Praise for A Capitalist in North Korea
"Just finished your book--fascinating! What an experience. Wow."
–Justin Rohrlich, Emmy Award winner, head writer of Minyanville's World In Review, the world's first (and only) animated business news show.
Justin Rohrlich discussed the book on Money Matters Radio, New York. Listen to it here
And here is Rohrlich's interview on Minyanville's World in Review with Felix Abt
A CAPITALIST IN NORTH KOREA is Swiss entrepreneur Felix Abt’s account of his work and life in the DPRK, 2002-2009. As Jim Hoare did in North Korea in the 21st Century, Abt draws from a trove of personal experience to create a vivid account of the people and place. Along the way, Abt addresses big questions such as economic reform and practical ones such as how to use e-commerce to achieve brand recognition in North Korea. I’ve excerpted freely from Abt’s extraordinary story both to give a sense of his book and to pass along some of what he saw and learned.
Abt went to the DPRK in 2002 as resident representative for the Swiss power equipment-manufacturing conglomerate ABB, a $40 billion a year multinational. When his relationship with ABB ended in 2005, Abt stayed on to represent other European multinationals. He also became managing director of a joint venture with a North Korean pharmaceutical manufacturing and distribution company, co-founded the European Business Association in Pyongyang, and started the Pyongyang Business School to develop “market skills in the next generation of leaders.”
Abt had worked for multinationals such as Hoffman-La Roche, the Swiss pharmaceutical and medical supply manufacturer, in Europe, Africa and Asia, including as country director, before going to North Korea. Perhaps because of his experience in developing countries, he shows a willingness to consider the realities in the North—its problems and opportunities—rather than base his judgment on all the international lists that so reliably put the country at the bottom, from investment climate to human rights.
The author’s account of his experience as resident managing director of PyongSu Pharmaceuticals, a joint venture between European investors and a North Korean partner, is the most unexpected part of the book. Abt writes that when he joined Pyongsu in 2005, he immediately saw the need to devise marketing strategies to compete against products from State-owned drug makers priced much lower but of uncertain quality.
PyongSu’s market research—that meant hiring sales staff to visit drug stores, doctors offices and hospitals, to see who was buying what, why, and how much they were willing to pay—indicated pent-up demand from wealthier consumers in Pyongyang and also in the provinces. The joint venture had already learned to concentrate sales efforts on doctors’ offices and pharmacies, and not on the state-owned hospitals, because the authorities would see that as a challenge by the privately run pharmaceutical firm to the socialist health system. As such, PyongSu devised a strategy to spark demand for its products, both manufactured domestically and imported, from prospective customers. He explains:
We were looking for somebody who could give fair, competent medical advice, in response to questions from readers, on our company’s website. The country’s intranet was then accessible to households throughout the country, rather than merely government agencies, state companies and universities.
In response to this need, Abt interviewed and hired a recent medical school graduate, Dr. Song.
In 2007, we began our online medical advice service, receiving one or two emails a day. Dr. Song was also a talented medical writer. She put together terse, understandable articles with tables and illustrations on our website. Her efforts paid off for all of us: after a few weeks, the number of incoming emails started to explode from North Koreans looking for health-care wisdom. Dr. Song’s working days became longer and longer, but this relentless physician didn’t complain. She must have, after all, become one of the country’s most popular doctors, building our reputation as a competent pharmaceutical company. Not surprisingly, the first orders of pharmaceuticals from remote provinces reached us a few weeks later after her public image took off.
Observers of the North often wonder about access to computers in households and offices, and how connected those computers are to each other. Abt’s is the first account of e-commerce in the DPRK I’ve seen. He gives us more clues about how widespread computer use is in North Korea, when he writes about stocking-stuffers for prospective business partners:
At the beginning of my stay in North Korea, I offered nice gifts, such as a pair of fine leather shoes, a bottle of Scotch whisky or a large box of Dunhill cigarette packs for the men. For the ladies, I handed over a beautiful silk scarf, a brand-name perfume or a piece of jewelry. But when people became so keen on getting a USB to watch foreign movies, I stopped offering expensive presents and gave them those tiny electronics.
Having informed us North Koreans use computers for marketing, medical advice and entertainment, Abt turns to military applications, too:
I once asked Professor Kim, a leading IT expert at the respected Kim Chaek University of Technology, what future role information technologies would play in national defense. He answered that wars without a cyber element are increasingly unthinkable, the internet would not be spared from battle. North Korea, he added, would build up the needed IT capabilities to make its enemies pay dearly for their aggressions.
