North Korean Economy Watch

North Korean Fashion Archives

Choson Exchange posted the following on their web page:

During our last trip, we met with Korea Daesong Bank, which kindly provided a product catalog from the 80s/90s of their parent company – Korea Daesong Economic Group (KDEG). While fashion definitely has moved on in Pyongyang, we thought that it might be good to share some of the products they display in their catalog – for old times sake. In case you decide that the retro look is for you, do note that KDEG is currently under international sanctions.

Choson Exchange posted the pictures to their Facebook Page, but since there are many people who cannot (or do not) access Facebook, I thought I would post the pictures here:

American beer popular in the DPRK?

Pictured above (left) is a bottle of Budweiser served with dry fish aboard the recent Mangyongbong-92 “cruise” from Rason to Kumgangsan.  Learn more here. Pictured above (right) is a can of Pabst Blue Ribbon (PBR) which has been converted into a candle holder and placed next to a bottle of “domestic” Taedonggang Beer. Click image for source. Maybe the number of hipster visitors to the DPRK has increased?

Coca Cola
Forbes Magazine has a very interesting article on talks between the North Koreans and Coca-Cola! Read the full article here.  I thought this would be a good time to remind readers about the DPRK’s indigenous cola:

Image source here

The soda is “Crabonated” which is a pretty funny typo. Also worth noting are the lengths they have gone through to copy the Coca-Cola brand–as if they are trying to win back market-share from the firm. The colors, red, black, silver and white are the same. The familiar cursive English “C” at the beginning of the word is a close copy. They even tried to replicate the Coke “wave” by adding a literal wave in a similar curve along the bottom of the advert.

Pictured above (Google Earth): 1.18 Factory (January 18 Factory), which I am told manufactures tanks

According to Yonhap:

According to the Joint Chiefs of Staff (JCS), North Korea added about 300 tanks and 1,200 artillery guns over the past decade. The report comparing the armed forces of the two Koreas was submitted to the National Assembly ahead of the annual parliamentary inspection.

The report claimed that over the same period, the number of North Korean troops went up from 1.17 million to 1.19 million. The JCS noted that financial difficulties haven’t prevented the North from bolstering its military.

On the other hand, North Korea slashed the number of its vessels from about 900 to 740, and its submarines from about 90 to 70. There were 870 fighter jets in the North in 2000, but 820 last year.

You can read the full article here.

According to the Choson Ilbo:

According to the Unification Ministry, 123 firms were operating in the industrial park as of July, with combined production output amounting to US$34.87 million in May, up 25 percent from $27.79 million year-on-year.

The total volume of inter-Korean trade through the industrial park reached $825.88 million in the first half of this year, up 19.5 percent from last year and a whopping 135.8 percent from 2009.

South Korean staff dwindled from 1,461 in 2008, when inter-Korean trade was at its height, to 801 in May this year, but the number of North Korean workers rose from 36,650 to 47,172. And some 3,700 more North Korean workers were hired even since May last year when the South banned new investments there after the North sank the Navy corvette Cheonon in March.

At the moment, the regime is unlikely to shut down the industrial park, since nearly 50,000 North Koreans are working there. But experts stress that the government should take the seizure of the properties in the resort as a warning and be prepared for anything that the regime could do.

“There’s nothing we can be sure of in inter-Korean relations,” said Dong Yong-seung, a researcher at the Samsung Economic Research Institute. “Risk factors always exist because the government launched the Kaesong project without providing any safety net to protect its people and properties, as in the case of the Mt. Kumgang tour project.”

South Korean investments in the industrial park amount to W920 billion (US$1=W1,079) — W540 billion invested by the 123 firms, and W380 billion from the government and public corporations to lay the infrastructure, including electricity and communications facilities, and landscaping.

If the regime shuts down the industrial park, the South would suffer double the losses it incurred from the regime’s seizure of the properties in Mt. Kumgang, which are worth W484.1 billion.

