North Korean Economy Watch

UPDATE:  A few weeks ago we were speculating as to whether DPRK women were getting tattoos (see original post below), but it seems this is sadly not the case.  It is more likely that these colorful icons are logos of some kind.  Another visitor to the DPRK this year sent in the following picture:

Click image to see stocking logo on the ankles

Do any readers from China recognize this logo?  I find it hard to believe that stockings made in the DPRK would be so brazen. As an aside, the woman in the picture above is wearing the same shoes as some of the women below.  It looks like thick souled shoes are in this year.

ORIGINAL POST: A recent visitor to North Korea with a very keen eye snapped this photo at Kamsusan Palace:

I have seen tattoos on North Korean men but never on women.  True, these may only be temporary tattoos (more likely since they all seem to match–both in design and in place of application), but this is also interesting.  Given the way the girls went about applying these tattoos it is likely they are trying to signal something.  What?  If anyone can find out more on North Korean tattoos–or where the Pyongyang tattoo parlor is (if there is one)–I will be eternally grateful.  I am not optimistic at this point.

Check out the full set of photos here.

UPDATE: Some readers think these could be logos on stockings.  This would also be interesting.  So would these be a local fashion innovation or imported from China?

NOKO Jeans are finally for sale on their web page here.  However they include a not-so-subtle warning to American shoppers:

Important regarding ordering from the USA: at this time, goods of North Korean origin may not be imported into the United States either directly or indirectly without prior notification to and approval of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). You need to apply for this in order to import goods produced in North Korea. Contact OFAC here: http://www.treas.gov/offices/enforcement/ofac/. It is the buyer’s responsibility to get this approval.

OFACS is the same outfit that is supposed to go after you if you visit Cuba.  I am not recommending you do so, but it semes to me that it would just be a lot easier to have a friend in Europe order them for you…

Read previous NOKO posts here.

Some enterprising Swedes had some jeans manufactured in North Korea (where they can’t be worn in public) to be sold in the west.  The brand name is Noko Jeans.

The fist shipment  of appx 1,000 jeans arrived in Sweden on November 11, and the goods will go on sale December 4, 2009.

Here is a photo of the Noko jeans team with their shipment.

Here is a photo of all the  official stamps and approvals on the shipment.

IHere is their official web page: http://www.nokojeans.com/

According to the Daily NK:

North Korean citizens are not only sensitive to the style of their clothing or shoes, but also the brands of their accessories such as bicycles and MP3 players.

The reason behind the North Korean special emphasis on such items is apparent in the North Korean adage, “What one eats is not as important as what one wears.” It is not particularly evident whether one has eaten or not in the short term, but attire gives away the level of wealth in a household.

Just as household affluence is determined by the type of vehicle or house one owns in a capitalist society, the type of clothing or shoes that one wears, the particular brand of cigarettes in the pocket of a person or the kinds of objects one owns indicates the wealth of a person in North Korea and even decides the way in which a person is treated.

Two examples are the USB memory sticks and MP3 players which have started circulating there.

An inside source in North Korea testified, “Teenagers nowadays may not know how a computer works, but will carry at least one USB memory stick along with their keys. Middle school students living in cities have to own at least one MP3 player in order to be acknowledged as coming from a middle class background.”

So, in order to cement or exaggerate their social positions, youths go out and get an MP3 player, even if it means foregoing meals, and the parents who do not want to see their children getting alienated will save every penny to buy these ‘essential’ items.

Read the full story below:
Teenagers, the Generation Keeping up with the Times
Daily NK
Moon Sung Hwee, from Jagang in 2006
10/7/2009

(Hat tip to Gavin) A reader recently visited the DPRK and took these pictures of children playing in Pyongyang.  There was no shortage of Western brands on display:

Pictured above: BMW, Ronaldo, Weetbix (Weetabix), Puma, and Snoopy  

Thanks to entrepreneurial Chinese and DPRK merchants, Western brands are getting their foot in the door with some free advertising.  If BMW keeps up this covert strategy they might be able to knock Mercedes out of the top position some day!

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-1-6-1
1/6/2009

Jo Jong-woong, assistant director of the North Korean Department of Light Industry, announced that this year, efforts would be concentrated on production of daily necessities, with a priority on resolving clothing issues.

In an interview on January 4 with the Chosun Sinbo, mouthpiece for the General Association of [North] Korean Residents in Japan, Jo stated, “Currently, the most important sector is textiles,” and, “regarding the easing of the people’s problems, and regarding our production of necessities as well, we have decided to move forward with resolving issues related to clothing shortages first.”

Jo emphasized that the government had been working since 2006 to revitalize the Pyongyang Weaving Factory, and since last year, with all equipment upgraded, quality and production capacity had been increased “several times over.”