While at Pyongsu, Abt worked in light manufacturing and marketing; his work representing ABB and mining equipment manufacturers gave him experience with heavy industry. That work took him to power plants, factories and mines around the country. He observed both industrial infrastructure and the workforce:
The lack of electrical power is the largest bottleneck to any industrial development of North Korea. I have visited provincial factories far from the capital, where workers sleep in the factory at night so they can wait for sudden electrical bursts. When the power came back and the lights went on, the workers jumped to their feet to operate the machines for a couple of hours until the next blackout.
The North Koreans, like their southern brethren, were hard workers—and it showed. Laborers sometimes stayed overnight and worked weekends without resting, sometimes even for weeks if an urgent project needed to be finished. Workers didn’t complain around us about long working hours. I observed this in my North Korean business partners as well as in the factory I was running myself.
When Abt took visiting ABB power station experts to a hydro construction site, he says they “were amazed and called it an engineering masterpiece.”
Most foreigners in the DPRK feel their interactions with North Koreans are carefully structured to minimize contact beyond what’s necessary to get their work done. Abt describes this aspect of life there:
Given the realities of the closed socialist system, most foreign managers were kept in a bubble, making it difficult to meet directly with North Korean customers, suppliers and authorities.
But, he writes, “I got lucky, because the state allowed me regular access to local businesspeople and customers.” Abt parlayed that “luck” into building relationships with Pyongyang hospital directors, drug wholesalers and pharmacy managers. And as he built his personal relationships, he built his business. Abt offers a primer on how to get “lucky” in the DPRK:
Part of my success owed to my willingness to work with local people, rather than pass judgment and get involved in politics. I built up a large network of contacts who helped shape our business for the socialist economy. Compare this approach to that of my predecessor, a close friend of the British ambassador, who was a staunch advocate of regime change. He didn’t get access, of course. While I could name off-hand the family background of my staff, he did not even know who the party secretary at PyongSu was—and a good relationship with that gate-keeping official is key to success.
Abt gives the reader a sense of what it’s like to live in Pyongyang as a foreigner. In one revealing anecdote, he tells us that late at night in Pyongyang, traffic police (and for James Church, traffic ladies, too!) wave down passing cars for a ride home at their shift’s end. One night, a policeman stopped Abt’s car in the dark, jumped in without looking at the driver, and as Apt took off, was horrified to see he was with a foreigner. The policeman picked a deserted spot to jump out, but Apt can’t be sure the incident hadn’t been observed—which would have reinforced suspicions about foreigners generally that he was a spy. Apt decided to tell his office the next day about the incident.
My staff quieted down and looked serious when I talked to them. A case as serious as this had to be reported by them to the government. I repeatedly asked them in the coming days if they had heard something about this case, knowing they could tap into their contacts in the police. After some days, I was told that the policeman could continue his work but that he would certainly be more careful in the future when stopping cars. It’s highly likely that he underwent some very unpleasant scrutiny and self-criticism sessions.
The capitalist who went to Pyongyang to make his living was affected personally by the currents in economic policy in the 1990s and 2000s, and his treatment of the various institutions and personalities at play is particularly interesting. Abt recounts a message given him of the wrong path taken:
After a meeting in early 2005 with one of North Korea’s largest business groups, the vice chairman walked me to my car and lowered his voice. “Lengthy discussions on the course of the economy took place at higher echelons of our party in the recent past,” he whispered, “and the old conservative guard asserted itself this time. Business people just need to be more patient now.” Obviously, he was aware that there was a period to come that would make business life tougher for everybody. But he was optimistic that this was a passing phase: the course of the economy was, surely and predictably, going to change again later. And the change was set in motion, after the “old guard” became too zealous in its ruinous currency reform.
Minds are often pre-set when it comes to North Korea. There’s little varnish in Abt’s book, and passages in turn will irritate virtually every reader of every nationality in every mindset on the subject on the DPRK. That’s a good thing. The conclusions of this Swiss capitalist who chose to make a living in the North offer a better way forward for the U.S. and for the DPRK, but involve choices that, much like other parts of this excellent book, neither are likely to find very palatable:
Pyongyang is not a mafia state, and cornering a country is ethically more questionable than engagement. Foreigners engaging with North Koreans are change agents. The North Koreans are confronted with new ideas which they will observe and test, reject or adopt. As the French economist and writer Frédéric Bastiat once said: “When goods do not cross borders, armies will.”
In the mid- to long-term, the DPRK cannot survive without true economic reforms, and the party knows this. If it refuses them, it will collapse as badly as the socialist countries in Eastern Europe did two decades earlier.
While many outsiders may see the country as “stuck,” A CAPITALIST IN NORTH KOREA depicts a society in motion—changes in gender relations, values between generations, government functions such as the public distribution system, attitudes toward foreigners and foreign investment, relations with China, practices and policies in agriculture, how markets operate, how people find their housing, how companies find their offices, and how people find their jobs.
