Archive for the ‘Black markets’ Category

North Korea between collapse and reform

Friday, December 19th, 2008

Asian Survey Vol. 39, No. 2 (Mar. – Apr., 1999), pp. 287-309
Kongdan Oh and Ralph Hassig

Download PDF here or download from Jstor.org here

The refusal of North Korea’s letters to institute serious economic reforms has frustrated those who study the country and those who seek to alleviate the suffering of the North Korean people.  Two French medical aid organizations have withdrawn from the country complaining that the Pyongyang government interfered with their work.  This is but one sign of a growing donor fatigue.  The muddling through plan that the Kim regime has adopted involves soliciting foreign aid, bargaining with its military and nuclear products, making minimal unofficial changes in the domestic economy, and waiting for the international environment to become more favorable—perhaps even expecting a resurgance of international communism.  Equally important, Kim and his ruling cohorts are willing to sacrifice the economic health of their nation for the security of their regime, just as other dictators, both communist and non-communist have done.  The painful difference in North Korea’s case is that it is half of a divided nation, posing an immediate humanitarian dilemma for the millions of Koreans in the Southern half of the penninsula whose families are suffering in the north.  For this reason more than any other, the future of North Korea cannot be ignored.  

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The NSA Smuggling Ring

Wednesday, December 17th, 2008

Daily NK
Lee Sung Jin
12/17/2008

Recently in the North Korea-China border region, North Korean smuggling groups associated with the National Security Agency have been actively operating.

A source from Yangkang Province relayed in a phone conversation with the Daily NK on the 16th, “On the 9th in Songjeon-ri, Kim Jong Sook County in Yangkang Province, a van ferried on a raft fell into the water, so the border guards and the National Security Agents tried to get it out in the middle of the day. The van was being smuggled from China by the ‘national smuggling group.'”

The “national smuggling group,” or “NSA smuggling group,” which earned its epithet from the North Korean citizens, is directly operated by the National Security Agency and is composed of soldiers, well-to-do merchants, Chinese emigrants, and Chinese relatives of officials.

The group was organized in the fall of last year and has been in operation since then. The source added that its size, members, and range of traded items have significantly increased.

The source stated further, “In Hyesan alone there were at least three smuggling groups by the end of the summer, but with the passing by of the fall harvesting season, there are now about seven in operation. With the National Security Agency making profit from these groups, the No. 8 Bureau of the Chosun (North Korea) People’s Army (in charge of mobilizing war supplies) even formed a group last summer.”

In particular, it has become known that the No. 8 Bureau, under the patronage of the National Security Agency, sold a massive supply of medicinal herbs secured in North Korea to the Chinese merchants in exchange for Chinese rice.

The source emphasized, “Usually, there are four or five active members of a smuggling group. In the past, they only smuggled at night, but the groups have lately been taking advantage of quiet places during the day to hand over goods.”

He said, “When the groups engage in smuggling, the commander or vice-commander of the border guard unit will go on duty. After the National Security Agency calls the border unit, the smuggling group(s) goes out at a pre-determined time and hands over the goods.”

Goods that are currently handled by the groups are not only marine products or scrap iron, but are increasingly high-priced goods such as gold or drugs, because they can be traded for cash.

The source explained, “The smuggling groups have to give approximately 30 million North Korean won (approximately USD8,500) per person a month to the state, but ordinary smuggling does not suffice to make such a sum of money. The state severely punishes trading drugs or gold, but given the exorbitant sum which has to be paid to superiors, there has been a tendency to engage in the trading of such goods.”

He noted, “Nowadays, each unit acquires the necessary goods, so the border smuggling channel created by private individuals for trading has also been used by the national organization.”

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Water Trade Burgeoning in North Korea

Monday, December 15th, 2008

Daily NK
Moon Sung Hwee
12/15/2008

Amidst the trend of increasing numbers of civilians trying to make ends meet through trade in the wake of the July 1st Economic Management Reform Measure, medical students in North Korea have started doing business by drawing water from the Yalu River.

However, due to the territorial nature of the Yalu River, water-selling, and attendant incidents of violence in order to grasp commercial rights, have become more frequent.