He also stated that as much as possible, domestic resources would be used for raw materials, with those unavailable or in short supply being imported in order to meet demands of the factories.

Since 2006, South Korea has provided the North with the necessary materials for the production of shoes, clothing, soap and other daily necessities, in return for mining rights and production distribution rights.

Jo added, “We are pushing light industries to create a country in which all the people can live comfortably and affluently,” and stated that light industries were working to broaden the variety of goods available, while at the same time maximizing the quality of products manufactured for the good of the people.

Daily NK
Park In Ho
1/1/2009

The marketplace has become an extremely important ground in North Korean people’s lives. 70 percent of North Korean households in the city live off trade, handicrafts and transportation businesses related to trade. If the jangmadang works well, people’s living situation is good, otherwise it is not. In the situation where the food distribution system has broken down, the whole economic existence of the populace is bound up in jangmadang trade.

Trade is bound to generate successful merchants but also failures, due to a lack of know-how or confiscation of products by the People’s Safety Agency (PSA), or simply because a competition system operates. These failures in the jangmadang do not have any second opportunity to rise again so they frequently choose extreme acts like defection, criminality or suicide. Failure is serious.

However, the revitalization of markets has caused great changes in North Korean people’s values. The individual-centered mentality among the people is expanding and the belief that money is the best tool is also spreading. Due to such effects, the North Korean communist authorities in 2008 made the regulation to prohibit women younger than 40 years old from doing business, but of course the people use all necessary means to maintain their survival.

Daily NK investigated the 2008 top ten items in the jangmadang, so as to observe developments in North Korean society.

1. Rice in artificial meat, the first instance of domestic handicraft

Since 2000, the most ubiquitous street food has been “rice in artificial meat,” which is made from fried tofu with seasoned rice filling. This food is found everywhere on North Korean streets. One can find women who sell this snack in alleys, at bus stops and around stations. It costs 100 to 150 North Korean Won.

Meanwhile, the most popular street food is fried long-twisted bread. Individuals make the fried bread at home and sell it on the street. The length of the fried bread is around 20 centimeters and it sells for 100 won.

In around 2005 corn noodles were popular on the streets, but now street-stands for noodles have largely disappeared due to the existence of a permanent store controlled by the state.

These days, if one can afford to eat corn noodles, at approximately 1,000 won for a meal, one can safely say that one is living comfortably.

2. Car battery lights North Korea

The reason why North Korean people like car batteries is that the authorities provide a reliable electricity supply during the daytime, when consumption is less than at night, but at night they don not offer it. The authorities shut down the circuit from around 8 PM to 9PM, and from 12 AM to 2 AM: when the people watch television the most.

As a result, the people charge their car batteries during daytime and use it at night. A 12V battery can run a television and 30-watt light bulb. If they utilize a converter, they can use a color television, which needs more electricity.

Ownership of batteries is a standard of wealth. Officials use electricity from batteries in each room. They usually draw thick curtains in their rooms, to prevent light shining through that might draw attention to their status.

3. The strong wind of South Korean brand’ rice-cooker, Cuckoo

A South Korean brand pressure rice-cooker called Cuckoo appeared as a new icon for evaluating financial power among North Korean elites.

It has spread from the three Chinese northeast provinces into North Korea. In North Korea, Chinese rice and third country aid rice, dry compared to Korean sticky rice, generally circulates, but if the lucky few use this rice-cooker, they can taste sticky rice the way Korean people like it.

There are Cuckoo rice-cookers from South Korean factories that arrive through Korean-Chinese merchants, and surely other Cuckoo products from Chinese factories. These two kinds of rice-cookers, despite having the same brand name, sell for different prices.

The Chinese-made Cuckoo sells for 400,000-700,000 North Korean Won (approximately USD114-200), while the South Korean variety costs 800,000-1,200,000 (approximately USD229-343). A Cuckoo rice-cooker tallies with the price of a house in rural areas of North Korea. According to inside sources, they are selling like wildfire.

4. An electric shaver only for trips

The electric shaver is another symbol of wealth.

It is not that they use electric shavers normally, because one cannot provide durability. At home, North Korean men generally use disposable shavers with two blades made in China or a conventional razor. However, when they take a business trip or have to take part in remote activities, they bring the electric shaver.

There are North Korean-made shavers but most are imported from China. Among Chinese products, you can see “Motorola” products and fake-South Korean products with fake labels in Korean. A Chinese-made electric shaver is around 20,000-40,000 North Korean Won.

