North Korean Economy Watch

Daily NK
Yang Jung A
7/11/2007

Earlier this year, North Korean authorities banned the importation of cars made from Japan. However, it seems that Japanese cars are still being imported into North Korea.

Moreover, due to Japan’s sanctions on North Korea which prohibits the entry of North Korean cargo ships into Japanese ports, it seems that 3rd countries’ ships are being used to import the cars.

On the 8th, the Sankei Shimbun reported, “The Japanese government placed a measure prohibiting the entry of the “Mankyungbong 92” and other North Korean ships into Japanese ports. However, North Korea is using foreign cargo ships to import second hand goods made from Japan.”

In relation to this, the Sankei Shimbun reported, “From January until June this year, a total of 13 foreign cargo ships have entered North Korea loaded with Japanese goods” and informed, “These ships come from 5 countries including Russia, China, Georgia, Cambodia and Belize, with the majority of staff Russian or Chinese.”

Further, the newspaper stated, “1,000 second hand refrigerators and hundreds of small second hand trucks have been imported into North Korea through 3rd countries’ ships.”

In particular, “Last January, a Cambodian cargo ship carrying 9,000 second hand Japanese bicycles entered North Korea and in April, a Berlize cargo ship containing 11,000 second hand Japanese bicycles entered North Korea” the newspaper reported.

The fact that North Korea has continued to import Japanese cars is a clear sign that the measure to ban all Japanese vehicles was more or less a bluff.

A number of North Korean sources revealed this month, “Authorities made an order to confiscate all Japanese made vehicles including trucks and cars until 2009, and to change all the vehicles to cars made from South Korea or China.”

A source informed “This order was notified by the secretarial department of the central authorities around February 16th, as a directive from the transportation division in the form of lectures” and said, “In Pyongyang, the city traffic security agencies are in charge of the inspections whereas in the country, the provincial traffic security agencies are in charge.”

However, the drivers and conductors of Japanese cars and trucks in North Korea question whether all the Japanese cargo vehicles will be confiscated considering they make up 95% of North Korea’s vehicles. Rather, the atmosphere tends to be leaning towards the measure diminishing away sometime in the near future.

North Korea experts speculate that the order to confiscate Japanese vehicles is an attempt to aggravate antagonisms against Japan in response to Japan’s abductees issue and progression of six party talks. Nonetheless, Japanese goods beginning with cars are used and spread widely across North Korea. In reality, it may be difficult to see any results in attempt to confiscate the vehicles.

Bloomberg
Bradley Martin
7/10/2007

A black Volkswagen Passat with smoked windows glides down a suburban Pyongyang road. Its license plate begins with 216 — a number signifying Kim Jong-il’s Feb. 16 birthday, and a sign the car is a gift from the Dear Leader.

Even without a 216 license plate, a passenger sedan bestows VIP status in a country where traffic is sparse and imports are limited by external sanctions and domestic restrictions alike.

Just across the border, South Korea is the world’s fifth-largest automotive manufacturer. To an ordinary North Korean, though, a private car is “pretty much what a private jet is to the ordinary American,” says Andrei Lankov, author of a new book “North of the DMZ: Essays on Daily Life in North Korea.”

He estimates there are only 20,000 to 25,000 passenger cars in the entire country, less than one per thousand people.

Discouraging private car ownership is not just a matter of ideology in a communist country, Lankov said in a phone interview from Seoul, where he teaches at Kookmin University. The passenger car, usually black and chauffeur-driven, “is the ultimate symbol of the prosperity of high officials,” he says. They keep the vehicles scarce “so everybody knows they are the boss.”

Measuring, copying

North Korea moved early — shortly after the Korean War, and ahead of the South — to mass produce trucks and 4-wheel-drive Jeep-type military vehicles. Craftsmen took apart imported Soviet tractors, trucks and utility vehicles, measuring the parts to make copies.

The indigenous civilian passenger-car industry, too, mostly made knockoffs of models produced elsewhere. After importing a fleet of Mercedes-Benz 190s, the country produced replicas under local model names into the 1990s. Unfortunately, the domestically-made copies were dogged by reports about “terrible overall quality,” says Erik van Ingen Schenau, author of a new pictorial book, “Automobiles Made in North Korea.”

