North Korea is perhaps not the most obvious place to do business.

Its ban on private markets, its shrinking economy and reputation as a blustering relic of the Cold War would not normally make it the first choice for foreign firms.

And new US sanctions against Pyongyang announced Wednesday by Secretary of State Hillary Clinton during a visit to Seoul have not helped the North's cause.

Clinton said the measures, in response to the sinking of a South Korean warship, were designed to prevent the regime from bankrolling its atomic programme or spreading nuclear arms.

But a tiny band of entrepreneurs from the west are still willing to take a chance and do business in North Korea.

A handful of European companies are exploiting North Korean expertise in film and cartoon animation, videogames, software and map digitisation — even the making of replica paintings.

Leading the trickle into North Korea is Paul Tjia, founder of Rotterdam-based outsourcing company GPI Consultancy, who is organising a trade trip for interested companies in September. It will be his fifth visit.

"The main challenge is finding accurate information on business opportunities, and for this reason, participation in a trade mission is useful," Tjia told AFP.

"North Korea is a rather isolated country, and the general opinion is that more international trade and investment will improve the situation."

In tough economic times in which companies need to cut costs, North Korea "is an interesting option" says Tjia.

But there are several issues that could put off any potential investor.

South Korea in May announced a ban on most trade with the North after a multinational investigation concluded that a North Korean torpedo sank the Cheonan, a South Korean warship, in March, with the loss of 46 lives.

The country suffered famine in the 1990s which killed hundreds of thousands and it still grapples with severe food shortages.

A currency revaluation last November, designed to flush out entrepreneurs' savings, backfired disastrously. It fuelled food shortages as market trading dried up and sparked rare outbreaks of unrest.

The United Nations also tightened sanctions following the North's missile launches and nuclear test last year.

Yet all this does not discourage some bold businessmen.

There are "around a hundred" western ex-pats living in Pyongyang, says Volker Eloesser, a German national, who set up an IT company in North Korea in 2007 and now lives there.

Sanctions do not stop companies from being able to do business that is not weapons-linked, he says. His firm, Nosotek, makes entertainment software and games for the European and Chinese markets.

"The first time I came was in 2005," he told AFP. "I was impressed by the opportunities, the workforce here is something like a raw diamond.

With many well-trained IT engineers, North Korea's workforce "is definitely much more skilled then in other developing countries," he said, adding that the education system has some special classes for the highly-skilled.

"And, as working for overseas customers is high prestige, foreign customers can get easy access to the best engineers.

"The money our company earns is mainly used by our employees for food and items of daily necessities, not for the army or any kind of political activities."

He says that "less than a dozen" western companies have offices in North Korea, and many firms that do business in Pyongyang keep the fact quiet, fearing negative publicity.

North Korean leader Kim Jong-Il, who has claimed in the past to be a computer expert, ordered schools to teach information technology from an early age and the country has a rich vein of skilled IT workers.

Yet North Korea is the world's most isolated country and works hard to remain so — keeping so-called spiritual pollution from subverting its socialist system.

This can cause a major problem for western firms, as most people do not have any unrestricted access to the Internet, which can severely hamper even the brightest IT expert.

Eloesser says the main attractions of North Korea are its low labour costs for highly skilled workers and "the first-mover-advantage into a new, almost virgin market".

"And, honestly, some people just come for curiosity and adventure," he said.

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