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Drain of Antiques from Chosun Central Historical Museum

Tuesday, September 4th, 2007

Daily NK
Kim Min Se
9/4/2007

Recently, a report was issued that Pyongyang’s Chosun Central Historical Museum made a request to a Japanese broadcaster to buy a rare cultural artifact, a bamboo chest with an engraved drawing for $700,000, causing a shock to the domestic historical world.

On June 10th, Japan’s TBS broadcasted a program called, “Special Report – Why was it sold? North Korea’s Historical Treasure,” but its contents were divulged belatedly, so was reported domestically only recently.

The program contained in detail TBS’ freelancer cameraman Gatanoda’s visit to North Korea and his direct exchange of cultural assets with a person who asserted himself as the “Chosun Central Historical Museum’s Vice-Curator.”

The North Korean government’s officials’ chronic corruption and drain of nationally propagated cultural assets due to careless maintenance of the state is well-known. However, the spread of news of the Central Historical Museum’s Vice-Curator directly stepping forward like this time and attempting sales with a foreigner is at its first.

Due to this event, the shock received by South Korean experts on history has been huge. When this event was reported on the 31st of September, domestic cultural experts said, “If they are going to insist on selling to foreigners, they should make a long-term loan to our National Central Museum and receive rental fees instead.”

“There is the possibility of selling fakes.”

However, criticisms on whether such occurrences are actually possible are not negligible. In particular, most of the “bridgeheads” for the outflow of North Korean cultural assets, businessmen in Dandong, China cannot be trusted. In Dandong, 100~150 curio dealers have formed large-sized businesses and are selling North Korean cultural assets to South Korean dealers.

In Dandong, Chae Jung In (pseudonym), who has been selling North Korean cultural assets for 10 years, in a recent phone conversation with DailyNK, retorted, “Think about this how they dare sell the national assets from the Museum?”

He said, “If North Korea is in a dire situation as in the late 90s, I can understand, but there is no way that it is secretly dealing cultural assets with foreigners. Those who know the North Korean situation well will never believe that, considering people can be put to death for secret sales if the treasures are rare.”

He carefully proposed the possibility that the bamboo chest reported this time is a fake, “In the late 90s, I did hear that there were cases of the North Korean museum out flowing fake cultural assets.”

Also, another curio dealer, Lee Myung Hee, said, “A year ago, the North Korean museum, introduced a Japanese person after receiving the request to sell a saber used by the Japanese Lord of the Heaven, but it was revealed as a fake, so they lost face.”

Mr. Lee hinted the possibility of “frauds,” saying, “The tendency of the North Korean people, when conducting such business, is not to directly deal with South Korean or Japanese people.” The reason for this is that, “They can be mistaken for South Korean spies and can be executed.”

Ms. Lee is a veteran who has been selling North Korean cultural assets since the beginning of the 90s. At one time, she entered Kaesung with Chinese identity in order to acquire highly-treasured antiques, but was arrested under the charge of espionage, stayed in a North Korean prison for a year, and came out as a “living witness of North Korean cultural asset drainage.”

One treasure that the North Korean Central Historical Museum surreptitiously tried to sell is a 3rd-century bamboo chest unearthed in Pyongyang by the North Korean Historical Remains Research Committee in 1931 and Japan’s TBS reported at the time that it was a valuable relic deemed as a “top-class world asset.”

Posted in Antiques, Black markets | Comments Closed

Every Time I Enter North Korea Customs I Feel Like a Criminal

Friday, August 31st, 2007

Daily NK
Kim Min Se
8/31/2007

There is one place that traders curse every time they pass through North Korea and China. That is towards the corruptive and fastidious North Korean customs officers.

It is widely known that North Korean customs officers blatantly seek bribes and extort goods justifying it is for inspection.

As more and more citizens became disgruntled by the security at customs, North Korean authorities enforced strict investigations towards customs officers. However, tradesmen who travel in and out of North Korea comment that the corruption occurring at customs is still prevalent.

