North Korean Economy Watch

According to the JoongAng Ilbo:

North Korea held a rare investors relations event over the weekend and its more capitalistic and entrepreneurial manner hinted at a new openness to foreign investors and economic reform in general.

“The door is wide open. Come on in any time,” said Oh Eung-gil, president of North Korea’s Wonsan District Development General Corporation.

Oh was inviting South Koreans to invest in the North as he addressed a group of businessmen at an investors relations session at the Shangri-La Hotel in Dalian, China, on Saturday.

“We prepared all the conditions to develop Mount Kumgang and waited for the South to change its attitude,” said Oh. “But we can no longer wait, so we are trying to attract foreign investors. We have no intention to exclude the South.”

The investors relations event was arranged by the Dalian chapter of the World Federation of Overseas Korea Traders Association. About 200 Korean businessmen from around the world including Australia, China and the United States attended.

From North Korea, five delegates including Oh joined the event.

The North started its event with a presentation by Oh on the country’s laws governing foreign investments and the business environment.

“We have already simplified the investment application procedures and created regulations that meet international standards,” Oh said.

He spent a considerable amount of time to assuring businessmen that their investments, if made, will not vanish overnight.

“With Article 19 of the Foreign Investment Act, we promise that the assets of foreign investors and their companies won’t be nationalized,” he said. “If they are nationalized for an unavoidable reason, then we will make compensation for all costs.”

He also stressed that the North has abundant mineral and fisheries resources. With its 2 million educated workforce, who graduated from 300 universities, Oh said North Korea is the best place to make investments in Asia.

He said foreign companies that invest in special economic zones will only have to pay 14 percent corporate income tax and that the tax is even lower for some advanced technology industries. Making investments in the North’s infrastructure will also be tax-free, he said.

The North also held an unprecedented question and answer session. At similar events in the past, the North only made presentations without answering investors’ questions.

A businessman said he was afraid that the North Korean government could confiscate his investments, and Oh assured him that the government guarantees all legal investments by laws.

Oh even used humor to answer one businessman’s question.

“I would like to invest in hospitals,” the businessman said.

“Our [Democratic People’s] Republic of Korea offers free medical services, so it will be hard for you to make money,” Oh joked. “Please reconsider.”

Following Oh’s presentation, Ri Sing-ryol, vice president of the Wonsan District Development General Corporation, unveiled a development plan for the Wonsan-Mount Kumgang international tourism zone. He said the zone has 142 historic sites, 11 white-sand coasts and nine lakes, as well as 676 tourist venues.

The North’s Standing Committee of the Supreme People’s Assembly announced in June an ambitious plan to develop the area as an international tourism zone.

“Now that the Kim Jong-un regime is settled, the North’s top priority is resolving economic hardships and strong economic reform is being pushed forward,” said Jin Jiang, chairman of the Dalian Chapter of the World Federation of Overseas Korea Traders Association.

According to the Donga-Ilbo, the patchy subject of Hyundai Asan’s assets came up:

North Korea requested South Korea to make additional investment in Mount Kumgang and Wonsan areas, claiming that “it never confiscated the South’s property,” which it had forfeited and frozen in April 2010. Oh Eung Kil, general president of Wonsan district development company under the North’s external economy ministry, told South Korean reporters at an informational session on investment in the North in Dalian, Liaoning Province, China on Saturday.

“We did not confiscate Hyundai (Asan)’s asset. We will not confiscate and will wait (going forward). We have waited for long (thus far),” Oh said. “The South’s asset is just in our territory because it is real estate, and the property is registered in Hyundai’s name.”

Notably, citing the North’s foreign investment act providing that Pyongyang does not nationalize foreigners’ asset, Oh said, “Because we cannot afford to continue waiting, blindly trusting the South, we will form ties with investors from various countries. Still, we are not excluding the South. The door is open.”

In April 2010, the North implemented a slew of measures, including forfeiture of the South Korean government’s assets such as a separated family reunion house, freezing of private sector assets including duty-free shops, and deportation of management staff. In 2011, the North enacted the “Mount Kumgang international tourism district act,” and deprived Hyundai Asan of the exclusive right to tourism projects. Hotels and other assets that were owned by Hyundai are currently operated by the North Korean authority. Experts say, “The North’s move is aimed at denying its forfeiture of Hyundai Asan’s assets, which was negatively regarded by foreigners, and displaying situation of improved investment environment.”