Lee Keum-ryung, a former used-car trader who defected from North to South Korea in 2004, agrees. The knockoffs came with “no air conditioning, no heater, and they’re not tightly built or sealed,” he says. “If you drive out of the city and return, your car will be full of dust. It’s like an oil-fueled cart.” Lee, 40, uses a pseudonym because he fears repercussions from North Korea.

Slow recovery

Material and energy shortages that accompanied a famine in the 1990s brought state-run factories to a halt. Recovery has been slow, and Schenau said he believes even domestic production of Jeep-style vehicles has been replaced by imports from Russia and China.

Imports have similarly come to dominate what passes for the passenger-car market. Used cars — mostly Japanese-made — are the mode of transit for many members of the new trading and entrepreneurial class that has emerged in the last couple of decades. Under a loophole in the country’s long-standing private-car ban, these vehicles typically enter the country disguised as gifts to North Koreans from their relatives in Japan’s Korean community, Lankov says.

Lee says “a relative abroad” helped him buy his first car when he was 23. “But as an ordinary person, I couldn’t keep it under my name, and I didn’t have a number plate of my own,” he says. “A friend was a high police official with many cars under him. I borrowed a plate.”

‘A very affluent life’

Lee had “a very affluent life” before he defected, importing 10-year-old cars from Japan and selling them both in North Korea and, for a time, across the border in China. “I had money, status,” he says. “I enjoyed everything people my age could have.”

A small passenger vehicle for which his agent paid $1,500 at the docks in Japan would sell for $2,500 to $3,000, Lee says. A bigger car — say, a Toyota Crown — might cost him $4,000 to $5,000; he would sell it for $8,000.

While Japanese trade figures show annual exports of some 1,500 passenger cars, mostly used, to North Korea in 2005 and 2006, the total for this year is zero. After Kim’s government tested a nuclear device last October, Japan placed passenger cars on a list of banned luxury exports.

Perhaps as a sign of displeasure with Japan’s sanctions, Kim ordered most Japanese cars confiscated, according to a February 2007 dispatch by South Korea’s Yonhap news agency. The order, if it indeed was issued, hadn’t been carried out by the time of a May visit to Pyongyang, when a number of Japanese cars could be seen.

German inroads

When a European-made import passes by, it’s often owned by the state, used by high officials and foreign dignitaries. Sweden’s Volvo had a hefty market share in the 1970s; Germany’s Audi and Volkswagen have made inroads lately. Mercedes is particularly well-represented in Kim’s personal fleet of hundreds of vehicles, according to Lee Young Kook, a defector who served in Kim’s bodyguard force.

In a 2003 Yonhap story, Lee said the security-conscious leader traveled in motorcades of identical cars to confuse would-be assassins and generally maintained 10 units each of any model so five would always be road-ready.

With the nation’s access to imports constricted, a relatively new player in the market, Pyonghwa Auto Works, has attempted to fill the gap. The company was created when Seoul-based Pyonghwa Motors, which began as a car importer affiliated with Rev. Sun Myung Moon’s Unification Church, teamed up as majority partner in the 70-30 venture with the North Korean state-owned trading firm Ryonbong Corp.

Kits of parts

The first assembly line was set up in 2002 at the west coast port city of Nampo to produce, from kits of parts, a version of the small Fiat Siena, called the Hwiparam (Whistle) in Korean.

So far, the factory has built about 2,000 cars and pickup trucks, according to Noh Jae Wan, a spokesman in Seoul for Pyonghwa Motors, who said it is the only manufacturer now turning out passenger cars in North Korea. According to a February announcement by Brilliance China Automotive Holdings, Pyongyhwa has agreed to let Brilliance use part of the Nampo plant to assemble Haise minibuses.

While some news accounts have mentioned the possibility that the North Korean cars may eventually be sold in the South, “this will take time,” Noh said in an interview. “It can only happen when the two Koreas reach some significant agreement on trade or other international circumstances change.”

Yonhap
7/2/2007

In a sign of burgeoning economic ties, a group of South and North Korean officials jointly visited South Korean companies in China and Vietnam, the Unification Ministry said Monday.