A source from Yangkang Province said in a phone conversation with the Daily NK on the 9th, “Three Hyesan Medical School students who were selling water near the People’s Committee of Yangkang Province building attacked a couple in their 30s, who had to be taken to hospital on the 7th.”

The source said, “Generally, the Yeinbong-dong (in Hyesan) is where students of Kim Jong Sook College of Education and Bongheung Middle School sell water, and the area around Hyemyung-dong is designated for Hyemyung Middle School and Hyesan Medical School students. The Hyesan Medical School students mistook the villagers drawing water for people trying to enter their zone, so the incident erupted.”

According to the source, the medical school students used their handcart to crash into the couple’s sleigh. The husband, angry at this, hit one of the students, which provoked the two remaining students to collectively assault the couple and flee.

The source relayed, “Subsequently, the relatives of the couple and their friends sought out the Hyesan Medical Student dormitory with axes and spades, so the People’s Security Agency (PSA) was called. The PSA searched all over the dormitory, but ultimately could not find the suspects.”

In Hyesan, Yangkang Province, as water provision to civilians became more erratic due to failing subsistence, the business of drawing supplies from the Yalu River to take to far-flung regions started springing up. Not only does the business not require much capital, but water can be fetched from the Yalu River with a handcart or a sleigh and be sold in residential areas, so it is popular among college students who come from farming regions to Hyesan, or among middle school students.

“Selling water is mostly monopolized by middle school and college students. This is a job that ordinary people will take up as a last resort,” the source said.

He added, “Those college students who come from the country side and live in dormitories take up this business. A portion of middle school students, in order to contribute to the livelihoods of their families or to make personal allowances, choose to do it as well.”

“In Hyesan right now, 50 liters of water costs around 300 North Korean won, and a 70-liter Chinese bucket sells for 400 won,” he explained.

He then said, “Water is fetched from the Yalu River with a handcart or a sleigh: one sleigh can carry about four to five 50-liter water buckets. This business cannot be done solo, so people usually undertake this in groups of three or four.”

The source stated, “Water merchants go back and forth between the Yalu River and where they are based at least four times a day. Sometimes, they can even go seven to eight times a day, but there are not too many people who buy water.”

“Those who buy water are mostly cadres or merchants who have to go to the markets. Also, people who sell liquor or tofu require a lot of water. With so many water merchants, incidents of fighting over territory are quite common.”

Hyesan, which began receiving aid from international organizations in 2003, was the pride of the North Korean authorities, especially since the completion of a “natural water supply system” which took two years to construct. However, as a result of simultaneously burying the water and the sewage system at the time of construction, the polluting of the city’s water resulted. The residents of densely populated areas, which are located mostly on hillier regions relatively far from the Yalu River, have not been receiving tap water, noted the source.

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Behind North Korean Plan to Reopen State Stores

Wednesday, December 10th, 2008

Daily NK
Moon Sung Hwee
12/10/2008

The North Korean authorities recently announced the intention to sell all industrial products in state-operated stores, soon after announcing the revised “10th-day farmers markets,” which open only on the 1st, 11th and 21st of every month, starting from next year.

According to an inside source in North Hamkyung Province, a new instruction on the sale of industrial products in state-operated stores was introduced during the latest cadres’ lectures. As rumors of the large-scale entry of Chinese goods onto the market due to Chinese loans circulate among people, there has been in a flutter in the market.

The source stated that the idea of industrial product sales was introduced during a cadres’ lecture on the 29th of November under the title, “measures to improve the current situation and people’s lives,” which also explained the transformation of the current market system into the “10th-day farmers market” system.

In the source’s opinion, “It signifies the government’s attempt to monopolize the industrial-product market, which was actively and spontaneously established by the people after the ‘march of tribulation’ in the late 1990s. Industrial goods to be sold in the state-operated stores would include both Chinese and North Korean products.

During the lecture, it was stated that “All industrial goods that have been passing through the jangmadang (markets) must now be sold in the state-operated stores and only vegetables or certain agricultural products can be sold within the farmers markets,” which suggests the prohibition of individuals selling food-related products and industrial goods.

