North Korean Economy Watch

Again, while trapsing through the jungle of YouTube videos on North Korea, I stumbled on this clip shown on Japanese television which was secretly recorded in a North Korean market.  Since my Japanese ranges from rusty to nonexistent, I do not know where it is.

What does this clip teach us?  That some North Koreans are becomming more sophisticated shoppers/ consumers–looking to the outside world to get a sense of what’s fashionable.  Chinese entrepreneurs are hard at work building brand loyalty for western companies that are not yet aiming for the DPRK market.  Chinese knockoffs of Nike, the North Face (mislabeled “the Nice Face”), and fake designer apparel are all on display.  I imagine no North Korean citizen expects to ever see these goods in the local Public Distribution Office. 

Japanese narration highlights (thanks, Tony):

• Are the North Koreans familiar with these western brands? Some are familiar and others are not so sophisticated.
• These items sell really fast.  You can buy a Rolex Watch (knock off) for 800 Yen (appx. $8 or appx 2,400 North Korean Won).
• The narrator contrasts lifestyles.  He compares shoppers that can afford these market goods with others in the same village who cannot.

Daily NK
Han Young Jin
8/7/2007

Defector Choi Young Lim [pseudonym] who entered South Korea this past January was a “broker” in North Korea who would receive money from defectors and deliver it to family members in North Korea. He was exposed while mediating money and arrested but was released after giving bribes.

Choi said, “Previously, even with just evidence that there was a connection to a South Korean, you were dragged to a political prison camp and your family members were exiled. However nowadays, even if it is exposed that a defector who entered South Korea sent money, the family members aren’t severely punished.”

“These days, even if there is evidence that you received wired money, unless there is hard evidence of ties to the National Intelligence Service in South Korea the national security agents just impose a fine and release you,” he said.

According to Choi the fine is around the range of USD $2000.

Most of the foreign currency that enters North Korea these days is done through wired transfers from defectors in South Korea to family members. The money that Korean defectors send to family in the North undergoes a 20-30% processing fee and is finally delivered to the individual. The process is from the defector in South Korea through Chinese exchange broker to North Korean broker.

If USD $100 is sent from South Korea, the brokers share $30 and the remaining $70 is delivered to the family.

Until the mid-1990s, regardless of reason, North Korean authorities would take any monetary matter related to South Korea and punish them as “spies”. However, as the number of defectors concentrated in the North and South of Hamkyung increased after the food crisis, a uniform punishment became difficult to impose.

Choi said, “Even the National Security Agency doesn’t consider receiving money from family in South Korea as a spy activity. If they punish everyone, there is a side effect that even their own personal connections will be made adversaries. Thus, they can’t touch this issue.”

The emergence of taxis targeting large city wealthy classes

Trader Hwang Sang Do [pseudonym] who had traveled Chongjin, Hamheung and Shinuiju to collect trade items to export to China entered the South Korea this March.

Hwang introduced a variety of daily activity that he experienced in North Korea. “Even in Hamheung and Chongjin, taxis are operated. The base fare is around 3,000 won. Some cars have the mark that says, ‘taxi’ but some operate as passenger cars without such marks,” he said.

In the North Korean black market 1kg of gasoline (North Korea ordinarily uses kg) costs around 2,000 won. Hwang says, “There are drivers who solicit customers in front of the Chongjin Station or Hamheung Square Station. There aren’t many customers so when veering outside of central city, they receive the round trip fare.” The customers are mainly trade workers, overseas Chinese emigrants or the wealthy class.

It is known that taxi drivers refurbish used taxis or passengers cars that come in from China, then register it as an institution or business entity and start business activity. As there was an order earlier this year to remove all Japanese cars within 3 years, most of the cars that are on the street are manufactured in China.

Massage Parlors, Skincare Salons – Prostitution Secretly Going On

In large cities of North Korea, motels, massage parlors and skincare salons have been established and prostitution has been going on secretly.

Trade worker Hwang says, “There has been an increase of places in Hamheung motels that also function as saunas or skincare salons. A Chinese style massage at a massage parlor is 10,000 won (around US$3.4) per 60 minutes and there is instantaneous prostitution with female masseuse.” It is told that prostitution goes on for about 20,000 – 30,000 won.

With North Korean bathhouses, a service culture to put women at the forefront has taken place. The owners here use jargons such as “selling a bed” or “selling flowers” to feel out a customer’s intention for prostitution. There are cases where women find private homes to prostitute themselves. Hwang says that because it is easy to make money through prostitution, there has been an increase of female prostitutes.