The delegation consisting of seven South Koreans and as many North Koreans working at a joint management office of the Kaesong industrial complex visited the companies in Shanghai, Shenzen, Guangzhou, Hanoi and Ho Chi Mihn City for 10 days from June 19. They were given tours and received briefings on the companies’ operations, the ministry said.

“It was a good opportunity for North Korean economic officials to learn from rapidly developing socialist countries,” a senior ministry official said, asking to remain anonymous. “They must have shared the need to further promote inter-Korean economic ties.”

It marks the first time that South and North Korean officials made an overseas trip together to assess the development of South Korean companies, the official added.

In the North Korean border city of Kaesong, a capitalist enclave, South Korean businesses use low-cost skilled North Korean labor to produce goods. Monthly production in the complex exceeds US$10 million.

Currently, 23 South Korean companies employ about 15,000 North Korean workers at the site developed on a trial basis. These include construction workers and workers at a management office. The number of North Korean workers is expected to increase to more than 350,000 when the complex becomes fully operational in 2012.

Bloomberg
Hideko Takayama
6/28/2007

Kim Jong Il no longer supports the government of North Korea.

Kim is a 66-year-old businessman who owns a shoe factory in Kobe, Japan. In 1997, he resolved to switch his citizenship to South Korea from North Korea after deciding that “I could no longer support a government that allowed children to starve to death.”

Since then, thousands of North Korean residents in Japan have made the same decision. And that is bad news for the other Kim Jong Il — the one, no relation to the businessman, who has ruled North Korea since 1994.

For the last four decades, Japan’s North Korean residents have sent billions of yen in money and goods back home to their relatives and the Pyongyang regime. As more and more of them switch their allegiance to South Korea, they are choking off the flow of resources to an isolated and impoverished country already coping with trade sanctions.

While there is no way of knowing exactly how much they have sent, Katsumi Sato, director of the Modern Korea Institute in Tokyo, estimated that in the early 1990s, the annual total was some 60 billion yen ($600 million) in money and supplies.

“The cash and goods sent from Japan in the late 1980s were bigger than their national budget,” Sato said. “It was North Korea’s lifeline.”

Forced Labor

Japan was home to more than 600,000 Koreans in the 1970s, according to Japanese government figures. Roughly 330,000 were loyal to the South and 280,000 supported the North. They were the descendants of forced laborers Japan brought back from the peninsula during the era of colonial rule from 1910 to 1945, or Koreans who came to Japan looking for work.

South Korean residents now number about 400,000, according to the Korean Residents Union, a pro-South group. North Koreans are estimated at less than 50,000. The Chosensoren, an organization founded in 1955 to represent the interests of North Koreans who live in Japan, doesn’t disclose how many members it has.

One wave of North Koreans switched allegiance in the mid- 1990s after visiting their relatives and witnessing their suffering as a result of the famines that killed as many as 3 million people. Hundreds more switched when North Korea’s Workers Party secretary Hwang Jang Yop defected to South Korea in February 1997 and openly criticized Kim’s regime.

Demographic Forces

The shift reflects demographic as well as political forces. Older North Koreans are dying; some younger ones are becoming naturalized Japanese citizens. Other younger residents have fewer direct ties with their North Korean relatives and find other ways to spend their money.

One 27-year-old computer programmer dreamed of a honeymoon in Italy, then he hit a snag: He needed a fistful of time- consuming approvals and permits to travel. So he became a South Korean and heads to Italy this summer. He asked that his name not be used because he still has some loyalty to North Korea and feels uncomfortable about the switch.

Japan’s decade of recessions and slow growth has also taken a toll on the flow of cash and supplies sent to the homeland. Much of the money has come from North Korean residents running pachinko gambling halls, an industry with annual sales of 28 trillion yen ($231 billion), according to the Japan Productivity Center for Socio-Economic Development. But even these popular parlors have felt a financial pinch.

Seeking Protection

In April, a pachinko chain owned by a former North Korean resident and known as Daiei — no relation to Kobe-based retailer Daiei Inc. — filed with the Tokyo District Court for protection from creditors under the Civil Rehabilitation Law.

“With the slump in Japan’s economy, many North Koreans here lost their businesses,” Kazuhiro Kobayashi, who wrote “Kim Jong Il’s Big Laugh” and other works on North Korea, said in an interview. “I believe the amount of funds flowing to the North from Japan is less than a twentieth of what it was.”