5. Chosun men’s fancy shoes

Dress shoes are one of the most important items for Chosun men when they have to participate in diverse political events, loyalty vows or greeting events at Kim Il Sung statues on holidays. Right after the famine in the late 1990s, it was considered a symbol of the wealth, but now general workers, farmers and students are wearing dress shoes.

The shiny enameled leather shoes with a hard heel cannot be produced in North Korea because of a lack of leather. The North Korean authorities provide the National Security Agency (NSA) and officers of the People’s Army with dress shoes, which are durable but too hard and uncomfortable.

Shoes for general citizens and students are mostly made in China and some are produced in joint enterprises in Rajin-Sunbong. The price of shoes ranges from 30,000 to 100,000 Won depending upon the quality.

6. Cosmetics prosper despite the economic crisis

Cosmetics and accessories for women are getting more varied. Lately, false eyelashes have appeared in the jangmadang in major cities. Chinese cosmetics are mainly sold, alongside fake South Korean brands. In Pyongyang, Nampo, Wonsan and Shinuiju Chinese and even European cosmetics are on sale.

“Spring Fragrance,” a North Korean luxury cosmetics brand, is famous for being Kim Jong Il’s gift that he presents to women soldiers or artists when he visits military units or cultural performances. It costs more than 200,000 North Korean won.

Lotions for women, made in China, are approximately 2,000-4,000 won, foundation cream is 3,000-5,000 won, and lipstick is from 500 won to 2,000 won. Hand cream is 3,000-5,000 won.

7. Hana Electronics recorder, the biggest state-monopoly production

“Hana Electronics” was originally set up to produce CDs and DVDs of North Korean gymnastic performances or other artistic performances, so as to export them foreign countries. The company has been producing DVD players since 2005.

Due to the state monopoly, the DVD player of the Hana Electronics dominates the market. North Korean people call a VCR and a DVD player a “recorder.” Since around 2005, after the booming interest in South Korean movies and dramas, the players have been selling very well.

At the beginning, North Korean visitors to China brought the DVD or CD players into North Korea, but as they got popular among the people, Chinese-made players were imported from China and since 2006 they have been really popular in every jangmadang.

Accordingly, since 2006, the authorities have started blocking the importation of the Chinese player and are selling the Hana Electronics players, which sell for around a 20 or 30 percent higher price than Chinese players in state-run stores. Now, they can be sold in the jangmadang by private merchants and comparatively free from inspection by the PSA. The prices are 130,000-150,000 won.

8. Bicycles are basic, the motorcycle era is here now

In major cities, numbers of motorcycles are increasing. Especially in border regions where smuggling with China is easier than in other cities, motorcycles are common.

The motorcycles are ordinarily used for mid or long distance business. Most motorcycles are made in China and some are Japanese second-handed products, which sell for 1.5-2.5 million won. 125cc new products are over 5 million won. The cheapest second-handed motorcycle is 500,000 won.

9. Vinyl floor covering for the middle class and vinyl for the poor

Demand for vinyl floor coverings and vinyl has been increasing since the late 1990s, when residential conditions improved. In the late-1990s people had to use sacks of cement or Rodong Shinmun (newspaper) as a floor covering, but now they are using vinyl floor coverings.

Uses for vinyl are unimaginably diverse: from a basic protection against wind and cold to when people take a shower at home in the vinyl tunnel hung on the ceiling of the bathroom.

Depending on the thickness and width, there are four or five kinds of vinyl in the jangmadang for from 150 to 500 won. Vinyl floor covering is a Chinese product selling for from 3,000 to 10,000 won.

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-17-1
2008-12-17

As the end of the year approaches, North Korea has launched a ‘Year-end Battle’ in order to encourage every sector of the economy to meet annual production targets, without exception.

On December 1, (North) Korean Central Broadcasting announced, “workers, laborers and technicians of the harvesting industry sector overcome difficulties and barriers with indomitable moral strength, while thoroughly accomplishing the (New Year) Joint Editorial’s fighting tasks, focusing all strengths on the struggle to brightly wrap up the deeply meaningful year,”while also reporting on the production innovation of the nation’s mining and smelting facilities.

The program also announced that each North Korean region’s hydroelectric power plants, “brightly bring the year to a close, while the issue more important than any other is ensuring the People’s Economy electrical use, strongly demanding power production, is supported,” reporting that efforts were being focused on ensuring power production equipment was operating at full capacity, and electrical production was being expanded.

Rail transportation in Pyongyang, Kaechun, Anju, and other areas also reported high achievements in distributing coal for electrical production and ores sent to metal factories, as efforts are put into the ‘Year-end Battle’, according to the broadcasters.

