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Doing business in North Korea

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Building a city
  • Met with North Korean leader for four hours in August to release an employee
  • Hyun: "He had lost a lot of weight ... (he) still had a good memory"
  • Hyundai runs with North Korea the Kaesong Industrial Park

SEOUL, South Korea (CNN) -- As the chairwoman of South Korea's Hyundai group, Hyun Jeong-eun, faces business challenges few other executives can imagine.

The former housewife took over the company in 2003 after the death of her husband, who faced allegations he transferred millions to North Korea to help arrange the historic 2000 summit. In addition to managing massive operations in finance, manufacturing, and transport, she oversees operations in the secretive state of North Korea.

Subsidiary Hyundai Asan has led efforts to build economic ties between the North and South, so Hyun is not only managing a multinational through a recession but also through global tensions over the North's nuclear program.

Hyundai Asan has invested $272 million in North Korea, in projects like the Kaesong Industrial Park and tours to Mount Kumgang.

Hyun traveled to North Korea in August to secure the release of a Hyundai worker who was detained on accusations he insulted the government. While there, she spent more than four hours with the state's reclusive leader - Kim Jong Il -- who was said to be recovering from a possible stroke.

As part of CNN's Eye on South Korea, Kristie Lu Stout sat down with Hyun at Hyundai Group's Headquarters in Seoul. Here are edited excerpts from the conversation.

CNN: What was your impression of Kim Jong Il as a man? Does he look healthy? Was he mentally very aware?

Hyun: When I first saw him I thought he had lost a lot of weight than before, but once we started talking, his voice was strong and he talked a lot about things that had happened in the past. He talked about my father-in-law [Hyundai Founder Chung Ju-Yung], my husband and a lot of things from the past, and it seemed like he still had a good memory and had no issues with carrying out his work. He seemed to be in good health.

When you were talking with Kim Jong Il, was it your impression that he wants more investment from South Korea? That he wants to do more business with your country?

He showed a lot of enthusiasm. He said he hopes the North and South Korean government can talk things through so to have a lot of South Korean companies enter the North, and he also said that since they have the natural resources and the South has the skills to sell, if both sides work together he expects the North and South to prosper.

Is Kim Jong Il a tough business negotiator?

He seems to be very honest and straightforward when he speaks. So I believe that if direct talks with the leader Kim Jong Il are possible, a lot of good results will come out of it. I personally think that if President Obama and Kim Jong Il meet, things can be worked out quite easily.

The Kaesong industrial complex, the joint facility run by North and South, what is the future of that complex?

Currently we are only operating the first block, but I am sure that once things get settled down by both governments, we have many plans for the second block as well. A hotel needs to be built. We need to have hospitals, post offices, so I am expecting gradually that we will expand business there.

Kaesong Industrial complex has North Korean workers. What is it like to manage them? Do they have the skills? Do they understand the technology?

North Korean employees work very hard, and I heard that women work especially hard, so all the factories want to take in the female workers. In the beginning, because the workers hadn't used things like sewing machines before, I heard they would come to work an hour early to practice and that they work with great enthusiasm and work very hard.

North Korean workers are also good at holding small meetings and they talk things through during those meetings. So the factory owners seem to be very pleased with it all. When you have a factory in China, if there's a problem it's hard to fix it because of the language, but in this case, since you can communicate freely, the employers find it much easier to do things.

Why invest so much in North Korea? What is the upside for Hyundai Group?

It all started with the project of my father-in-law. Because he was born in North Korea he always had a great love towards North Korea. He met some of his relatives there. I think personally, he was saddened by the economic poverty that people were experiencing in that country.

So this isn't a business mission, it is a personal mission?

I think for my father-in-law, a lot of it was started for personal reasons. For me, of course I do it for business, but also because my husband experienced bad things due to operations in North Korea, I feel like it's my duty to continue this business to ensure his death does not go to waste.

Is the South Korean government supportive of Hyundai groups operations and interests in North Korea?

Not really at the moment because of the nuclear issue at the middle. Things are not going that smoothly at the moment. But we are hoping in the future that they will help and cooperate and be supportive and I guess they will.