Abt’s story will fascinate generalists and specialists alike. Photographs he took around the country appear throughout to show the North’s glitter and grit, and his narrative takes us where the shutter cannot. If understanding the DPRK factors into your job description in any way, and you haven’t spent seven years recently on the ground there trying to figure the place out so you can make a euro, A Capitalist in North Korea is a must-read.
–Jeff Baron, 38 North: Informed Analysis of North Korea, U.S.-Korea Institute at the Paul H. Nitze School of Advanced International Studies (SAIS), Johns Hopkins University
 Abt explained that the state in 2006 had closed a Chinese-run pharmacy which had located itself right in the entrance to a state-owned hospital. He took this as a warning from the authorities not to compete directly against state enterprises.
“This inside account of life as a Western businessman in North Korea is uniquely first-hand and up-to-date. Combining general insights and precise examples drawn from seven years as a foreign businessman in Pyongyang and from his interaction with the North Korean elite and middle class, Felix Abt supplements and balances important works on the suffering of ordinary North Koreans during the great famine of the 1990s and on the dangerous nuclear gamble played by the country's leadership. The author offers a multifaceted insight into a facet of reality in North Korea that is often either not seen or deliberately ignored in the West. This book challenges many of our views of an allegedly isolated and static country. It is a must-read for everyone who is seriously interested in understanding important aspects of the inner dynamics and the development of North Korea in the 21st century.”
–Rüdiger Frank, North Korea expert and economics professor, University of Vienna.
Rüdiger Frank was recently appointed Co-Chair of the North Korea Advisory Board set up by the World Economic Forum (WEF), famous for its annual convention in Davos, Switzerland where the world's top business leaders meet. The Advisory Board is aimed at fostering dialogue with North Kora and providing advice and support for its economic development.
“Very few Westerners can match Felix Abt's depth of hands-on business experience in North Korea. Not only similarly adventurous would-be investors and traders in the 'Hermit Kingdom' but also members of my own fraternity of Pyongyang-watchers will want to peruse his useful new book for the otherwise unavailable details and unique insights it provides. Don't look for apologies here. The author strongly believes, and argues, that the use of international sanctions to isolate the country from the global economy is a counterproductive policy.”
–Bradley K. Martin, longtime Asia news correspondent and author of Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty.
“Before there was Orascom there was Pyongsu Pharmaceutical Co. In this book Swiss businessman Felix Abt discusses a cross section of topics related to North Korea, a country about which the author has gathered a great deal of information and business know-how as one of the country's first western resident investors and social entrepreneurs. The strongest parts of the book are those that deal with the author’s first-hand experiences in solving problems that come along with establishing and running a firm that produces high-quality pharmaceuticals in North Korea. Although many expected and unexpected obstacles business persons must address in the areas of operations, logistics, management and finance within the DPRK are discussed, the book is also peppered with interesting anecdotes and stories about cultural and private life in the DPRK that do not typically receive attention in the western media (at one point the author offers a North Korean joke about adultery).”
–Curtis Melvin, blogger, North Korea Economy Watch.
“Felix Abt’s new book, “A Capitalist in North Korea”, is a precious account of a long-term resident of the Hermit Kingdom. Some readers may disagree with author’s conclusions but everyone will find the content of this book fascinating. The book is destined to serve several generations of readers. These days, occasional travelers and business entrepreneurs will benefit from it but, as time passes by, economists, sociologists and historians will study this book as a rare perspective on the tragic episode of the Cold War in East Asia.”
–Leonid Petrov, lecturer in Korean studies, University of Sidney.
“In certain respects, this book may be compared to Peter Olszewski’s Land of a Thousand Eyes. The Subtle Pleasures of Everyday Life in Myanmar (Crows Nest, NSW: Allen & Unwin, 2005). Both authors describe their colorful personal experiences in countries whose coverage in the Western mass media has been mostly confined to stories about the repressive practices and military ambitions of their ruling autocrats, and about the political, social, and economic hardship suffered by ordinary citizens. Both Abt and Olszewski seek to counter these simplified and often sensationalist images by more or less skirting subjects of a political and security nature, and instead drawing attention to other, less martial aspects of life in North Korea and Burma, such as cultural traditions, gender relations, social customs, education, forms of entertainment, and – last but not least – the art of making business.”
–Balázs Szalontai, author, Kim Il Sung in the Khrushchev Era.
"Felix Abt – no better guide to the real North Korea. - Many people pontificate on North Korea, usually in lurid and extravagant ways. Many who do this have never been to the country, or have only a fleeting experience of it. It seems as if there is an inverse relationship between actual knowledge and the fantasies that many self-proclaimed ‘experts’ construct. This is where Felix Abt is so different. There are four reasons why he deserves our attention.
