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Felix Abt is the author of A Capitalist in North Korea: My Seven Years in the Hermit Kingdom.
2015 has been a record year for the publication of books about North Korea. Many of these deal with the horrific crisis years of the ’90s, characterized by mass famine, poverty and oppression. North Korea is portrayed as a country stuck in the past; laboring under brutal repression, poverty and hunger.
North Korean political activists also claim that North Korea’s government still rigidly and violently suppresses all foreign ideas and information, saying citizens found watching foreign films are summarily executed and their close family members shamed and demoted in the social hierarchy. Vociferous defectors like Jang Jin-Sung categorically state that North Korea cannot be reformed and assert that change can only emerge bottom up, but never top down.
Yeonmi Park, another famous defector and author, talked about an ongoing “gulag with dead bodies floating in North Korea’s rivers and piling up in the streets.” If these horrific depictions are accepted as truly representative of contemporary North Korea, it would seem there is no possible alternative to systematically isolating it and imposing strangulating sanctions until it collapses. Human rights issues are similarly used as to bash North Korea, not with the aim of their amelioration, but to be employed as a tool in an uncompromising fight against the loathed regime.
The economy has expanded substantially over the past 15 years, thanks largely to a burgeoning ‘informal’ economy
Yet today’s North Korea is very different from the country of the ’90s. The economy has expanded substantially over the past 15 years, thanks largely to a burgeoning “informal” economy. Poverty has dropped and, equally visible, a middle class has emerged. A poll of North Korean defectors who recently arrived in South Korea concludes, highly significantly, that: “More North Korean defectors in South Korea are reporting they enjoyed a higher standard of living in North Korea.”
Meanwhile Reuters reports: “The servi-cha (privately run vehicles for goods trade and distribution) are another example of a growing tolerance for private enterprise within North Korea.” Another media report adds that a “startup scene is quietly brewing in North Korea — with the blessing of the government.”
Since the 2000s the state has tolerated more private farming and trading, which resulted in substantially more food on the table of ordinary North Koreans. North Korea’s cautious reforms are paying off. Unsurprisingly, the rates of poverty and starvation have plummeted.
While there may be occasional clampdowns on consumers of non-authorized foreign films and books, nothing happened to any of my North Korean acquaintances who watched foreign movies while I lived there, and such suppression has become increasingly rare. The North Korea historian Andrei Lankov concludes that repression has significantly reduced over the last decades: “The average North Korean has (fewer) chances to get arrested for a political crime than 15 or 25 years ago.” Joseph Kim, another famous defector and author even goes as far as claiming that “North Korea’s youngsters watch Hollywood films, South Korean soap operas and pornography.”
That more foreign influence is penetrating North Korean society is plain to see and obviously tolerated by the government. This summer, visitors noticed, for example, a photo stand showing private photographers’ pictures of North Koreans with Winnie the Pooh dolls right outside the main revolutionary museum in Chongjin. In Pyongyang, there was a shop reportedly selling prohibited foreign cultural icons such as Spongebob Squarepants, Hello Kitty and Garfield soft toys and schoolchildren could be seen in shirts boldly emblazoned with “Haribo.”
The engagement of ordinary North Koreans in these reforms is beyond dispute. But is the engagement of the elite possible, and necessary, to promote further change for the better? In a country where the leadership wields considerable power to both prohibit and allow changes, the question is highly pertinent. And there is little uncertainty that the leadership is still firmly in power: “63 percent of North Korean defectors believe leader Kim to have majority support from people within the country.”
Undoubtedly, I wouldn’t have been able to co-found North Korea’s first business school: that would have been considered a subversive enterprise aiming to overthrow the socialist system just a few years earlier. Nor could I have set up the European Business Association, the first foreign chamber of commerce in Pyongyang, as it was previously considered a foreign conspiracy. Similarly, advertising was formerly banned and considered anti-socialist, but I was one of the first to utilize it extensively. Even the setting-up of our pharmacy chain would have been unthinkable and considered an unpatriotic sellout to foreigners, out to conquer North Korea’s pharmaceutical market. Other “firsts” I helped to initiate and revolutionary by North Korean standards included the first foreign-invested software enterprise and first e-commerce, which could not have been established without any engagement from the country’s decision-makers.