With regard to the backdrop of this policy, the authorities explained that, “The current market was a temporary measure taken by the state considering the difficult situations caused by the march of tribulation. However, the markets after some time deviated from the state’s intention and socialist economic principles and have become a hotbed of crimes generating capitalist and anti-socialist trends. Therefore, we are ridding ourselves of all markets and reviving the farmers market.”

The source explained that this measure does not seem to “simply control the markets. But if they begin selling industrial products in the state-operated stores, they would be able to circulate money within the regime that has been circulating within private markets and among individuals by tying purchase profits to national banks.

He said, “Due to the jangmadang, the gap between the rich and the poor has widened. And, because money is not flowing within the regime, the authorities are getting rid of private sales to revive the banks so as to recover the regime economy… It seems the state-controlled economy will become better next year” he added.

However, the source also relayed that “Although they announced the selling of industrial goods only in the state-operated stores from next year, nothing, regarding exactly when and how, was mentioned during the lecture.”

“There is also another rumor that even ‘procurement stores’ would have to sell products on the same price level with the state-operated stores, or they would have to close down. It basically signifies that the regime will not permit any form of private sales, by selling all products that had been sold by individuals” he added.

The source reported that there have been heated debates on this decision among North Koreans.

“Famers gladly took this decision that industrial goods will sell in state-operated stores because they have been complaining that they sold agricultural products at next to nothing while buying industrial goods at such a high price. They are expecting that industrial goods will cost less than now” the source reported.

“However, workers in urban areas are extremely concerned that they cannot sell anything in the jangmadang. An average workers’ salary is 1,500 North Korean Won and if individuals are not permitted to sell, workers’ families will be harshly affected” he forecasted.

The source continued on and said, “Even though they say workers get paid well, how are they expected to live when a pair of military boots costs 9,000 North Korean won. One month’s salary is not even half a kilo of rice.”

The source in the end expressed concern because workers began “explicitly complaining about cadres who only fill themselves up. I personally think that there will begin a massive war within the markets starting from New Year’s Day”.

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North Korean authorities order markets to open every ten days, from 2009

Friday, November 21st, 2008

Daily NK
Jeong Jae Sung
11/21/2008

The North Korean authorities have been on the move to strengthen recent market regulation policies.

The 6th edition of “NK In & Out,” a recently released newsletter by the Network for North Korean Democracy and Human Rights (NKnet, Representative Han Gi Hong), relayed an order decreed by the North Korean authorities for the operation of markets every 10 days (on the 1st, 11th, and 21st of the month) starting next year, and introduced as an example some Pyongyang-based markets that only open once a month (on the 10th of every month) starting from last month.

According to the newsletter, an inside source in Yangkang Province reported, “The news of the ‘10-day market system’ starting next year emerged from lectures for government officials.”

A source from Shinuiju also said, “From November, the market maintenance office guards have been relaying the news of the conversion of permanent markets into markets that will operate much less frequently to the civilians.”

A North Hamkyung source said, “At a recent meeting of the People’s Unit, I heard that a new market management policy will come into effect starting next year. However, this is nothing new; all it is saying is that the jangmadang will be eliminated and converted into farmers’ markets, starting next year.”

The sources then pointed out that while the resistance of North Korean citizens will be strong, the possibility of actual policy implementation is deemed low.

The sources unanimously declared, “Similar news of the conversion of markets to the 10-day system or farmers’ markets began to circulate widely at the beginning of the year, but it was not carried out. If the jangmadang are converted into farmers’ markets right now, a riot will result.”

They also retorted, and expressed skepticism regarding the regulation of the market itself, “Most of the products that are circulated in the markets are connected to officials, so they will not actively step forward to regulate the markets and forsake their own gains.”

The “NK In & Out” newsletter relayed that irregular trends have not yet taken place in the markets in North Korea’s major regions. One Chinese trader who visited Dandong, China on the 10th said, “Markets are operating as normal, daily, in Pyongyang, Eunsan, Pyongsung, and Shinuiju.”

He added, “Among the rumors I have heard recently, there was one that private trade itself would be strictly prohibited from November 10th, but this news has been circulating for a while, so people are uncertain whether this will actually happen either.”