Previously, if prostitution was exposed, you would be sentenced to forced labor. Even now, the authorities ban prostitution. However, the reality is that related entities have secretly been increasing.

On the other hand, there have been several luxury restaurants that opened in Wonsan and Hamheung. These places have implemented the Chinese service system, so the interior facilities are luxurious and female employees greet customers with a “Welcome” at the door.

Previously, only overseas Chinese emigrants or Chinese businessmen invested in such restaurants but recently, there are many cases where North Korean residents open large restaurants as well. Hwang says that as the Chinese restaurant culture that competes with taste and service infiltrated North Korea, North Korea has been undergoing a huge transformation to gain customers through service.

A service concept to “treat the customer as a king” has been emerging different from 1990s.

Daily NK
Kim Min Se
6/22/2007

It has been reported, colourful clothes and accessories such as gold rings are current hot trend among North Korean women, unlike their conservative dressing ritual in the past.

This transformation has been clearly revealed by Daily NK’s recent encounter with North Korea-China traders and their main importing goods for North Korea.

On the 18th, Choi Myong Hee (pseudonym), who has been trading the indispensable from Dandong, China, to North Korea, talked about this new trend in North Korea as meeting one of our reporters at some place in downtown Dandong.

Choi said “Recently white-based yellow and red floral prints have been going very well” “And also animal prints with puppies or ducks have been good,too. On the other hand, human-figured prints have not been doing well”

According to Choi, colourful looks have been the latest mode among North Korean women in big cities like Pyongyang. In particular, accessories have been a big trend.

Currently, Choi has been selling light industry goods such as clothing. However, it is accessory trading she has made a sizable profit nowadays. The accessories she has bought in Shenyang or Dalian, China at 5~8 Yuan (US$ 0.6~1) have been sold at 10~15 Yuan (US$ 1.3~2 ) in department stores and markets in Pyongyang.

Choi admitted “Accessory trading requires less cost and makes greater profit. Especially, I have never had a problem transporting them because of their efficient size.” we were told, she normally imports 10,000 various kinds of accessories to North Korea, mainly necklace and hair clips, and her major clienteles are women in Pyongyang.

Choi declared that necklaces, rings and hair clips have become common accessories for most of North Korean women. In fact, she has been trading accessories quite a few times on the sly.

“Still, necklaces and bracelets with religious symbols such as a cross or charms are prohibited” she remarked. In addition “Too much dazzling or abnormal looking necklaces are also forbidden.. So, it is crucial to import most favored design and colour.”

It is considered this radical change of North Korean women has resulted from increasing flexibility of the population because of the stimulated market as trading has been the only way to provide maintenance due to the fall of rationing system.

Besides, the influence from Chinese accessory fashion is observed to be one of the major factors as growing numbers of North Koreans have been visiting China.

Moreover, this changing trend of North Korean women, who have begun to dress up with colourful clothes and accessories, is perceived as a reflection on women’s natural desire, admiration on beauty.

Daily NK
Kim Young Jin
6/12/2007

Recently, it has been reported that businesses in charge of facial plastic surgery and skin maintenance are becoming more popular among the wealthy class.

Through a survey DailyNK conducted on actual living conditions in the Northeast region of North Korea, it was discovered that massage rooms, steam baths, beauty-related enterprises (plastic surgery and skincare maintenance) are the main thriving businesses.

Beauty-related businesses such as these prevail in relatively large-sized cities, such as Chongjin in North Hamkyung, Hamheung in South Hamkyung, and Wonsan in Kangwon. This trend seems to follow the up and coming wealthy class who have risen through doing business in North Korea.

Skin maintenance and plastic surgery which has caused a stir among the women in Shinuiju and Pyongyang have spread to inland countrysides within the last several years.

Double eye-lid surgery, eyebrow tattoos, and others can be simply performed by a plastic surgeon doctor or beauty operation specialists, so it has been widely popular among young women.

The cost of plastic surgery, in the case of double eye-lid surgery, was 500 North Korean won per one-eye in 2004, but the asking price has been 1,500 won since 2006. The North Korean exchange rate was recently 2,980 won per dollar.

In addition to double eye-lid surgery, breast augmentation has been spreading to a portion of upper-class women. The popularity of the breast enlargement surgeries demonstrates an encouragement of beauty among North Korean upper-class women.

◆ “Massages” a rage, centered on large-scale cities = Chinese-style health massages cost around 10,000 (US$3.4) North Korean won per hour and for an additional 2~30,000 won, on-the-spot sex with a female masseuse is possible.