Meanwhile, Oh said, “Foreign shipment of unprocessed natural resources has been designated as an additional item subject to restriction of investment into North Korea.” While banning shipment of coals and others without processing in North Korea by foreign investors, the North intends to allow processing of such resources within the Stalinist country. Since the North Korean authority singled out “sale of valuable natural resources at bargain prices as a unpatriotic act” as one of the crimes allegedly committed by Jang Song Thaek who was executed late last year, Pyongyang is believed to have strictly restricted foreign shipment of natural resources.

Here is additional coverage in the Choson Ilbo.

Other posts on the Wonsan-Mt. Kumgang International Tourist Zone here. See the category tab on the right for more.

Read the full stories here:
Pyongyang woos foreign investors
JoongAng Ilbo
Choi Hyung-Kyu
2014-9-22

N.K.: ‘We never confiscated facilities from Hyundai Asan’
Donga-Ilbo
2014-9-22

From the Pyongyang Times (2014-9-20) No. 38 (2813), p4:

The Presidium of the Supreme People’s Assembly issued a decree establishing Jindo export processing area in Nampho on July 23.

The second SEZ in Nampho after the Waudo export processing area which was set up last year, the Jindo export processing area will be the first bonded processing trade hub among the 24 special economic zones built in the country.

Part of Ryongnam-ri in Waudo-District sitting on both sides of the road leading to the West Sea Barrage from the lower reaches of the Taedong River in southwest Nampho, it covers an area of 1.8 sq kilometers and has very favorable conditions of infrastructure.

It is also near Nampho Port, trade port directly leading to China and southeast Asia, and Pyongyang and Nampho cities boasting machine-building , electronic and light industries. It will provide the region with every potential for industrial growth and enough manpower.

The area is aimed at bringing in raw materials duty free and producing light industrial and chemical goods for export.

To this end, it plans to build a bonded processing trade area that encourages processing export by allowing businesses to be built on the principle of environmental protection and energy saving and promoting technology transfer and introducing new products and industrial sectors from other countries.

According to the first-stage development plan, the area will cover 180 hectares, which will be divided into 10 sections of electric and electronic appliances , leather, shoes and other light industrial goods, machine and metal products, chemical, rubber and plastic goods, fibre and clothes-making, bonded warehouses and and exhibitions, management and service, power station and reserve area.

Premiums and privileges will be offered to investors in the area according to the law on economic development zones and its enforcement rules and regulations.

The master plan of the processing area is now under examination and investors are making field surveys.

By Cha Chol

According to the Daily NK:

Independently owned taxi services have emerged in South Pyongan Province, Daily NK has learned. This is the only other confirmed location of such a service in North Korea, outside of Pyongyang and Rasun.

A source in South Pyongan Province reported to Daily NK on September 11th, “Taxis have appeared in Pyungsung [Phyongsong] and Suncheon [Sunchon] Cities and are quickly gaining popularity,” adding that, “Privately owned taxis are emerging as a new way to make money and the donju [new affluent classes] are quick to invest in the opportunity.”

Taxis managed by the Daedong River Passenger Transport Service Company in Pyongyang are widespread in the capital city as well as Rasun [Rason], but the cabs operating in Pyungsung and Suncheon only require registration with the Transport Service Company, after which they and are free to operate independently.

Originally, Daedong River Passenger Transport Service Company had plans to expand its operations to other regions, but budget shortages stymied these efforts, and the source surmised this as cause for the organization to begin issuing operating licenses, for a fee, to individually owned taxis instead.

As these privately owned taxis become more prevalent in Pyongnam [South Phyongan Province], Pyongsung, and Suncheon, vehicle sales, automobile parts, and recruitment and hiring of drivers continues to rise. The source estimated approximately 18 privately owned taxis in Pyungsung currently, with at least 8-10 operating in Suncheon.

A report by the pro-North publication Choson Sinbo [run by The General Association of Korean Residents in Japan] proclaimed last year that there were 400 taxis operating in Pyongyang. A taxi dispatching service [known as “call taxis” in South Korea] were among the other purported features offered to customers by the Transport Company in the capital city.

“These independently-owned cabs are not part of a state-run enterprise; they are personal businesses,” he explained. “After being granted an operating license, the donju are keen to purchase vehicles to employ as taxis. Cars imported for use as taxis through official trading licenses are taxed at high rates, so most use smuggled cars instead.”