One sign of North Korea’s woes: Last week, the Tokyo District Court ordered the Chosensoren to pay 62.7 billion yen to cover unpaid debt or face the seizure of its headquarters in lieu of payment.

In the past, the Chosensoren might have collected money from North Korean residents in such a situation. That’s now much more difficult, not only because of the North Korean business failures, but also because many residents criticize the organization for serving as a watchdog or even a branch office of the government in Pyongyang.

Medical Supplies

North Korea has also found it increasingly difficult to transport cash, medical supplies, clothing and other goods from its residents in Japan.

In the past, most of this cargo would travel on the North Korean vessel Mangyonbong, which docked on Japan’s northwestern coast. The ship also carried 90 percent of the parts for North Korean missiles, according to testimony in 2003 before a U.S. Senate subcommittee by a North Korean engineer who defected.

After North Korea test-fired several missiles over the Sea of Japan in July 2006, Japan banned the Mangyonbong from its ports. It banned all other North Korean ships after the underground nuclear test last October, as part of its economic sanctions.

The flow of North Koreans changing citizenship shows no sign of abating. In Tokyo alone, residents have been switching at a rate of roughly 100 a month since 2006, according to statistics from the South Korean consulate in Tokyo. In February 2007, the latest month available, 120 switched.

For Bae Soo Hong, the 46-year-old president of a construction company near Osaka, it was Kim Jong Il — the ruler, not the businessman — who made him decide to change.

When Kim acknowledged during a 2002 meeting with Japanese Prime Minister Junichiro Koizumi that North Korea had abducted Japanese citizens, “I knew it was time,” Bae said. He became a South Korean citizen this month.

Korea Herald
Matthew Lamers
6/21/2007

“Would you rather pay $1,000 a month for a laborer in South Korea, or would you rather pay $60 a month for a laborer in North Korea? It is up to you.”

When Byun Ha-jung, general manager at Hyundai Asan, put that question to a bus full of potential investors visiting North Korea, a sputter of chuckles filled the air.

But he was serious.

Yesterday, Hyundai Asan invited just over 100 guests to tour North Korea’s Gaeseong industrial park, just a few kilometers away from the Demilitarized Zone.

The potential benefits of investing in Geaseong are enormous. Up for grabs for almost anyone willing to front the cash, are factories for 43,900 won ($47.32) per square meter, even cheaper than in China, and an educated and hard working labor force that demands only about $2 a day.

Development of the complex has been steaming ahead and senior vice president of Hyundai Asan, Jang Whan-bin, said that the reason is that South Korean corporations are essentially being squeezed by rising labor costs in China and elsewhere. “It is difficult to compete with Chinese companies. Some South Korean companies that have moved production facilities to China will have to return to Korea” to maintain competitiveness, “and Gaeseong is the best alternative.”

Gaeseong’s laborers are a fraction of the cost in comparison to workers in developing countries like China and Vietnam. The minimum wage for North Korean workers in the industrial park is $50 a month for a six-day work week. Each worker is entitled to 14 days holiday per year, and maternity leave is up to 150 days, 60 of which are paid.

In 2004, the first 255 North Koreans were hired to work in the complex and as of February 2007 there were over 11,000. That number is expected to swell north of 70,000 before the first phase of the complex’s development is completed.

Han Cheon-seung, co-CEO of Citigroup Global Markets Korea, said that the North is “one of the last frontiers for development. The workers’ quality is quite high here. I think this project is really going to work.” Han added that he thinks the biggest draws for Gaeseong are labor, quality and the Korean connection. “Labor is about 1/30 of the cost here,” and the logistics of having factories located on the peninsula “is much easier than having factories in Vietnam or China.”

“About 7,000 companies have moved abroad – 2,000 of those to China – but Gaeseong is much closer to home and there is no language barrier. One very important question is – can we trust the North Korean government.”

A pertinent question indeed. It is often quipped that the only thing reliable about the North’s government is its unpredictability.

Still, some potential investors were not fazed at all by the geo-political tension between South and North Korea. Others voiced great surprise that a project like Geaseong has been as successful as it has. “What impresses me is the (cooperation) for reunification, roads and railroads being reconnected, for example … In Germany, the Berlin Wall came down and that was it,” said Knut Kille, a native German, now executive vice president of Robert Bosch Korea.

