It was 2004 on the Chinese border when Australian businessman, James Perri, boarded a train. The act itself was hardly unusual, but the destination certainly was – ahead of him lay an uncommon business trip across the Friendship Bridge into North Korea.
Four years later, after buckets of blood, sweat and relationship building, the Stalinist country was plugged into a 3G phone network for the first time in history. But what of the Melbourne man that quietly brought it all together?
Perri as a businessman is almost ethereal. His listed addresses range from Singapore and China all the way to Australia, but almost all are serviced offices or accountants. His colleague and current NBN Co project manager, Arvin Fardsavar, is willing to confirm what he’s done but refuses to comment further unless he’s present.
Yet still, Perri does what needs to be done and lands deals with Governments from Indonesia to Sri Lanka and beyond.
The hard sell
This story and deal begins in 2003. The wealthy elite of North Korea had access to cell phones and all ran smoothly till a suspected assassination attempt on the country’s elusive leader, Kim Jong-il. Over 160 died and 1300 were wounded in the massive explosion that ripped through a railside community – remote detonation by mobile phone was suspected as the trigger.
The reaction was swift – all mobile phones were banned throughout the totalitarian state. While smuggled Chinese cells phones were able to get reception within 10km of the border, those caught with the devices were quickly and severely punished.
But such was the demand for mobile technologies that by 2004, Perri was told during meetings in China that North Korea was looking for a solution. After many conversations and plenty of business meals (vital to doing business in both countries), Perri’s company, Prime Land Group, made the move and started talking to people in the DPRK.
“It took us at least four years to really get anywhere,” he said. “Like anything you need to establish trust and good friendships, understand the people, the culture, the communities and what they’re all about.”
Perri is the first to acknowledge his role is less about building the solution and more about finding companies willing to deal with his unconventional and occasionally controversial clients.
“We’re not necessarily the face on the front, we’re the quiet achievers you could say,” he told ARN. “Most of our business is quite private and we want to maintain that… because we do deal with various different governments and countries and the core of our business is to make sure we maintain a good relationship and trust.
“From that you establish good friendships and relationships, which lead to other things and we need to maintain that to continue our business growth.”
Perri’s influence certainly spreads around the world, with Victorian Premier, John Brumby, just one of the politicians pictured shaking hands with him on his company’s website. Another VIP found smiling for the cameras is the flamboyant Orascom CEO, Naguib Sawiris.
Go West! ... to Egypt
In 2005, Perri signed a contract with the dictatorship to hold its 3G mobile spectrum license for 25 years. Part of the deal was to involve an operator that wasn’t linked to a country the DPRK considered hostile.
Based in Cairo, the Egyptian conglomerate, Orascom Group, had built a reputation for creating profitable mobile carriers in far-flung countries like the Central African Republic and Zimbabwe.
However, it was two long years later that Orascom signed a memorandum of understanding to build the first 3G mobile network in the capital, Pyongyang. It invested $US400 million over three years for a 75 per cent stake in Koryolink, with the rest given to the State-owned Korea Post and Telecommunications Corporation (KPTC).
Rumours abound that part of the deal included spending $US115m for a stake in the state-owned Sangwon Cement company and refurbishing Pyongyang’s infamously ugly Ryugyong Hotel, also known as the “Hotel of Doom”, though the company denies this.
Finally on December 15, 2008, 3G services were switched on. Propaganda footage soon flowed forth showing queues of eager North Korean stepping up for new handsets.
But on the ground, the reality was that the sign up rate was slow – unsurprising in a country where the average monthly salary is under US$50 a month and chronic food shortages still exist.
“SIM cards initially cost €450 and the Koryolink handsets were probably another €150,” University of Sydney lecturer and North Korean expert, Dr Leonid Petrov, said.
Paying the price
In a twist that defies the usual corporate paradigm, Orascom had to lobby the Government to let it reduce the price of handsets and now more than 180,000 active accounts are reportedly up and ringing.
“These days the prices are dropping and Koreans are generally very communicative,” Dr Petrov said. “Many North Koreans have two or three mobile phones. For them it’s a matter of survival.
“Initially, only companies could afford the price but now the most active part of the population and those who do market activities and private business all use mobile phones.”
What’s good for the locals is also reportedly very good for the bottom line of Perri and Orascom. The Egyptian telco reported total sales worth $US12m and an operating profit of $US2.8m before taxes in the first half of 2009. This rose to $US23.2m and $US18.7m, respectively, in the first half of 2010.
As for Prime Land Group, the secretive Perri refuses to divulge the contractual agreements held between any of the parties except to say it was definitely a financial success.
“I can’t really comment on that because it was a quite private and confidential agreement reached between my partners and one of the countries we’re dealing in,” he said. “In North Korea itself it’s been the biggest deal for us.”
Perri is relatively happy about where his company is and welcomes inquiries from investors willing to bankroll his projects in locations under various regimes around the world.
“With some of the things we’ve been looking at lately we’ve been looking to raise our own funds and do it ourselves,” he said. “That varies from telecommunications to infrastructure and development. As you can appreciate, the funding in this market is quite scarce so the investor opportunities are always there and we’re happy to discuss it.”
Despite North Korea’s notorious political instability on the global stage, Perri claimed doing business with the country was relatively straightforward once the language barrier was broken.
“It’s a country that still has a lot of uncertainty and that might lead to some companies to shy away from it,” he said. “But if we agreed to do something [with the North Korean Government] it eventually got done. For me that was a big indicator of their credibility so I couldn’t really fault them from day one and because of that we did what we did.”
The ethics of business in North Korea
But all this success does not mean North Korea is becoming a haven of cellular freedom. Locals continue to be tried and executed if caught leaking basic information like food prices and the Government has total access to any and all conversations made on the 3G network.
“The calls are framed and limited to local calls only,” Dr Petrov said. “Sometimes you can’t even call outside the province. They confiscate mobile phones from foreigners because they’re afraid someone may lose or give it on to a North Korean who might use it to pass information to or get information from the outside.”
Perri is circumspect about the ethics of dealing with a country that has been sanctioned numerous times. He feels that the technology has helped the locals and that North Korea is a country trying to move its people forward.
“Everyone has to look after their own country as China does and North Korea. So I don’t see any wrong-doing there, it’s the way to go,” he said. “In the end I was happy to get the deal across the line not only from a business point of view but for the people because it was going to help the country dramatically.
“I’ve visited North Korea many times and you get to know quite a lot of people and see how everyone lives in that country. I think they deserve better.”