The newsletter released a rumor that graffiti and flyers saying “Topple Kim Jong Il” were seen on the morning of the September 9th National Foundation Day among North Korean citizens.

With regard to this, a Shinuiju source stated, “According to stories from merchants who have recently come from Pyongyang, the graffiti could be found near Chungsung Bridge on Unification Street in Pyongyang on September 9th. Flyers were passed out in the markets.”

He added, “The flyers also said, ‘What is socialism?’ ‘How can officials eat well while people starve?’ and ‘Let’s end the Kim Jong Il era’.”

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Christian group smuggling radios into DPRK

Wednesday, November 12th, 2008

Individuals and organizations who smuggle radios into the DPRK, whether for personal gain or for altruistic reasons, do not to attract attention to themselves.  This makes it difficult to determine just how many foreign-made radios can be operated, and by whom, in the DPRK.

This week, however, Christian broadcaster Trans World Radio announced that it will distribute 3,400 radios in the DPRK this year alone:

International Christian broadcaster Trans World Radio (TWR) confirmed Friday, November 7, that it has secretly distributed thousands of radio receivers in North Korea, one of the world’s most isolated Communist nations. 

“TWR already delivered 3,100 radio’s in recent months and the plan is to increase that number to 3,400 by the end of this year,”  said TWR-Netherlands from its headquarters in the Dutch town of Barneveld. “Radio is the only way for North Koreans to hear the Gospel.  However receivers sold in the country are only tuned to the state-run network,” TWR added.

TWR said it has set up a transmitter in the region to reach the people of North Korea with Christian programming and encourage underground churches. “Most Christians in North Korea are not able to share their faith with other believers openly, and are forced to worship in secret.”?

Who knows how many of these radios will end up in actual use, but this is just one organization in one year.  Is it plausible to believe that over 10,000 radios are smuggled into the DPRK in a year? Are there reasons to doubt or qualify these numbers?  Why would they announce this if it was true?

Source:
Christian Broadcaster Smuggles Radio’s To North Korea   
Bos News Life
Eric Leijenaar
11/7/2008

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DPRK to tighten market restrictions in 2009

Thursday, November 6th, 2008

According to Yonhap (hat tip to Oliver):

North Korean authorities are clamping down on private markets that have cropped up across the country, citing concerns that such business activities can compromise centralized control, a local civic group said Thursday.

Good Friends claimed in its recent newsletter that the government will allow private markets to operate only once a month beginning in 2009. Markets operate on the first, 11th and 21st days of the month at present.

In North Korea’s capital and largest city of Pyongyang, such measures have been implemented since October, said Good Friends.

The Seoul-based relief group said North Korean authorities expressed concerns that merchants who make a living by selling goods at these markets could contest or circumvent decisions and rules made by the state.

The markets have become an integral part of the local landscape, as they are used by many people to supplement their meager state rations.

Quoting an anonymous North Korean official, the group said the government’s ultimate goal is to shut down the markets altogether.

Although I am sure North Korea’s leadership does not enjoy competing against thousands of their uppity subjects (entrepreneurs) in the production of consumer goods and services, the scale of the DPRK’s marketization over the last decade is simply too large and ingrained in the social fabric to be eliminated now.  Preventing entrepreneurs from emerging into a powerful political force (and making sure they pay their “taxes”) while maintaining control of the economy’s “commanding heights” seems a more likely policy direction for the North Korean government at this point.

As an aside, I have located dozens of North Korea’s markets (including the largest in Pyongsong) on Google Earth (Download here).

Link to the full article below:
N. Korea clamps down on private markets
Yonhap
11/6/2008

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(UPDATED)Financial crisis hits DPRK

Sunday, November 2nd, 2008

Although many would assume that North Korea’s economic isolation would insulate it from recent global financial instability, this does not appear to be the case.  According to the Wall Street Journal:

North Korea does little trade with the rest of the world — about $2 billion annually — and now it’s being hurt by lower prices paid by its biggest trading partner, China, according to report from a South Korean institute that specializes in North Korea research.

In recent weeks, the Chinese companies that buy North Korean ores and minerals like zinc, which are some of its biggest exports, have slashed the prices they’re willing to pay. That’s forced some North Korean mining firms to halt production and even produced a drop in the smuggling of ore and scrap, trade that’s illegal in the North but is believed to play an important role in supporting the impoverished country.