Regarding the North’s nuclear programs, Hyundai Asan’s Jang said, “The overall development of the country is the most important thing. I am not concerned with only the nuclear issue.”

Yonhap
Sohn Suk-joo
6/20/2007

Four South Korean companies have canceled their contracts for the use of land at an inter-Korean industrial complex in the North Korean border city of Kaesong for unknown reasons, officials said.

The cancellations come amid growing concerns about stalled negotiations on North Korea’s nuclear weapons program, which critics fear might endanger, in the worst-case scenario, the status of the inter-Korean joint economic project, the brainchild of the unprecedented inter-Korean summit in 2000.

Refusing to identify the companies, they said the contracts were revoked in January, February and April, respectively, but the government has yet to take back the corporate licenses for doing business in the Kaesong industrial complex.

In the capitalist enclave, South Korean businesses use cheap North Korean labor to produce goods. The monthly production in the complex exceeds US$10 million.

Currently, 23 South Korean companies employ about 15,000 North Korean workers at a site developed on a trial basis, including construction workers and others at a management office. The number of North Korean workers is expected to increase to more than 350,000 when the complex becomes fully operational by 2012.

In September 2005, the South Korean government offered plots of land to 24 South Korean companies so that they could start to move into the area created in the first phase of the industrial complex’s development.

Some raised the possibility that the companies canceled the contracts becase there is little chance that the complex will become an “outward processing zone” in a free trade deal between South Korea and the United States.

South Korea pushed for the U.S. to include products from the complex in the trade deal, but they only agreed to create a committee to discuss what they called an outward processing zone.

South Korea sees it as the basis for further discussion of the Kaesong issue, while the U.S. cautions against reading too much into it, saying it is a kind of agreement they can reach with any bilateral trade partner regardless of the existence of a free trade deal. They are expected to formally sign the deal later this month.

Daily NK
Kim Min Se
6/19/2007

Having received permission from North Korean authorities, North Korean restaurants that are operating in China or in Southeast Asia are making fixed payments of $10,000 to 30,000 to North Korea.

The portion of payments made to North Korea by North Korean restaurants operating in China or Southeast Asia is a known reality, but this is the first time that the amount that these restaurants made to North Korea became known.

Kim Myung Ho (pseudonym, 59), who has experience running a North Korean restaurant in China under the auspices of a North Korean foreign currency-making activity organization, met our reporter in an unnamed quarter of Dandong in China on the 13th. He said, “Under the influence of each ministry in the administration or a money-making business, North Korea is trying to competitively establish restaurants abroad.”

According to Mr. Kim, the amount remitted by the restaurants is decided according to the number of waitresses and employees.

He said, “The amount sent back to the North is $10,000 if the number of employees is less than or equal to 15, but if it exceeds 20, then the amount of remittance is $20,000, and over that, the amount is capped at $30,000.”

Mr. Kim said, “Every year, the sum total is counted at the business headquarters in Pyongyang, but if there’s even a small default or lack of results, then the threat of evacuation is given.”

Currently, there are over a hundred odd restaurants which are known in China, Vietnam, Cambodia, and Laos. In the case that $10,000~30,000 is sent to North Korea every year, it can be calculated that North Korea is earning approximately several tens of thousands of dollars through overseas restaurant operations alone.

Mr. Kim revealed, “North Korean restaurants are receiving the limelight as main foreign currency-making activity businesses. Because they are pursuing business competitively, they have had to shut down operations one after the other due to the inability to manage internal affairs, such as employees breaking away.”

The shutdown of two North Korean restaurants, named “Pyongyang Moran Restaurant” and “Pyongyang Restaurant,” for several months due to the running away of waitresses was a confirmed fact of Daily NK’s investigations.

Presently, there are special trade companies who try to achieve the foreign-currency making activity plans issued by each ministry of the North Korean government. Most of North Korean restaurants that are operating overseas right now are associated with these trade companies.

Mr. Kim said, “Foreign currency collected in these ways is used as operating capital of superior offices Party and as a portion of the Party. Anything besides this, higher than that, is hard to say.”

