Felix Abt’s "A Capitalist in North Korea: My Seven Years in the Hermit Kingdom"

May 19, 2015 7:00 AM

There is a terrific picture in Felix Abt’s memoir of him with about two dozen of his employees, mostly women, at a company picnic. Abt’s bet is that these are the faces of the new North Korea. Let’s hope so.

As with the growing number of books written by those with extensive time on the ground in North Korea, Abt’s account combines three separate narratives. The first is the obligatory general introduction to the country, the compressed and often facile history required to frame the discussion. The second piece is the “daily life” segment. In Suki Kim’s account of her time teaching at PUST, daily life is a grind. Abt’s purpose, by contrast, is to humanize and it is clear he knew how to enjoy himself. Yes, there are the monuments, propaganda posters and security snoops. But the message is “life goes on.” Most North Koreans are like the rest of us in basic ways: working, fretting over their children, worrying about getting ahead.

More than that, though, Abt argues that things are generally not as bad as frequently portrayed. The book is peppered with asides to the likes of Barbara Demick, Andrei Lankov, Melanie Kirkpatrick and others that circumstances are changing, and rapidly. Although Abt clearly knows better, this effort to bend over backward—to normalize—generates some jarring claims. At one point, Abt draws a comparison with South and East Asian maids in the Middle East and reaches the conclusion that North Koreans are better off than those still more wretched. Why is that tortured comparison relevant? At another point, he writes that “North Korea, despite its communist system, is fundamentally not distinct from other East Asian countries like South Korea and Japan.” Huh? And as for human rights, the line is generally “well, I didn’t see it.”  Motivated reasoning and what I call “the Pyongyang Illusion” can clearly cloud the judgment.

Nonetheless, this book is worth reading because it captures quite well the gradual, unplanned process of what might be called “reform from below.” Abt—a Swiss national—spent seven years in North Korea from 2002 as the agent for a European group and trying his hand at establishing a business school and other ventures. In 2005, he took over leadership of Pyongsu, a pharmaceutical venture owned largely by a Hong Kong based family business but with other European investors as well. Pyongsu had a limited number of its own products and had to rely on marketing of foreign drugs. It thus competed with domestic producers with distinct cost—and political—advantages: lower salaries, lower electricity and water bills, zero land fees, subsidized raw materials, at least when available at all.

Abt had to devise a strategy not only around these constraints, but around the effects of sanctions. As we have often pointed out, multilateral sanctions have formally left the commercial trade intact—at Chinese insistence—and for many products, including luxury goods, the sanctions are often leaky.

But Abt reminds us that the sanctions in fact do have some effect because of restraints on dual-use technologies, including things as simple as water filtration systems and basic chemical regents. Financial constraints are another problem. He walks through how the BDA and Foreign Trade Bank sanctions swept up purely commercial ventures while leaving illicit networks intact. He also notes that some investors—such as those in an IT venture called Nosotek—faced the PR risks associated with having North Korean suppliers, even if the products in question were not formally banned (an iPhone app, medical software, a Wii game).

Abt details the complexities of explaining such business basics as “marketing,” both to the government and potential franchisees, but also the challenges of supplying donor organizations because of high product and production standards. Abt found both the WHO and the Swiss aid machinery annoying for their lack of flexibility.

The central message of Abt’s book is hard to discern because his own optimism is often undercut by evidence he himself presents of the extraordinary difficulty of working the system. The book outlines an array of ventures that ultimately failed, and it is a little facile to say they did so because the foreign partners lacked Abt’s acumen. Nonetheless, he concludes that there is more technocratic thinking in the government than is apparent and that investment and trade networks continue to broaden, not only from China but from Europe as well; Americans, in particular, don’t see how porous the country is becoming to influences from elsewhere. Above all, the central truth of Abt’s book is that North Korean managers and workers are completely capable of open-field running if just given the crack of an opening for doing so. That is what makes the North Korean story both hopeful and depressing at the same time.


Felix Abt

Thanks for the interesting book review. I'm not sure if I suffer from the "Pyongyang illusion” since I also traveled to and worked in places far from the capital where I spent my nights during cold winters in guesthouses without power but with candlelight – how romantic! – and without running water but buckets with ice-cold water for my showers – how refreshing! Call me a victim of the “countryside illusion” (•‿•)

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Stephan Haggard Senior Research Staff

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