Read the full story here:
Kaesong Firms Worry as N.Korea Seizes Mt. Kumgang Assets
Choson Ilbo
2011-8-24

According ot the Choson Ilbo:

In the scorching afternoon heat last Thursday, two Asian laborers sat in front of a grocery store near a building site in Vladivostok, Russia, cooling themselves with mugs of draft beer. When asked if they were North Koreans, the men asked, “Are you from South Korea?”

One of the laborers, who was in his 40s, then said there were around 50 workers from all over North Korea, including Pyongyang and Nampo, at this particular site alone, and they can be seen at practically every construction site in Vladivostok.

The entire Siberian city has turned into a building site in preparation for the 2012 APEC Summit as roads are being widened and hotels and apartments built. The projects have created booming conditions for North Korean laborers. They can easily be spotted at practically any construction site, cheap restaurant or near housing projects. One North Korean laborer in his 50s said, “We earn US$500 a month if we work from 7 a.m. until 10 p.m. Aside from missing our families, things are not that difficult.”

There are an estimated 3,000 North Korean laborers in Vladivostok. One source there said, “In the past, most of the North Korean laborers worked at logging sites near Khabarovsk, but now most of them work at building sites here.” City officials expect around 3,000 more North Koreans to arrive.

But they are getting stripped of their hard-earned money by the regime. They are sent to Vladivostok by North Korean companies tasked with raising foreign currency and must send a set portion of their earnings back to the North. When their three- to five-year contracts expire, they return home.

One South Korean resident in Russia said, “Even in winter, when there is no work, North Korean workers are threatened by their government minders, who extort money by telling them it is up to them whether they want to stay in Russia or go back to the North and starve.”

For these laborers, money comes before loyalty to the regime. Some with more experience working abroad earn extra cash on the side by working as handymen in Russian homes after they make their payments to North Korean officials.

Recently, there have been rumors that North Korean workers are having to be especially careful. Seven North Koreans working in Vladivostok were apparently sent back to the North after they were caught watching South Korean movies on DVD. One South Korean resident in the city said, “North Korean laborers are allowed to watch porn, but they get in big trouble if they watch South Korean movies.” The resident said North Korean laborers refused to watch South Korean movies even if they are free.

“North Korean laborers send back up to $1,000 a month,” an ethnic Korean merchant in China said. “Things must be better than living in North Korea, but they don’t seem to make enough money compared to the hard work they do.” He said North Korean workers are notorious for never buying anything.

Read the full story here:
Vladivostok Teeming with N.Korean Laborers
Choson Ilbo
2011-8-18

Pictured Above: The Taesung Machine Factory featured in the most recent issue of KPA Journal.

I have been pretty busy this week, but I wanted to put up a quick link to the latest issue of KPA Journal. This issue focuses on the Tae-sung Machine Factory. The issues also contains addendums, corrections and other publications of interest.

Have a good weekend!

Institute for Far Eastern Studies (IFES)
2011-8-10

Kim Jong Il is stressing the importance of the production of commodities for the North Korean people through upgrading the country’s light industry.

On August 1, an editorial in the Rodong Sinmun, “Let’s Go Full Speed Ahead with the Light Industry to Maximize the Production of Commodities,” mentioned the second product exhibition at the Pyongyang Department Store No. 1 as an exposition of “the growing development of light industry.”

The article emphasized Kim Jong Il’s second visit to the exhibition of commodities at the department store, “With the 100th anniversary of the birth of Kim Il Sung, our fatherly leader, revolutionary transition to improve the production of daily commodities must be put into full effect.” Kim’s recent field guidance at the exhibition hint at the state’s increasing efforts to improve the living standards of the population.

The newspaper also reiterated the significance of the exhibition stating, “The second exhibition of commodities at the Pyongyang Department Store corroborated the policies and the legitimacies of the Workers’ Party of Korea (WPK), aimed at improving the living standards of the people through continuous revolution and progress in the light industry of the country.”

In addition, the news mentioned, “Under the leadership of the WPK, the light industry products at this exhibition displayed the spirit of Juche and modernization at the forefront in building an economically powerful nation.” It also explained a variety of about 1,400 “high quality” light industry products were manufactured by 350 central and regional light industry factories, companies, affiliated units, department stores in Pyongyang, and comprehensive industrial product shops.

