Coke in Pyongyang: the Non-Story
If you watch North Korea, there was a much bally-hooed Forbes piece on Coca-Cola in Pyongyang of a few weeks back. A close read of that story suggests that it's hard to figure who the truly gullible are: Forbes’ Gady Epstein, the North Koreans or the North Korean watchers in the US. We vote for the last of these, but can’t rule out that it was the Norks who got suckered. Wouldn’t that be nice!
The story quotes Park Chol Su, the president of North Korea’s Taepung International Investment Group, as warmly welcoming “the Coca-Cola delegation, with Mr. Schulze as [the] leader.” Park gushes to Epstein: “Coke is strategic. I hope that Coke will serve as a bridge for relations between the two governments.”
Wait a second. We know what the Taepung group is and have blogged on its place in the recent “reform” effort. Far from reflecting an interest in reform, it appears to be a body staffed up with regime heavyweights hoping to skim their 10%+ off of any investment deals.
But the real question is “who is Gabriel Schulze?” It turns out that he is among that great rare breed of ultra-risk takers who willing to gamble on weird deals in out-of-the-way places.
The only problem is that his links to Coke are dubious to say the least. Epstein is worth quoting because he has done his homework:
“[Schulze] has been surveying this forbidden market on the strength of informal connections to Coke and one of its bottlers, SABMiller, but without either company’s top-level approval. SABMiller sent a regional executive at Schulze’s invitation to the May meeting with Taepung Group, saying in a statement for this article, “however, we have no plans to invest in North Korea.” Coke turned down a request from Taepung Group (via Schulze) to visit this summer, and distanced itself from the remotest hint of soft-drink summitry in Pyongyang with this statement to FORBES ASIA: “No representative of the Coca-Cola Co. has been in discussions or explored opening up business in North Korea.”
So just in case you missed it: Schulze has a pal in a bottling company; he is not authorized to speak on behalf of Coke; even a regional bottler is saying “no deal”; and Coke Central has completely denied any interest at all in North Korea. Oh, and incidentally every other deal that Schulze has done with the North Koreans—including some equipment financing in 2008—would now be illegal under the unambiguous sanctions order that Obama issued earlier in the year; we provide the details in several blog posts (here and on Executive Order 13570). Needless to say, a Coke investment in bottling--or even distribution--would be out of the question.
So the interesting question is really the breathy excitement that surrounded this non-story. The first thing to note is that while Epstein is thorough, he is also an incredible tease. The title of the story is “North Korea's Next Purchase: One Investor Hopes Coke Is It.” Well, maybe. But maybe Schulze knew perfectly well that a Coke investment was a non-starter and was simply stringing the North Koreans along with a tall tale based on thin connections. The real prize was probably in one of his other ventures.
But maybe the last laugh is on us, and Epstein and the North Koreans succeeded in getting otherwise smart people to think for a week or two that something was really going on.