, Neungra, Political economy, Russia | 1 Comment »

Scrap metal smuggling rampant in North Korea

Friday, April 4th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-4-4-1
4/4/2008

As smuggling scrap metal across the DPRK-PRC boarder has become widespread among North Korean residents lately, police are investigating the illegal trade, leading to the arrest of all of the residents in the border region that were involved in the smuggling. On April 1, the Daily NK quoted a source inside North Korea reporting that a group was arrested while transporting six tones of scrap metal to smuggle out to China via the highway connecting Yanggang Province’s Kabsan Town and Hyesan City, and subsequently imprisoned.

Those arrested were from ‘Unit 8’, an office in Hyesan under the direction of the People’s Trading Bureau regional office tasked with delivering and selling gold, food, oil and other goods in China and returning with materials needed in the North.

According to the source, “An order was handed down by the central government at the beginning of March to ‘come down hard on those scrap metal smugglers’, and the police and security force investigation is ongoing.” The source went on to report that in the Kumsandong Fertilizer Factory in Hyesan, “everything metal that wasn’t bolted down is gone, and only the walls of the factory remain…in the future [authorities] will punish scrap metal smugglers severely.”

It appears that scrap metal smuggling began to become popular in 2004, but these days, in the border areas, starving soldiers are using military vehicles to buy scrap metal from regions further from the border, then selling them in the Hyesan-Jangbaek border region. In the Yanggang and North Hamkyung Regions of North Korea, famine first spread in the mid-1990s, at which time emerged the presence of smugglers who quietly amassed copper, aluminum, nickel, and other metals and sold them in China. In response, North Korean authorities attempted to crack down, using public firing squads as a deterrent, but as border guards were in the pockets of smuggling residents of the border region, they became implicated in the cross-border illegal trading, and the crack downs became effectively useless.

Posted in Black markets, Economic reform, Institute for Far Eastern Studies, International trade, Manufacturing | 1 Comment »

World Cup Qualifier: Under dogs vs. Running dogs

Tuesday, April 1st, 2008

Update 2 – 6/9/2008: YouTube video of the game

Both national anthems played

North Korean tem thanks the fans

Update 1 – 4/3/2008: Interesting coment on DPRK sports social norms below…

By pure serendipity I happened to be in Shanghai last week when the DPRK and South Korea faced off in their first world cup qualifier. As readers are aware, this match was supposed to be held in Pyongyang, but after the DPRK refused to raise the South Korean flag (preferring instead a single “unification” flag), FIFA moved the game to Shanghai.

Both flags were raised and national anthems were played–then the players took to the field. The game was pretty exciting. Although the final score was 0-0 both teams played like they wanted to win. The South Koreans were the clear favorites, so it was a surprise when the game ended in a tie. Fortunately, I could not contact my bookie from China.

Above: the North Korean fans sitting directly below me.

Although it was a “home” game for the North Koreans they were drastically out-numbered by Southerners and contained together in their own section.

Scarves available from Koryo Tours!

The Northerners were quite accessible, however, in the hallways at half-time and after the game. The few I spoke with were language students, business students, engineering students, and businessmen, mostly all from Beijing and Shanghai. They were organized into groups like Japanese tourists, but it was nice they made the effort bringing out some supporters for the home team.

Thanks to Simon for the tickets, scarves, and the title.

UPDATE
nkmonitor:
The DPRK fans seem pretty friendly. By the way, where they mostly Chaoxian Zu or actual DPRK citizens? Where they aware of the controversy surrounding the match?

Simon:
All the ones in white clothes (as seen in the pics taken from above) were full-on DPRK citizens, as mentioned in the piece above they were mostly working in Beijing and Shanghai; there were airline staff, businessmen, students, waitresses, etc all there. The Chinese chaoxian zu seemed to be sitting on the upper stand across the stadium, at least there were a load of people dressed drably, not really making any noise and they had a couple of NK flags out so I assume this was them. The NKs in the lower stand made a bit of noise and had big singalong at the end. When people attend matches in Pyongyang they tend to just sit in silence regardless of how it is going so this did make a refreshing change from that scenario.

Posted in Civil society, Football (soccer), Koryo Tours, Sports | 13 Comments »

Air China finally lands in Pyongyang

Monday, March 31st, 2008

According to Reuters, Air China on Monday launched service to North Korea, making it the world’s only foreign airline to fly regularly to Pyongyang.

The Beijing-Pyongyang flight route was postponed by three months after Air China said preparatory work took longer than expected.

Air China will fly the return trip three times per week, making Pyongyang a Star Alliance destination, the airline grouping led by Singapore Airlines, Lufthansa and United Airlines.

Air China said previously that it saw the financial potential in the route, primarily from the Chinese tourist business.

I predicted that Air China would primarily service Chinese customers, with Westerners sticking with Air Koryo, the North Korean airline. In separate conversations with Koryo Tours and Walter Keats both tour operators expressed a preference for Air Koryo because of its flexibility and unique atmosphere, neither of which Air China can easily match.

The time-warp effect travelers feel when boarding an Air Koryo flight, however, might be soon diminished. Largely at the insistence of Beijing, Air Koryo has recently updated its fleet to meet international safety standards. Although the stewardesses appearance and speaker announcement welcoming arrivals to the land of “juche paradise” will likely remain the same, the 1950’s era deco interior will certainly take on a more conventional feel.

Source material here:
Air China launches flights to North Korea
Reuters
Simon Rabinovitch
3/31/2008

Posted in Aviation, Koryo Tours, Tourism | 1 Comment »

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