The newspaper also praised the exhibition to provide an, “Important opportunity to improve the lives of the people while parading the great national spirit, creativity, and ability.” It added, “The product exhibition has become an important turning point to revitalize the production of daily commodities of the people and revealed brilliant prospects for the future development of the light industry of our country.”

Thus, this year was depicted as an important year for light industry. The development of light industry was described as an unwavering goal of the workers and the party members to succeed in the march for improving the lives of the people by 2012 and celebrate the 100th anniversary of the DPRK founding leader’s birthday.

According to Yonhap:

Trade volume between South and North Korea reached US$825 million in the first six months of the year, up 19.5 percent compared to the same period last year, the Unification Ministry said Wednesday.

The cross-border trade volume jumped more than 135 percent compared to the January-June period in 2009, the ministry said.

The figure suggests that a joint industrial complex in the North’s border city of Kaesong, a key source of inter-Korean trade, has not been affected by South Korea’s sanctions imposed on the North for its two deadly attacks on the South last year.

The industrial complex, an achievement of the first-ever inter-Korean summit in Pyongyang in 2000, combines South Korea’s capital and technology with the North’s cheap labor.

More than 47,000 North Koreans work at about 120 South Korean firms operating in the industrial zone to produce clothes, utensils, watches and other goods.

South and North Korea have recently raised the minimum monthly wage for the North Korean workers by 5 percent this year to US$63.814, according to the ministry.

Previous posts on the Kaesong Industrial Zone can be found here.

Read the full story here:
Inter-Korean trade via joint industrial zone increases 19 pct in H1
Yonhap
Kim Kwang-tae
2011-8-3

Pictured above (Google Earth): Kumsong Tractor Plant (금성뜨락또르공장).  See in Google Maps here.

According to Reuters:

North Korea wants to import Cambodian rice to try to ease food shortages and has offered in return to provide machinery and expertise to develop Cambodia’s fledgling mining and energy sectors, a Cambodian official said on Wednesday.

A North Korean delegation led by Deputy Trade Minister Ri Myong-san visited Cambodia this week and the country is keen to import rice as soon as possible, said Ouch Borith, Cambodia’s secretary of state for foreign affairs.

It would help Cambodia develop its mining sector and invest in hydropower dams.

The amount of rice North Korea wanted to import was not disclosed, he said. Further specific details, such as how North Korea would fund its purchases and investments, were not available.

Cambodia is the world’s 15th biggest producer of rice and has set a target of exporting 1 million tonnes of the grain within the next four years.

According to the Economic Institute of Cambodia (EIC), an independent think tank, the country is expected to ship about 100,000 tonnes of milled rice this year, up from 50,000 tonnes in 2010. More goes to Vietnam to be milled and shipped from there.

North Korea is one of the world’s poorest countries and it rarely produces enough food to feed its 24 million people, often as a result of bad weather affecting harvests.

International sanctions over its nuclear weapons programme combined with neighbouring South Korea’s refusal to provide help have led to a substantial decline in food aid from its traditional donors.

Although Cambodia and North Korea have no trade ties, they have a diplomatic relationship. Cambodia’s former King Norodom Sihanouk has a house in North Korea and was once a special guest of the country’s late ruler, Kim Il-sung.

Ouch Borith said North Korea had offered to sell agricultural machinery to Cambodia, such as tractors, at cheaper prices than Western countries and wanted to provide expertise in developing mines.

“We have only small and medium-sized enterprises, not big industries, but Cambodia’s natural resources are huge, such as minerals, gold, iron and aluminum,” he told reporters.

“Our friends the Koreans said they would do studies and use their experience to help Cambodia make an industry from these natural resources.”

Agriculture forms the biggest part of Cambodia’s $10 billion economy, followed by tourism and garment manufacturing, but it is also trying to develop its energy and mining sectors.