Lim Eul-chul, a professor at the Seoul-based Institute for Far Eastern Studies who wrote the report issued Thursday, said he learned about the commodity-trade problems from North Koreans doing business in China

“Chinese companies that are affected by global trends don’t want to pay as much as they used to for North Korean raw materials or resources,” Mr. Lim said. “Thus, North Korean merchants can’t make profits from trade.”

The price pressure exerted by Chinese traders on North Korean companies is in line with the broader drop in commodity prices in recent months. But it has imposed new burdens on North Korea in what is shaping up to be a terrible year there.

Official North Korean media have published reports saying the global financial crisis will ruin the U.S. and other industrial powers. But in the report, the Institute for Far Eastern Studies said “North Korean people are becoming very anxious over the possibility of the international economic crisis having a long-term impact.”

Below is the IFES report mentioned in the Wall Street Journal:

Global Financial Crisis hits DPRK economy by way of China 
NK Brief No. 08-10-29-1
10/29/2008

Contacts within North Korea are reporting that the North Korean people are becoming very anxious over the possibility of the international economic crisis having a long term impact as not only exports have dropped, but even cross-border smuggling is taking a hit.

Recently, as Chinese traders have more than halved the price of North Korea’s main export goods such as minerals and scrap iron, North Korea’s markets and even construction industry have felt the blow.

As North Korean state-run media outlets report the current financial crisis as the ruin of the United States and other capitalist world powers, they report as if North Korea were completed unaffected by it. On the 20th, the Rodong Sinmun emphasized that the the U.S.’ financial management system was ‘like a candle in the wind.’

However, it has been leaked that since last week, businesses in North Korea have been shutting their doors as a result of the financial crisis. In particular, the value of the North Korean Won has dropped sharply against the Chinese Yuan, and combined with Chinese traders’ reluctance to purchase North Korean goods and calls to lower prices, very little business is being conducted. This has led mines in Hyesan to halt exports of lead and zinc, and with the drop in legitimate exports, of course smuggling has dropped of, as well.

Furthermore, as raw materials from China are not being supplied, construction projects in the North are also grinding to a halt. 

(UPDATE) Barbara Demick reports in the Los Angeles Times:

Despite efforts to keep North Korea’s extreme poverty out of view, a glance around the countryside shows a population in distress. At the root of the problem is a chronic food shortage, the result of inflation, strained relations with neighboring countries and flooding in previous years.

Aid agencies say the level of hunger is not at the point it was in the 1990s, when it was defined as a famine, although they have found a few cases of children suffering from kwashiorkor, the swollen belly syndrome associated with malnutrition. Mostly what they are seeing is a kind of collective listlessness — the kind shown by the people on the streets of Nampo.

“Teachers report that children lack energy and are lagging in social and cognitive development,” reported a group of five U.S. humanitarian agencies in a summer assessment of the food situation. “Workers are unable to put in full days and take longer to complete tasks — which has implications for the success of the early and main harvests.”

Hospitals complained to aid workers of rising infant mortality and declining birth weights. They also said they were seeing 20% to 40% more patients with digestive disorders caused largely by poor nutrition.

The U.N. World Food Program reached similar conclusions. In a recent survey of 375 households, more than 70% were found to be supplementing their diet with weeds and grasses foraged from the countryside. Such wild foods are difficult to digest, especially for children and the elderly. The survey also determined that most adults had started skipping lunch, reducing their diet to two meals a day.

These are some of the same signs that augured the mid-1990s famine, which killed as many as 2 million people, 10% of the population.

“The current situation hasn’t reached the famine proportions that it did during the 1990s. Our hope and goal is to keep it from going over the precipice,” said Nancy Lindborg, president of Mercy Corps, one of the U.S. aid organizations working in North Korea. “You have a number of factors that have conspired to create a really tough food situation.”