Firstly he has spent more time in North Korea than perhaps any other foreigner. Secondly there is the nature of his involvement. Ambassadors, some of whom are prone to write pretentious books about the countries to which they have been posted, have very little engagement with ordinary people and the realities of life. Even aid workers, some of whom spend a considerable time in country, and often travel through it quite widely, have an experience limited by the nature of their job and its functions. Businesspeople, especially those such as Felix Abt who have operated at a fairly grass-roots level are another matter. They deal with Koreans on an equal basis, not as His Excellency the Ambassador, or as Ms Aid Worker who dispenses money and advice. Businesspeople must work their way around bureaucratic obstacles and cultural barriers. They must deal with the frustrations of a stressed infrastructure. They have to cope with the sanctions that have so devastated the economy. They, and their Korean counterparts, have to struggle to get things done and products manufactured and into the market in very practical ways. In doing so they share the challenges, and achievements, of Koreans in a way that foreigners seldom do. Thirdly, as president of the European Business Association in Pyongyang, and initiator of the Pyongyang Business School, he has had extensive contact with foreigners, and Koreans, who share those experiences. In a sense it is not one pair of eyes we are looking though, but of a number. Fourthly, Felix Abt has had experience in other countries, including Vietnam, so can bring in a comparative perspective."
–Tim Beal, Author of North Korea: The Struggle against American Power. London and Ann Arbor: Pluto Press, 2005. Crisis in Korea: America, China, and the Risk of War. London: Pluto, 2011.
"North Korea has often been in the headlines for the reasons we know: nuclear issues, Kim Jong Un’s wife, lack of internet. However we knew a little about the real daily life of North Koreans (not the one described by journalists who have been one time in North Korea) and the economical reality of North Korea. Felix Abt, one of the few foreigners who lived in reclusive North Korea for 7 years, tried in his book to give an overview of these issues. According to me he virtually succeeded in it. The result is terrific: We can not only approach and taste the crunchy daily life of North Koreans and as a a cherry on the cake, we can better understand the real economy of North Korea. What’s more, the author is not only a writer, but above all a manager whose approach will let us read some details related to business in North Korea that we will not find anywhere else. Therefore, I consider that the book of Felix Abt is a must-read for all those who want to get an objective view on North-Korean issues."
–Nicolas Levi, researcher at the Polish Academy of Sciences and an analyst on Korean Issues at the Poland Asia Research Center (www.polska-azja.pl). Holding a PhD regarding the North-Korean leadership, his personal website (nicolaslevi.wordpress.com) focuses on North Korea issues.
"This is the best book about the DPRK to come out; althouth that's not much of a compliment considering the rubbish filling the bookstores nowadays. The author, Felix Abt, was not a leftie looking for a socialist paradise, nor a journalist earning his/her hire with breathless horror stories, or a diplomat who has to be careful what he says, nor an evangelist bent on saving souls. He was (and is) a hard-headed businessman. A Swiss national, Abt spent seven years in North Korea, leaving in 2009. He managed several Western businesses, being involved in pharmaceuticals, mining and bottled water, traveled all over the country and had contact with senior economic officials as well as dozens of ordinary people. He also set up the European Business Association, which was the first foreign chamber of commerce in Pyongyang, and the Pyongyang Business School. According to Abt, the North Koreans are eager to learn Western ways of doing business and he received wholehearted cooperation from both his workers and the authorities. It was not all smooth sailing, he admits, but adds that the problems he encountered in the DPRK were no worse than those bedeviling anyone trying to run businesses in a foreign country. And he should know, having worked in a number of different countries. Abt doesn't mince his words. He criticizes foreign NGOs in North Korea for creating a 'culture of dependence,' when what the North Koreans need is the investment and training that only business people can provide, to help them stand on their own two feet. He also lays the blame for much of the North Koreans' suffering fair and square where it belongs: politically motivated foreign sanctions imposed to strangle the North Korean economy. He says, 'it is engagement, not isolation, that can lead to the improvement of human rights.' He also reproduces a telling quote from the French economist Bastiat: 'When goods don't cross borders, armies will.' Don't waste your time and money on any other book about the DPRK. Read this one."
–Paul White, DPRK Business Monthly, Volume III, No. 11, December 2012
"Des expériences édifiantes d'un entrepreneur suisse qui a vécu sept années à Pyongyang et y créa l'Association des hommes d'affaires européens, une Business School, des co-entreprises dans les secteurs de l'industrie extractive, la pharmacie ou encore l'embouteillage d'eaux minérales (ex. Félix Abt : A Capitalist in North Korea, Kindle Book, 2012, 17019 KB)."
Francois Guilbert, Le Huffington Post, France, en association avec le groupe Le Monde