Read the full story here:
N. Korea wants to buy Cambodian rice, invest in mining
Reuters
2011-7-27

This story is nearly impossible to verify, so take it with a grain of salt.

According to Choson Ilbo:

North Korea has been manufacturing banned substances on a state-wide level for years to help its athletes excel, according to a high-ranking defector from the communist state.

The shock announcement comes just days after five female North Korean athletes who competed in the 2011 Women’s World Cup in Germany tested positive for anabolic steroids.

“The Sports Science Research Institute under North Korea’s Physical Culture and Sports Ministry operates two plants in Pyongyang’s Potong and Sosong districts that produce drugs for athletes,” said the defector.

“They are disguised as tonics or nutritional supplements,” he said, adding that Pyongyang sent scientists to sympathetic communist countries decades ago to study up on the subject.

“North Korea sent Sports Ministry officials to East Germany during the late 1980s to learn about the latest drug manufacturing technology,” he said. “The drugs can make athletes strong, but they cannot be detected by most doping tests.”

“It is quite common for athletes in North Korea to take [performance-enhancing] drugs. When North and South Korea fielded a joint team during the 6th World Youth Soccer Championship [in Portugal] in 1991, Ri Myong-song, who headed the North’s sports delegation at the time, offered drugs to South Korean athletes but was turned down,” he said.

The North Korean military is also engaged in manufacturing such illegal drugs, he claimed. According to the defector, the regime’s armed forces began production in the 1970s at an army hospital in order to enhance the combat capabilities of its soldiers, but athletes in the military are now the main users.

The top officials tasked with overseeing the production of illegal substances are Physical Culture and Sports Minister Pak Myong-chol and First Vice Minister Jang Ung, he said.

Pak, the son-in-law of professional Korean-Japanese wrestling legend Rikidozan or Yok Do-san, is a childhood friend of North Korean leader Kim Jong-il. He is also a close confidante of Kim’s brother-in-law, Jang Song-taek, but found himself ousted in 2004 when Jang was accused of corruption. Both Jang and Pak were reassigned to their posts in 2006.

Jang Ung, who is also a member of the International Olympic Committee, handles the finances of the ministry in question. He apparently manages much of the valuable foreign currency wired from North Korean restaurants around the world that helps prop up the North’s cash-strapped regime. Those funds are then allegedly used to import the various ingredients needed to make performance-enhancing drugs and other illegal substances.

Regarding the latest doping scandal surrounding the women’s World Cup, North Korea has apparently claimed that its athletes accidentally ingested anabolic steroids while they were recovering from their injuries by taking oriental medicine containing musk.

The AP reported that the latest controversy is the biggest doping scandal in a major sports event since top soccer player Diego Maradona was kicked out of the 1994 World Cup in the U.S. after testing positive for banned substances.

Read the full story here:
N.Korea Manufacturing Banned Drugs for Athletes, Defector Claims
Choson Ilbo
2011-7-20

Picture above from the Daily NK.

According to the Donga Ilbo:

China has begun cracking down on North Korea`s narcotics trade in China along with South Korean intelligence, having seized 60 million U.S. dollars worth of drugs from the North last year, according to a South Korean government source Monday.

“It’s only a fraction. The volume of drug trafficking in China will be much greater than that,” the source said.

This is the first time for China to unveil the volume of narcotics made in North Korea.

Beijing had been reluctant to raise the matter in public though it found Pyongyang`s increased drug trafficking as a threat. China diplomatically protects the North in nuclear issues but started a crackdown with South Korea apparently because it can no longer tolerate the North`s narcotics, which threatened China`s three northeastern provinces bordering the North.

The drugs seized by Beijing are said to have the best quality, going beyond the level individuals can produce. So Pyongyang is considered to be manufacturing narcotics on the national level at factories.

“China is pretty much pissed off,” a diplomatic source said, adding, “China believes that North Korea’s drug trafficking has grown more serious since last year.”

Though Beijing did not specifically mention the North when it stressed a crackdown on drugs, it implied North Korean-made narcotics.