One member of the North Korean Cabinet’s office of light industry announced on November 30 that, in accordance with this year’s New Year Joint Editorial’s ‘prioritization of the lives of the people’, the government invested in the Sariwon Weaving Factory, the Haeju Textile Factory, etc., “struggling to produce more good-quality cloth” in textile factories under the guidance of the office of light industry’s department of textile industry management.

North Korea’s broadcasts also reported that the Ranam Coal Mine Cooperative Enterprise, the Musan Mine Cooperative Enterprise, the Chungjin Tractor Accessories Factory and others were also engaged in this ‘Year-end Battle’.

In South Hamgyung Province, a new lecture hall and electronic library were built at the Hamheung Medical Science College, and construction was underway to expand the number of classrooms. Also, the Heungnam Basic Foods Factory, the Hamheung Orthopedic Surgery Hospital and the Sinheung Irrigation were under construction as each locality is pushing forward with selected economic construction projects.

UPDATE: The Wall Street Journal did a follow up story on China Hongxing, sponsor of the DPRK Olympic team:

During the Opening Ceremonies, for instance, the North Koreans refused to wear Erke’s logo for fear it would compete with their country’s Communist red-starred flag.

and…

The North Korean sponsorship cost Erke $2 million to $3 million, said Wu Rongzhao, deputy chief executive at China Hongxing Sports, which owns Erke. The Singapore-listed Hongxing reported net profit of $59 million for fiscal 2007.

Yet Erke’s sponsorship of the North Korea team has been “a very painful process,” said Mr. Wu.

Erke had to scrub plans for a marketing event timed to the Games’ opening because of red tape and bureaucracy, said a person familiar with the matter. For instance, Pyongyang’s Olympic officials would communicate only by email, not by phone.

Nor are North Korean athletes a sports marketer’s dream. Most are conditioned to be self-effacing and to credit their victories to the North Korean regime and its leader, Kim Jong Il. Weightlifter Pak Hyon Suk, who won North Korea’s first gold in Beijing on Tuesday — wearing Erke — said her victory was the “the best present for the president, for the people, for the country and for myself,” according to Xinhua, China’s state-run news agency.

Read the full article here:
Chinese Companies Sponsor Countries Others Won’t Touch
Wall Street Journal, Page A14
Mei Fong
8/14/2008

ORIGINAL POST: Last year, North Korean Economy Watch informed readers about China Hongxing, the sports apparel company sponsoring the DPRK’s Olympic team.  Since most popular Chinese athletes are sponsored by relatively wealthier western sports apparel firms, Chinese companies had to come up with another strategy to make sure their products were noticed at the 2008 Olympics.  Sponsoring lesser-known, niche teams that could win gold in  a handful of events seems to be the way to go…

Today, Reuters follows up with China Hongxing:  

Hoping to achieve what Michael Jordan did for Nike, a little-known Chinese sportswear brand is banking on the North Korean Olympic team for publicity.

“[The Chinese] tend to watch the North Koreans compete in the events that the Chinese are also strong in, so sponsoring North Korea will get a lot more eyeballs,” [Jenny Yeo, company spokesperson] said.

North Korean athletes in the Beijing Games will be sporting a stylized swan logo from China Hongxing’s “Erke” brand, which means “you conquer” in Mandarin.

China Hongxing will be kitting out the team with leotards, soccer boots and the red windbreakers the athletes will wear to the August 8 opening ceremony. Erke will be selling some of this sportswear in China and expects buyers seeking novelty value.

Read the full article here:
North Korea’s Olympic outfitter hopes for publicity gold
Reuters
Melanie Lee
7/29/2008

Some enterprising Swedes are attempting to manufacture and export jeans from North Korea.  As far as western countries go, Sweden has been one of the leaders in commercial interaction with the DPRK.  Although, according to Erik Cornell, they were frequently burned. 

The project, Noko Jeans, would be the first jeans manufacturer in North Korea.  Here is some info from their website:

Noko Jeans – jeans from North Korea

Noko Jeans began with an e-mail sent to North Korea, fueled by the enthusiasim of being able to contact the country directly. We thought Noko Jeans would end there, before it even began. It didn’t. Instead, and despite our lack of experience in international trading, it swiftly grew to a much more serious level.

Initiated and managed by three Swedes with a background in advertising and PR, Noko Jeans is our attempt to approach and get closer to North Korea, and it is our attempt to answer the question: is it possible to do what no one has ever done before? Is it possible to design, produce and import jeans from North Korea?

Greetings from North Korea!

After months of research, loads of headache and, lastly, several meetings with North Korean government representatives, we are finally allowed into the country. As official visitors, and by invitation of the state. Take off: 27th of July.

We are just now beginning to sense that this experiment actually might come true. Please stay with us as we tell you the unique process – and story – that is Noko Jeans.