In Sinuiju City, the Kangsung Port sees high volumes of exports serving to procure foreign currency that funnels back into the Chosun Workers’ Party, in addition to highly active smuggling operations. Members of the donju usually request a vehicle to utilize as a cab through the appropriate trading company and receive it through the Kangsung Port.

New vehicles to service as taxis sold at Suncheon Market cost approximately $12,000, while used cars are priced in the region of $6,000-7,000 USD, with additional payments of $500 sellers who have the connections to throw in an accompanying license plate.

Even those who receive the license plate in the market must go through the proper channels to start offering their services. “Taxis purchased by individuals must be registered with the Daedong River Passenger Transport Company in Pyongyang,” he said, nothing it to be a fairly simple procedure, “After being issued an operating license and license plate, they pass through the “No. 10 Checkpoint and they are immediately able to begin business operations.”

According to the source, the majority of individuals purchasing taxis are female, while the drivers are procured from the Transport Company or personal connections. The taxi owners generally conduct personal interviews before hiring the drivers, who are mostly males in their 30s and 40s; it is fiercely competitive process–one must pass through a competition of 50:1 to secure the job.

Potential benefits of the position are enough to ensure no shortage of applicants. With the exception of those areas off limits without a special license, namely border regions and Pyongyang, it is within taxis’ rights to go to most areas. These taxis fetch approximately $100 USD [80,000 KPW] per day, excluding fuel expenses, and cab owners pay the driver roughly 50% of these profits [including gas] as a monthly salary.

The exact amount that individual taxi workers owe the transport company in Pyongyang cannot yet be verified, though the source reported that a monthly offering in the region of $500 USD, for “the sake of formality,” must be contributed to management officials there.

Taxi fees run about 15,000 KPW for a 4km ride; bus fees are approximately 2000 KPW to go the same distance. A Pyungsung-Suncheon trip costs the passenger in the region of 75,000 KPW–extremely expensive compared to the 10,000 KPW bus fee to make the same trip. However, for those doing a great deal of business and working against time, taxis are the easiest option, explaining the increase in those employing their services.

The source asserts that the North Korean authorities’ inability to expand taxi operations due to budget shortages will inevitably lead to the spread of these individually owned cab services through the North. The ease of and lack of restriction on running such an operation will also see them continue to spread, “Everyone doing business will start to use them,” he said. “There aren’t that many taxis at the moment, and the price is expensive, but as the number of those owning the vehicles increases, the price will drop, as will the cost of motorcycles and bicycles.”

Read the full story here:
Taxis Take Off in South Pyongan Province
Daily NK
Seol Song Ah
2014-9-12

Pictured above (Google Earth) the relative locations of Rason and Zarubino Ports

According to Port Technology International:

China and Russia are to join forces and morph Russia’s Zarubino Port into one of the biggest ports in northeast Asia, according to the Chinese People’s Daily.

Zarubino Port is at the far south-eastern tip of Russia and a stones throw from North Korea, and only 18km from China.

North-east China’s Jilin province and Russia’s Summa Group reportedly signed a joint-agreement concerning the rejuvenation of the port at the fourth Conference on Interaction and Confidence-Building Measures in Asia (CICA), in Shanghai in May, 2014.

It is planned that the Zarubino Port will have the ability to handle 60 million tonnes of cargo once construction is completed.

ECNS, an English-language Chinese news source, reported a Summa deputy president as stating the planned port will be multifunctional, and is intended to “hugely benefit China and Russia”.

The port will be used to serve as a key port in ensuring the security of food provisions.

Read more at Voice of America.

Zarubina port is only 80km (directly) north-east of Rason. It will be interesting to see what kind of effect this project will have on development at Rason.

According to Itar-Tass (Russia):

North Korean authorities have banned foreign diplomatic missions and branches of international humanitarian organizations working in the country from using any kind of wireless communications without government approval, starting from Monday.

The state department regulating radio frequencies said controls extending to satellite and Wi-Fi were in the interests of national security.

Regulations demand that foreign missions immediately dismantle all equipment providing such means of communication or face penalties including a substantial fine, enforced suspension of those systems and their confiscation.

Officials said foreign representations would be allowed to use equipment only after authorization.

A recent report in The Diplomat claimed that the black market price of housing near the Munsu diplomatic compound had gone up as people sought residencies that could access the internet.