In Pyongyang, the capital, residence in which is reserved for the most politically loyal North Koreans, plenty of food is available on sale. A grocery inside the Rakwon Department Store carries Froot Loops and frozen beef. At open-air markets, you can find mangoes, kiwis and pineapples

But the products are far too expensive for most North Koreans, whose official salaries are less than $1 a month — 60 to 75 cents monthly for the workers surveyed by the World Food Program. And the farther you get from Pyongyang, the poorer are the people.

Nampo is 25 miles southwest of the capital, on the Yellow Sea. It used to be a thriving port city, but nowadays its harbor is used mostly for shipments of humanitarian aid. On a weekday morning, many people sit along the sidewalk watching the few cars pass by. They appear to be unemployed or homeless.

North Koreans say that the food situation is improving and that a good harvest is expected this autumn, as a result of improved weather conditions. The last two years were disastrous because of heavy flooding.

“There was a problem before, but it is getting better. We expect a bumper harvest,” said Choe Jong Hun, an official of the Committee for Cultural Relations With Foreign Countries.

North Korea experts, however, are skeptical. “One good harvest is not really going to alter the picture,” said Stephan Haggard, a UC San Diego professor who has written widely on the North Korean famine.

The World Food Program and the U.S. aid organizations are providing food for the most vulnerable, including children and pregnant women. A U.S. ship carrying more than 27,000 tons of bulk corn and soy is slated to arrive in Nampo within days.

International agencies have been trying to raise money to expand their food aid to the general population. Many urban North Koreans are dependent on food rations, which have dwindled to 150 grams a day, or a little more than 5 ounces.

Even in Pyongyang, one can see signs of scarcity behind the facade of what is supposed to be a showcase capital. Foreign residents say they have seen homeless children in the last few months — a notable sight in a totalitarian country where nobody is supposed to wander away from their legal residence. (Los Angeles Times)

Read the full Wall Street Journal articles below:
North Korea Feels Effects of the Crisis
Wall Street Journal
Evan Ramstad and Sungha Park
10/31/2008

North Korean facade of self-sufficiency can’t hide signs of hunger
Los Angeles Times
Barbara Demick
11/2/2008

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DPRK drug smuggling well established

Saturday, September 6th, 2008

According to the Daily NK, the drug smuggling in the DPRK has matured from a small scale disorganized enterprise into a into a high-powered cartelized industry.  Whereas in the past, competition from lots of smugglers led to higher crime levels, cartelization has calmed things down.  Additionally, powerful cadres are involved in the trade now, meaning many local officials are powerless or disinterested in interfering with the trade.

As for the prices:

Mr. Kim explained specifically that “In 2006, one kilogram of Bingdu (氷毒), which means Philopon, so called ‘ice’ in North Korea, sold at 1.2-1.5 million won (approx. USD375-469) and one kilogram of opium sold at five million won (approx. USD1,563). As the regulation of narcotics was strengthened in 2007, one kilogram of Bingdu went up to eighteen million won (approx. USD5,625) and opium sold for ten million won (approx. USD3125) in September, 2007.”

He added that “Until 2006, the most expensive house in the downtown of a provincial capital sold for eight million won, but after drug prices rose, the price of those houses went up to fifteen million won (approx. USD4,688). Currently, here in North Hamkyung Province, one kilogram of ‘Bingdu’ sells for ten thousand dollars and opium sell for five thousand dollars. The prices of houses of the highest quality also rose from two thousand to three thousand won.

Read the full article here:
Drug Smugglers in Collusion with Cadres
Daily NK
8/13/2008

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Evolution of the DPRK’s cigarette market

Tuesday, August 12th, 2008

North Korean Cigarette Production: Chinese Cigarettes Disappear
Daily NK
Moon Sung Hwee
8/12/2008

The market share of North Korean cigarette manufacturers has been increasing because North Korean cigarette factories have turned their gaze on domestic low-priced brands instead of counterfeit products.

A source from North Korea explained on the 8th that “There are lately dozens of cigarette brands which are being produced in North Korea, from low-priced ones to expensive ones made for high officials. Now, we rarely see people looking for foreign-made cigarettes in the markets.”

He added that “We can see 500 won per pack cigarettes and also cheap brands, like 300 won cigarettes which are made by individuals. When compared to rice prices, cigarette prices have sharply declined, as well as their quality having advanced when compared to the pack price.”