This survey, based on the latter half of May, took place by focusing on the price of commodities in five cities, such as Kim Chaek and Chongjin City in North Hamkyung, Danchun and Hamheung in South Hamkyung, and Wonsan Kangwon.

The results of the survey showed that the region with the highest standard of living in the Northeast region is Wonsan City of Kangwon. The reason why Wonsan has a relatively high standard of living is that it has been a central place of trade with Japan.

If North Korea and China’s trade can be represented by Shinuiju, then Wonsan has played that role with trade with Japan. However, it has recently been severely targeted by the suspension in North Korea and Japan’s trade.

Wonsan’s upper-class restaurants are known to show aggressive service by shouting “Welcome” when guests come in, by decorating the interior of restaurants, and by adopting a Chinese-style waiter and waitress system.

In addition, Japanese secondhand goods have been highly traded in Wonsan. Electronic rice cookers, sewing machine, fans, TVs and other Japanese thrift goods are commonly traded and have more reasonable prices than the other regions.

Newly released 2-3 person electronic rice cookers are around 13~150,000 won, fans around 7~80,000 won, used gas stoves around 15~200,000 (approx. US$50.34~67.10), used TVs around 20~250,000 won, and flat-screen TVs over 350,000 (approx. US$117.50) won.

The supply of electricity is not an issue, so it is provided 24 hours long and electricity is better-supplied than in Hamheung.

Further, the “105 factory (furniture production factory)” in Wonsan produces furniture which is delivered to the Central Party and the quality, compared with the cost, is supposed to be the best in North Korea.

Industrial goods in Chungjin are relatively economical, but Chinese-made color TVs and flat-screen newly-released TVs are sold for 20~250,000 and 350,000 won, respectively. Used bicycles imported from Japan is sold for 10~150,000 won.

In Chongjin, the number of taxis have risen lately, but because of the expensive cost, not too many people take advantage of it. Going 4km costs around 5,000 won. Taxis that are operating are either Chinese used taxis or imported cars which are past the expiration date.

◆ The price of rice narrowly rises = In Hamheung, the cost of taxis is supposed to be slightly higher than Chongjin. There are not too many people who ride taxis, so the rate is doubled beyond the center of cities and in remote places.

The cost of penicillin has risen significantly in Chongjin, with the spread of the measles, the scarlet fever, and other infectious diseases since last winter. Chinese penicillin is hard to acquire due to its reputation for having poor quality and North Korean penicillin is sold at Jangmadang (market) for 500 won per one.

The cities considered to have low standards of living are Kim Chaek of North Hamkyung and Danchun in South Hamkyung. The size of the jangmadang (market) is smaller than in other regions and there is a limit in the variety of goods. Steam baths or massage places do not even exist. The price of medical goods are also supposed to be exorbitant.

The specialty of Kim Chaek City is its low cost of nails. The Sungjin Steel Works Complex in Kim Chaek produces nail by melting steel and sells them, which is sold for 2,200 won~2,500 won per kg in Hoiryeong, at 1,200 won in Kim Chaek. However, not only is the weight heavy and is difficult to package, but the usage by civilians is not very high, so the incidence of sale to other provinces is low.

In Danchun, the price of fruit is very expensive, so it is not sold by the kilogram unit, but is sold individually. One medium-size apple is sold for up to 800 won.

On one hand, the price of rice in North Korea’s northeast region showed a narrow upward tendency in the latter half of May at the end of the spring shortage season. Corn, the staple of low-income civilians, did not show a huge change.

KCNA
4/18/2007

The “Pomhyanggi” Cosmetic Exhibition has been newly built in Moranbong District of Pyongyang.

It is a show of quality cosmetics produced in the Sinuiju Cosmetic Factory and a research center for developing new products and establishing scientific method of their application.

It operates a consultation room and gives such services as explanation, sale, medicinal sauna, massage and facial treatment. The consultation room diagnoses skins, health and constitutions of the customers and introduces relevant cosmetics to them at their request.

The explanation room explains the peculiarities and effectiveness of “Pomhyanggi” Cosmetics (3 pieces, 7 pieces, 8 pieces).

Kwon Mun Gap, senior official of the exhibition, said in an interview with KCNA that “Pomhyanggi” cosmetic research team has developed the quality cosmetics not by the chemical method but by the method of combining over 30 kinds of natural medicinal materials with Kaesong Koryo Insam.

“Pomhyanggi” cosmetics are the refined and developed ones of the famous “Nowana”, “Meari” and “Kumgangsan” cosmetics.