DATE=8/28/2000 TYPE=BACKGROUND REPORT TITLE=NORTH KOREA MARKET OPPORTUNITES NUMBER=5-46926 BYLINE=HYUN SUNG KHANG DATELINE=SEOUL CONTENT= VOICED AT: ///// REPRINTING WITH CORRECT BKG NUMBER. ///// INTRO: The new thaw is relations between North and South Korea is stirring interest in the global business community. In the past few months North Korea has emerged from decades of isolation - slowly opening itself to foreign influences and business executives hope foreign investors. Hyun-Sung Khang looks at the prospects for making money in the world's most reclusive state. TEXT: /// ACT OF CHEERING, UNDER AND HOLD /// Ecstatic crowds greeted the South Korean President, Kim Dae-jung when he arrived in Pyongyang for his unprecedented summit with Kim Jong Il in June. /// BRING UP CHEERING AND OUT /// Global investors were looking at the crowds also -- with a more commercial eye. Jeffrey Jones, President of the American Chamber of Commerce in South Korea, says that North Korean is one of the last untapped markets in the world. /// JONES ACT /// The opportunities to invest at this point are wide open because there's not much in there. There are very few foreign companies, which are operating. They have a relatively large population of approximately 25 million people, and an economy which is not developed at all. In terms of investment opportunities, it's white page waiting to be written. /// END ACT /// /// JINGLE FROM COCA COLA, FADE UNDER /// This Coca Cola commercial jingle heard on televisions and radios throughout South Korea could soon be heard in the North as well. Following the inter-Korea summit in June, Coca Cola - that icon of Western capitalism - delivered a symbolic truckload of the fizzy drink to North Korea. Neil Drewett, of the advertising agency Ogilvy and Mather, says if the North does decide to do business with the outside world, multinational companies will lead the way. /// DREWETT ACT /// Companies like Coca Cola and Proctor and Gamble like to be early entrants into any developing economy, because they are always looking for new opportunities for growth. They are looking for opportunities for manufacture. And also companies in the area of consumer goods operate in a very competitive way against each other. It's very likely that if a Proctor and Gamble went into North Korea, a Unilever would follow. If a Coca cola went into North Korea, a Pepsi would follow, that's the competitive set of large multinationals. /// END ACT /// Any would-be foreign investor into North Korea may well work hand-in-hand with one of South Korea's large industrial conglomerates, otherwise known as the "chaebols". The chaebols have been a cornerstone of South Korea's economic growth in the last fifty years, but are now facing challenges from the Seoul government, which wants to see greater market competition. As Neil Drewett says, while the authority of the chaebols may be reduced in the South, their role could well grow across the border in the North. /// DREWETT ACT TWO /// We are talking about Koreans working with other Koreans and the model of development in the 1960s and 1970s is very Confucian. It is based on hierarchy and it's based on a command economy. /// END ACT /// Despite the North's new open attitude, companies are aware of the many obstacles to entering the North Korean market. David O'Rear of the Economist Group points out the hurdles. /// O'REAR ACT /// Like pioneers crossing the American Continent, there's no law, there's no infrastructure, there are no banks, there are no lawyers, there are no accountants. However, there is a very, a very large, very hostile bureaucracy that is going to have to be dealt with. /// END ACT /// It is these difficulties which make foreign companies hesitate. Many foreign investors have been stung by their experience in other newly opened markets and are yet to be convinced that the world's last Stalinist state is ready to open shop just yet. (signed) NEB/HK/HSK/JO/ rae 28-Aug-2000 10:02 AM EDT (28-Aug-2000 1402 UTC) NNNN Source: Voice of America .
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