Housing prices have skyrocketed in a residential area of Pyongyang where the foreign embassies are located as North Koreans are scrambling to move to that area, expecting to use the embassies’ Wi-Fi, North Korea Intellectuals Solidarity (NKIS) — a Seoul-based think tank — reported on August 6. The world wide web has long been totally banned in North Korea.

NKIS said the phenomenon became apparent in June when North Korean authorities arrested a broker who enriched himself by facilitating the purchase of housing in that area.

A man with the surname Cho helped people living in Pyongyang’s rich districts such as Central District and Potonggang District sell their houses and move in near the foreign embassies, NKIS reported. It is illegal for people to make real estate deals among individuals.

NKIS added that the reason why North Korean people want to move to the area where the foreign embassies are located is that they are able to use the Wi-Fi coming from the embassies. Since some of embassies have very strong Wi-Fi signals and some don’t even have passwords, people living around the embassies are able to access the Internet using the embassies’ Wi-Fi.

NK News received a copy of the official order from the State Radio Regulatory Department:

All the Diplomatic Missions and International Organizations to

The Democratic People’s Republic of Korea

The State Radio Regulatory Department, Democratic People’s Republic of Korea, presents its compliments to all the Diplomatic Missions and International Organizations to the DPRK and has the honour to inform that the signals of regional wireless network, installed and being used without licence, produce some effect upon our surroundings.

Therefore, it is kindly notified that the regional wireless network is abolished here according to Article 18, Chapter 3 of the Law on Radio Regulation, and that the Missions, who would like to use the regional wireless network in future, should seek a consultation with the State Radio Regulatory Department.

It would be appreciated if the Missions could positively co-operate in the current measures taken for the security of the DPRK.

The State Radio Regulatory Department, Democratic People’s Republic of Korea, avails itself of this opportunity to renew to all the Diplomatic Missions and International Organizations to the DPRK the assurances of its highest consideration.

The State Radio
Regulatory
Department,

Democratic People’s
Republic of Korea

Pyongyang
August 13,
2014

Appendix

Article 18, Chapter 3 of the DPRK Law on Radio Regulation; The institution, enterprise, organization and citizen who would like to form or use the wireless communication network and satellite communication network here should seek the licence from the Radio Regulatory body.

Article 61, Chapter 4 of the enforcement regulations for the DPRK Law on Radio Regulation; In case of having violated this rules and regulations relative to the application of the Law on Radio Regulation, a fine amounting up to 1,500,000 Wons will be imposed , or such punishment as interrupting the operation or forfeiting the equipment will be inflicted according to the circumstances.

Martyn Williams reports that KoryoLink subscriptions have hit 2.4 million.

You can read previous posts on the DPRK’s mobile phone network here.

Kevin Stahler ranks North Korea’s cell phone market penetration here.

Institute for Far Easter Studies (IFES)
2014-9-4

It appears that some factories and department stores in North Korea have begun to implement a delivery service in response to customer demand. This new customer-oriented service seems to have arisen out of the Kim Jong Un regime’s goal of increasing autonomy and competition among businesses.

According to the newest issue of “Choguk” [Joguk] (“Motherland”, September 2014), a media outlet associated with the General Association of Korean Residents in Japan, North Korea’s representative state-run department store Pyongyang Department Store No. 1 has been making efforts to diversify the services offered to its customers. The article specifically revealed a personal delivery service, saying, “Salespersons have responded to the public’s requests and have begun to deliver ordered products to sell directly to customers at their doorsteps.”

Salespersons from Pyongyang Department Store No. 1 have also been travelling to power plants, mining sites, textile mills, farms and other worksites to sell products directly to workers and farmers. Other businesses, such as the Potong River Shoe Factory, have also been diversifying customer services. For example, employees now visit customers’ homes to measure shoe size and satisfy other requests they may have when placing an order for shoes.

The Daedong River Passenger Transport Company in Pyongyang is currently offering a taxi dispatching service to customers who call in and request a pickup. Similar to the workings of South Korea’s taxi service, North Koreans may simply dial “186” to be connected to the closest dispatch office, which then sends out a taxi to pick up the customer.

On the other hand, North Korea has recognized the problem of the low-quality products and poor construction work and has emphasized that efforts must be made to remedy these areas. In the most recent issue of the quarterly academic journal, Kyongje Yongu [Economic Research] (2014, Issue 3), one article points out problems in the poor quality of North Korean-made products and construction, saying, “Neglect in quality growth is an outdated attitude.”