The reason for the expensive price of food at North Korean restaurants is due to these remittance amounts. They exceed the price of food at surrounding restaurants by three times. In Dandung City, nangmyeon (Korean buckwheat noodle), which can be obtained for 6 Yuan at a high-class Chinese restaurant, is two times pricier at 10~15 Yuan at North Korean restaurants.

The price is expensive, but what makes these restaurants popular, which cannot be found at no other restaurant, is the performances accompanied by song and dance of North Korean waitresses. Performers are usually 20~25 young women who draw customers by singing North Korean songs and even Chinese songs.

Mr. Wang, a Chinese patron seeking a North Korean restaurant in the evening of the 14th, confessed, “I like the fact that I don’t have to seek out a karaoke, because I can sing and dance with the ladies of Pyongyang.”

Further, he expressed contentment that “I can receive high-class service which is difficult to receive at a Chinese restaurant, so it is good for entertaining business partners.” North Korean restaurants are drawing popularity by its unique business method of simultaneously providing food and amusement. Recently, they have tried to actively rouse regular customers by not only providing performances, but dancing with the customers.

A person of Korean-Chinese descent, who is pursuing North Korea-Chinese trade in Dandung, expressed, “It’s disappointing to see the sight of restaurants multiplying when trade is not sanctioned normally due to the lack of foreign currency. Businesses are operating with food and entertainment due to a lack of good income sources; in Dandung alone, there are over 10 restaurants.”

Joong Ang Daily
Hwang Young-jin
6/19/2007

Trade volume between North and South Koreas has increased more than threefold since the historical June 15 Declaration in 2000.

With an average increase of 24.3 percent, annually, the total amount will reach $1.7 billion by the end of the year, according to the report on inter-Korean Trade from the Korea International Trade Association, also known as KITA.

Annual trade volume in 2000 was $425 million, which increased to $1.3 billion last year. Trade volume so far this year until May has already reached $563 million, which is a 31.3 percent increase year-on-year.

Besides the overall growth, what is healthy about the trade quality is that commercial trade accounts for almost 70 percent of the total trade. That figure was below 60 in 2000, according to the report. Non-commercial trade refers to aid including items such as rice, clothing and fuel. In other words, they are products that were sent to North Korea free of charge.

“The success of the Kaesong Industrial Complex is the biggest reason [for the rise],” said Roh Sung-ho, head of the Inter-Korean trade support team at KITA. “We are accepting bids for additional space at the Kaesong complex, and three times more companies bid than there are lots available.”

With more and more companies establishing factories in Kaesong, more material is exported from the South, and more manufactured goods return, said Roh.

The value of goods leaving South Korea was higher than the value of goods returning. However, about 30 percent of those goods were aid and were given free of charge. When that is taken into account, the North made more money from its exports to the South than the South made in exports to the North.

This allows the North to record a profit in trade account books.

“The nuclear incident last year, didn’t affect inter-Korean trade. There might be minor falls, but I expect trade volume between the two Koreas to increase for the time being,” Roh said.

Joong Ang Daily
6/13/2007

A U.S. congressman on Monday demanded changes to a tentative free trade agreement with South Korea, which he said could allow the Asian trading partner to export North Korea-made goods to the United States.

Rep. Sander Levin (D-Michigan) sent a letter to U.S. Trade Representative Susan Schwab raising questions about a draft FTA annex that deals with “outward processing zones” on the Korean Peninsula.

South Korea and the U.S. had maneuvered around the sensitive issue of the inter-Korean joint economic venture, the Kaesong Industrial Complex, by agreeing to discuss in the future whether to include products from such “zones” in their FTA.

Kaesong houses a manufacturing complex where South Korean capital is combined with North Korean cheap labor to produce price-competitive goods. Seoul strongly pushed to have Kaesong covered by the FTA, but the U.S. balked at the idea of importing products made in a country with such a poor human rights record.

Levin, who has already vowed opposition to the FTA, citing unsatisfactory provisions in the auto sector, said Annex 22-C on the zones applies labor standards different from those agreed on between the Congress and the U.S. administration.

The annex directs the committee to examine the standards with “due reference to the situation prevailing elsewhere in the local economy and the relevant international norms.”

“To apply any lesser or different standard for goods from North Korea,” Levin wrote, “would be wholly inconsistent with… basic international labor standards.”

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.