According to the statistics of the Korean International Trade Association, since 2000 imports of Chinese cigarettes have increased every year and in 2003, reached a maximum of 9.4 million dollars.

The source continued, “Competition to obtain Chinese cigarettes among Cigarette smugglers was keen, but now, consumers of North Korean cigarettes are increasing in number and the productivity of manufacturers is increasing as well. Therefore, individuals who produced cigarettes at home took a heavy blow to their business.”

North Korean cigarette makers converted from counterfeit to private development

Since the early 1990s, North Korea has felt keenly the necessity of earning foreign currency after suffering the aftereffects of the collapse of socialism in Eastern Europe. Accordingly, North Korean authorities have had an interest in producing and trading drugs and counterfeit cigarettes that need a low initial investment and quickly convert into money. Since 1992, North Korea has mass produced imitations of Mild Seven, Crown, 555, Dunhill and other international brands.

When suffering the “March of Tribulation” in the late 1990s, middle managers started taking an interest in counterfeit cigarette markets, which had been occupied by the authorities. In Nampo, Pyongsung, Pyongyang and other big cities, with the appearance of counterfeit cigarettes made by individuals, competition between the national cigarette traders and private manufacturers in the jangmadang started. Workers of cigarette factories kept secretly packing papers of the counterfeit cigarettes and sold them to the private manufacturers.

The North Korean authorities eventually took measures to punish the private manufacturers, to confiscate their products and search the workers’ bodies one by one.

However, after printers were allowed to be used in some factories related to IT departments of universities in 2002, managers of printers being in collusion with private manufacturers started printing the packing papers of cigarettes.

Production of tobacco leaves privately, manufacturing of cigarettes by the factory

After the start of the 2000s, North Korean authorities turned their gaze on domestic demand for cigarettes. The biggest North Korean cigarette factory is Ryongsung Cigarette Factory, where most counterfeit cigarettes made by North Korea were produced. As sales increased since 1997, the No. 39 Department of the Workers’ Party, which operates, accumulates and manages Kim Jong Il’s slush funds, has been directly operating the factory. The top quality counterfeit cigarette in North Korea, CRAVEN “A,” so called “Cat cigarette” by North Koreans, are produced in the factory.

The past price of CRAVEN “A” was much more expensive than Chinese cigarettes, such as Hongmei, BAT, Zhangbaishan and Tianping, being equivalent to two kilograms of rice. However, among cadres and the wealthy they were excessively popular. At the time, Chinese brands of cigarette in North Korea were generally valued at around the price of one kilogram of rice.

With profits increasing since 2003, North Korean authorities have tried to increase production by re-opening ruined factories that had closed their doors for lack of resources during the March of Tribulation.

In 2002, “Rasun” and “Sunbong,” which were produced in cooperation with Chinese entrepreneurs, came out in the Rajin-Sunbong area at a lower price than Chinese cigarettes.

Competition between factories to produce high quality and tasty cigarette toughens

Meanwhile, some of private manufacturers who went under in the competition have disappeared from the cigarette market or been merged with big factories.

There is no reason for being poor if North Korea works like it produces cigarettes

The source said that “These days, affiliates with cigarette factories buy dried tobacco leaves from individuals.”

According to the source, on seeing the high quality of cigarettes, people currently say, “That’s the reason why we should open and reform our market and system. If we produce other goods like we produce cigarettes, we won’t have any reason for being poor anymore.”

The Ryongsung Cigarette Factory in Pyongyang produces “Pyongyang,” “Geunseol (construction),” “Hyunmoo (a kind of mythological animal),” “GGoolbeul (Honey Bee),” “MT. Daesung,” “Dongyang (the Orient),” “Saseum (Deer),” and “Galmaegi (Sea Gull)” and the Sungcheon Cigarette Factory produces “Haedangwha (Sweetbrier),” “Yonggwangro (Furnace),” “Deungdae (Lighthouse),” and “Manbyungcho (a name of a herb).”

Koksan Factory in Hoiryeong produces cigarettes for soldiers; “Baeseung (ever-victorious),” “Ildangbaek (a match for a hundred),” “Chobyung (Sentry),” and “Poongnyon (a fruitful year).”

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