Specifically, the article mentions the problem of promising completion of construction according to deadlines: “Technical regulations and construction methods are disregarded when projects are rushed to be finished by their completion date, which is often decided in advance to coincide with a holiday or anniversary.”

Currently, North Korea has undertaken large-scale construction operations to finish the Kim Chaek University of Technology’s faculty apartments, the Pyongyang Orphanage and Nursery, the North Pyongan Chongchon River Power Plant and other projects spanning various fields. The goal is to complete these projects concurrently with the anniversary of the foundation of the Worker’s Party of Korea (October 10).

At construction sites around North Korea, it appears that all available resources are being mobilized to engage in a so-called “speed battle” with these construction deadlines. The side effect of this huge emphasis on speed has resulted in many instances of poor construction, like the collapse of the 23-floor apartment building in Pyongyang’s Ansan-1-dong back in May.

The article also points out, “Despite attempting to work toward self-sustainability, there are events where lower quality, alternative products are being used below the material requirements that are leading to lowered quality work.” Furthermore, the article emphasizes, “Production and circulation of faulty products or products which cause harm to the health or lifestyle of the people must be stopped.”

It has also been reported that corruption is taking place at factories and construction sites, with party officials or intermediary managers amassing riches by siphoning off materials and pocketing the money. This leads to further problems in product quality and defectiveness.

Due to the issues of poor construction and product quality, the article points out, “There are many areas in our material economic life that fall behind the global trend,” but “if the quality of products and buildings are improved, the need to consider products from other countries will wane.”

In order to solve these problems, the article suggests implementing product standardization and specialization and encourages research in industrial design.

UPDATE 1 (2014-9-11): IFES reports: North Korea emphasizes innovation using “economic management in our style” approach:

North Korea has announced that the nation’s economic management problem will be solved through their “own style,” once again stressing the superiority of the Socialist self-reliant economic model and reiterating the need to construct a strong and prosperous nation.

A September 3, 2014 editorial in the Rodong Sinmun argues the importance of economic management and leadership, saying that it must be improved to meet the demands of the North Korean economy, which has reached a new turning point in its development.

“Economic Management System in Our Style” is North Korea’s new approach to economic principles originally stemming from Kim Il Sung and Kim Jong Il. The editorial emphasizes that it is a project that will bring real results and continuous development.

Furthermore, the editorial argues that economic management and leadership must be carried out according to objective economic law and scientific reason in order to ensure the greatest possible economic practicality.

The article also emphasizes the role of scientific technology, saying that “Research and development must be actively promoted in all areas and all aspects of the people’s economy. New scientific technology must be integrated into production in order to renovate the economy and meet the demands of the new generation.”

The editorial also calls for conservation of national human and material resources as much as possible, as fundamental problems in building a strong economic nation and improving the life of the people, including the lack of adequate power and food, have yet to be solved.

The roles of economic advising agencies and their workers were emphasized as being especially important. The editorial stresses that these economic advisers must become aware of the deep responsibility they hold, and must work to achieve real results in improving the country’s economic management.

Finally, the role of the Cabinet was also emphasized as the commander of the economy. Specifically, the editorial calls for the strengthening of the Cabinet-centered system, in which the Cabinet should oversee all economic institutions and sectors and create policies accordingly. In addition, the Cabinet’s role to guide companies with scientific business and corporate strategies is emphasized so that they may actively engage in creative business activities.

North Korea has been rolling out economic improvement measures since early 2012, starting with the agriculture sector. Since then, an “independent profit system” has also been introduced in various factories and businesses where managers are allowed more autonomy in managing operations, but are ultimately responsible for the business’s productivity.

Beginning this year, the “business know-how” concept was applied to various farms and factories, and increased profits reportedly have begun to see their way back into the hands of the workers. The workers, whose job performance has increased due to the rise in profits, are seen as the driving force of North Korea’s economic development.

ORIGINAL POST (2014-9-5): Thanks to Choson Exchange for spotting this one. According to Rodong Sinmun (2014-9-4):

Giving Full Play to Advantages and Might of Self-surpporting Economy

It is necessary to settle the issue of economic management by Korean style in order to fully demonstrate the advantages and might of the Juche-oriented socialist self-supporting economy and win the final victory in the drive for building a thriving nation.

The establishment of Korean-style economic management method is, in essence, the work to apply, carry forward and develop the principle and methods of economic management indicated by President Kim Il Sung and leader Kim Jong Il as required by the present times.