An essential objective of mine was to further a welcoming investment and business environment that included the development of a law-based state, a level playing field for all businesses, state-owned and private, big and small, Korean and foreign; and to liberalize the economy to allow markets to expand and grow. To effect this, intense lobbying was (and is) necessary to convince party and government leaders that corresponding changes are necessary and in the best interest of the country.
One of the arguments I used in Pyongyang was that the North needed to build up a strong competitive economy in order not to be rolled over by the South. A scenario of reunification leading to the North becoming a giant sweat shop packed with cheap North Korean laborers, owned by South Korea’s few chaebol business conglomerates, exploiting its vast metal and mineral wealth for nothing, was not one the North wanted to experience.
Interacting with North Koreans at all levels helped to change minds and behavior patterns. Recruiting staff, accessing domestic customers and suppliers, and undertaking product promotion and advertising in the local market were very difficult, near impossible, at the beginning. After countless meetings and discussions with authorities it became much easier – déjà vu of the experience of business pioneers in China in the ’80s and Vietnam in the ’90s.
The mindset of staff and suppliers had to be changed too. Without the consent of the government this would have been impossible. I tried to instill an obsession for quality and service among these stakeholders, in order to grow, and to take market shares from our strong state-owned competitors. I also promoted critical thinking among my managers and staff to help us make better business decisions. The pharmaceutical factory I was running was not only recognized by the government as the model company for the pharmaceutical industry, it was also the first to reach WHO-recognized GMP standards (which led us to share know-how with competitors to raise their quality and safety standards), and it became the first North Korean enterprise ever to win tenders in competitive bidding against rivals in Asia and Europe.
North Korean business partners had also to learn that agreements needed to be respected and that if they wanted to do business with us, ethical business practices were required. At the business school I co-founded and ran, we had a course on Corporate Social Responsibility (CSR). Factory bosses learned that they could only become eligible as part of the supply chains of multinational corporations if staff were correctly remunerated and treated, and if the production was environment-friendly. To help factory directors to adopt CSR standards I hosted a round of dinner talks for their superiors and senior party and government officials.
Included in the talks were recommendations for a participative management style, rather than the more authoritarian practices that were pervasive in the country
For companies I represented like Dystar, a global dyestuff leader, I organized technical seminars for potential customers. Directors, technicians and workers of garment factories from across the country came to Pyongyang, most of them for the first time ever, to meet with foreigners to discuss state-of-the-art garment production. Included in the talks were recommendations for a participative management style, rather than the more authoritarian practices that were pervasive in the country.
Additionally, I refused to sell mining equipment to underground mines with poor safety records and practices. The companies I represented would not allow their technicians to be sent to unsafe mines and so mines were obliged to upgrade safety standards for their workers. To help facilitate this we were able to supply safety equipment necessary to help improve the conditions.
If you engage and are present in North Korea, you can understand the philosophy and practices of North Koreans and you can exert a powerful positive influence. Coercion is a poor agent of change, but engagement is. Foreigners, be they diplomats, NGO workers, business people or even tourists, always leave a mark on the people’s minds. Speaking with extensive first-hand experience, I know that positive, intense interaction can lead to many changes. While some of the engagement and conducting of business in North Korea may be seen to “prop up” the regime, it, more importantly, also helps to transform it. The confirmation of the potential success of this approach can be clearly seen in the emergence of China and Vietnam, which was precisely because of such a strategy and of the opening of business to outsiders.
Further historical evidence of the success of engagement over coercion comes from the former USSR: of the first four Soviet students (from elite families) who studied in the West during the Cold War in the ’50s, two became senior advocates of glasnost and perestroika. Yakovlev was one of them. He became party secretary and was a close ally of Gorbachev. It was not Gorbachev, but Yakovlev who was the architect and the driving force behind the Soviet Union’s breathtaking changes.
Engagement works, yet the West has persisted over the last 60 years with its policies of sanctions and coercion. These have failed to achieve any improvement in the opening up and development of North Korea, but have made the lives of ordinary North Koreans more difficult and served to make the regime more insecure, defensive and resistant to outside influence.
Main image: Ro Tu Chol, chairman of North Korea’s State Planning Commission and deputy prime minister in charge of economic affairs, listens to Felix Abt and discusses North Korea’s business and investment conditions.
All images courtesy of Felix Abt.