In a previous post, we linked to a Newsweek story on the Chinese crackdown:

Twenty years ago, Yanji had only 44 registered drug addicts. Last year, the city registered almost 2,100 drug addicts, according to a 2010 Brookings Institution report, with more than 90 percent of them addicted to meth or similar synthetic drugs. Local officials acknowledge that this is very likely a gross undercount and that the actual number may be five or six times higher. “Jilin Province is not only the most important transshipment point for drugs from North Korea into China, but has itself become one of the largest markets in China for amphetamine-type stimulants,” the Brookings report said.

Chinese authorities recently conducted a provincewide crackdown, code-named Strong Wind. But for law enforcement, the drug presents a particular problem. Unlike other drugs, it’s nearly impossible to trace the origin of meth. Still, officials, residents, and experts believe that much of the methamphetamine consumed in this Chinese region is manufactured across the border in North Korea, a longtime exporter of drugs. “Clearly,” the Brookings report said, amphetamine-type stimulants “from North Korea have become a threat to China in recent years.”

In an article published last year, Cui Junyong, a professor at Yanbian University’s School of Law, posited that a large amount of the illegal drugs ingested in Yanji came from North Korea. Supporting his point, the border patrol last year arrested six North Koreans in a high-profile bust, including a dealer named “Sister Kim.” Although sources estimate that a gram of meth in North Korea costs roughly 10 times the price of a kilo of rice—about $15—it’s still much cheaper than in China.

“Selling ice is the easiest way to make money,” says Shin Dong Hyuk, who was born in a North Korean concentration camp in 1982 and escaped to South Korea in 2005. Every defector, he added, “knows about ice.”

Perhaps because of its alliance with its benighted neighbor, the Chinese government has been extremely careful about pointing its finger at North Korea; reports on drug busts in Jilin province euphemistically refer to the drugs as coming from a “border country.”

“We don’t publicize” the drugs coming from North Korea because it would touch on “the good relationship between China and North Korea,” an official, requesting anonymity, from Jilin’s anti-drug unit says. But he adds, “Of all the drugs we’ve seized this year, it’s mostly been ice, because that’s our main drug here.”

…

According to Yun and others, North Korea’s methamphetamine production is centered in Hamheung, the site of a chemical-industrial complex built by the Japanese during World War II, which has a high concentration of chemists and was reportedly one of the worst-hit cities during the famine.
…

Earlier this year, a US Department of State report to the Congress alleged that the DPRK’s state-sponsored drug production was on the wane–though “private” production and trade along the Chinese border remained a problem.  According to one report:

In an annual report submitted to Congress, the US State Department said “no confirmed instances of large-scale drug trafficking” involving the North Korean state or its nationals were reported in 2010.

It said there was not enough information to confirm that the communist state was no longer involved in drug manufacture and trafficking “but if such activity persists, it is certainly on a smaller scale”.

This is the eighth consecutive year that there were no known instances of large-scale methamphetamine or heroin trafficking to either Japan or Taiwan with direct North Korean state involvement, it said in the 2011 International Narcotics Control Strategy Report.

“The continued lack of public reports of drug trafficking with a direct DPRK (North Korea) connection suggests that such high-profile drug trafficking has either ceased or been sharply reduced,” the report said.

The report said, however, that trafficking of methamphetamines along the North Korea-China border continues and press reports about such activities have increased in comparison to last year.

“These reports… point to transactions between DPRK traffickers and large-scale, organised Chinese criminal groups” in locations along the border.

“Press reports of continuing seizures of methamphetamine trafficked to organised Chinese criminals from DPRK territory suggest continuing manufacture and sale of DPRK methamphetamine,” the report said.

This and continued trafficking in counterfeit cigarettes and currency suggests that “enforcement against organized criminality in the DPRK is lax”, it added.

Additional Information:
1.  Back in March, Andrei Lankov wrote about this situtaion.

2. Earlier this year, the DPRK arrested some Japanese men in Rason for “trafficking and counterfeit”.

3. In June, China intercepted a meth shipment from the DPRK.

4. Marcus Noland also has posted on this topic.