It is necessary to hold fast to the socialist principle in improving the economic management.

It is essential to ensure the maximum economic profitability by guiding and managing economy according to the objective laws of economy and scientific reason.

In order to improve the economic management it is important to raise the responsibility and role of the economy guidance institutions and officials.

It is possible to successfully achieve economic development only by working out a scientific economy development strategy, enlisting the natural resources and all potentials of the country to the maximum, ensuring a steady growth of production and keeping the overall balance of economy.

The Cabinet is the economy command of the country.

It is necessary to strengthen the Cabinet responsibility system, system centering on the Cabinet, concentrate all the economic fields and overall economic work on the Cabinet and take measures under the supervision of the Cabinet.

The editorial calls for improving the economic management as required by the developing reality and intended by the party and thus giving fuller play to the advantages of Korean-style socialism and bring about a fresh turn in the building of a thriving nation.

Here is a PDF of the web page should the URL go bad.

It is worth noting briefly that this is what we have seen recently in recent consolidation of the JVIC, SEDC, and Ministry of Foreign Trade into the Ministry of External Economic Affairs.

Choson Exchange posted a picture taken of a billboard in China that shows the master plan for the development of Hwanggumphyong (HGP) Economic Zone.

Click image for larger version, or visit Choson Exchange here

Here are larger photos of the same billboard:

As was revealed in Andray Abrahamian’s report “The ABCs of North Korea’s SEZs“, there is a new construction project underway at the Hwanggumphyong SEZ:

It is not known for sure what this building is just yet, but it seems to fall within the “Finance Area” of the master plan.

Institute for Far Eastern Studies (IFES)
2014-8-25

Due to the strengthening of capitalism and competition in North Korean society, it appears that the status of consumers has risen considerably.

In the North Korean economy — which has clung to a supply-oriented, planned economic model — it is extremely rare to see production change in response to consumer demands and preferences.

The Rodong Sinmun, the official newspaper of the Central Committee of the Workers’ Party of Korea, published an editorial on August 3, 2014, calling for the “Brisk Opening of the August Third Consumer Goods Production Movement.” This editorial encourages the public by assuring that the consumer products will be made according to the needs and demands of the people.

“A socialist society cannot think about the production of consumer goods that are above the reaches of the people,” the editorial emphasizes, and that “the peoples’ demands and interests are [the Party’s] absolute top priority, and it is the noble duty of the Party to create these desired consumer goods for the people to enjoy.”

Through the use of various media, North Korea has propagandized the “consumer-focused” policy, claiming to have spurred competition and the increase in quality of products and services throughout the nation.

Joguk (Motherland), a media outlet of the pro-North Korean General Association of Korean Residents in Japan, published an article in their August 2014 issue entitled, “The Standard of Competition Is Determined by the People.” The article emphasizes production tailored to consumer demands, saying that “Product evaluation is something which can be done only by those who demand and directly use the product; it can only be done by the general public.”

The article further states that “Products popular among the general public and used by the masses are evaluated accordingly for their high quality.” It also mentions the cosmetic brands “Eunhasu” and “Pomhyanggi” as examples.

In a July 30, 2014 article, the Choson Sinbo introduced the Potong River Shoe Factory, which is responsible for the production of popular products such as the so-called “kill heel” high-heeled shoes, wedge-heeled shoes, and pointed stilettos. By working together with a department store and periodically reviewing customers’ feedback, the Potong River Shoe Factory can produce shoes to cater to shoppers’ preferences.

This method of setting the focus on consumer evaluation can also be found in North Korea’s education system.

On August 7, 2014, the Rodong Sinmun introduced the “bottom-up evaluation” system at Kim Jong Suk Middle School. This process, touted as one of the successes of educational reform, allows students to evaluate their teachers once per semester. By creating competition among educators, this system is expected to have effects all across the nation.

These types of changes are said to have close relations to the Kim Jong Un regime’s policy focusing on light industry, which also accounts for the improvement of standards of living for the people.

It appears that unlike the heavy chemical industry previously emphasized by the Kim Il Sung and Kim Jong Il regimes, light industry must consider not only production amounts, but the quality of the products as well. This inevitably leads to the emphasis being put on consumer product reviews.

Through consumer reviews, competition arises and productivity is increased, leading to the production of consumer goods with higher added value. Despite being called a “Socialist Competition,” in reality this system may not be so different from capitalism.