Wang Hae Dong (pseudonym), one tradesman who has been bringing goods manufactured in China into North Korea for the past 10 years said on 29th, “It’s becoming harder and harder to bring goods into the country because of the demanding customs officers” and “There is nothing left if you bring 100,000 yuan amount of goods as there are now many tradesmen who have been specifically sent from North Korea to acquire items manufactured in China.”

Wang, a Chinese merchant born in North Korea has been living in North Korea for over 20 years and now runs a trading company which sends items for daily living to North Korea.

Wang said, “Not only is it becoming harder to earn money but when customs officers speak rudely and undergo picky inspections, I don’t want to trade anymore and want to give everything up.” He said, “What’s more annoying is the fact that goods disappear every time inspections are made and yet there is no where to make complaints.”

“Losing one or two items of clothing is nothing. I am lucky not to get bundles of clothing taken away from me” he said.

He said, “I barely make a profit of 0.2~03 Yuan from a piece of clothing bought for 10 Yuan. I import about 5 tons of goods in 3 trucks in one go (worth 1million Yuan) but after I sell all of the goods, I’m left with about 3~40,000 Yuan. After delivery fees and taxes, there are many times I’m left with only 10,000 Yuan but when one or two bundles of goods disappear, the work becomes worthless.”

Irrespective of importing or exporting goods to and from China, all items must undergo thorough inspection at customs. Nothing is exempted from goods transported by car or containers to individual pockets and even purses.

Local traders describe the scene of North Korean customs officers opening and inspecting every piece of item as pandemonium.

Many goods also become damaged despite have been well packaged as they are roughly handled by officers. Losing one or two items is common, though there are cases where even whole boxes are lost.

Wang said, “As of 2 years ago, money was given to Chosun superintendents with an import license to clear goods because Chosun customs was so selective yet still goods went missing. What can I do? I still take goods to Chosun once a week, 4 times a month. Don’t I just have to accept the fact that I can’t redeem the lost money?”

Regarding the reasons why North Korean customs officers scavenge through all the goods like searching for lice, Wang said, “Isn’t so they can find another reason to collect extra money?” and “I think that’s what they live off.”

He added, “Every time I pass through Chosun customs, the customs officers seem like the prison guards and I feel like a criminal who is paying for his crime.”

Posted in Black markets, Illicit activities, International trade | 1 Comment »

Great Review of ‘Famine in North Korea’

Sunday, August 26th, 2007

For several months I have been meaning to post a review of Stephen Haggard and Marcus Noland’s book, Famine in North Korea, but for thousands of reasons it was always pushed back.

Stephen Haggard and Marcus Noland wrote the definitive book on the DPRK’s Arduous March, and it is required reading for any serious North Korea watcher.

Now…Joshua at One Free Korea has written the definitive review of the book, so I will just put links to his posts: Part One, Part Two, Part Three.

Posted in 1990s Famine, 2002 Economic reforms, Agriculture, Arduous March, Banking, Black markets, Economic reform, Finance, General markets (FMR: Farmers Market), International Aid, International trade, Price liberalization | Comments Closed

International Train Crew is the Best Job in North Korea

Friday, August 24th, 2007

Daily NK
Kwon Jeong Hyun
8/24/2007

The term for the train crew of North Korean Pyongyang-Beijing international rail connecting North Korea and China is limited to two years, relayed a related person of Dandong Customs in China on the 22nd.

The source at the customs said in an interview with DailyNK, “The crew of Pyongyang-Beijing international rail is a very competitive position. Only by paying a significant sum of bribe can one gain such a position.”

The source said, “Most of the international rail crew simultaneously trade. The crew who can conduct secret trade via trains is known as a covetable profession among the North Korean citizens.

Further, “The term of employment for North Korean crew do not surpass two years. There is so much corruption and the positions are quickly exchanged after the upper-level management receiving bribery from other applicants.”

He said that he has received introductions from new North Korean crews to watch over them during the 2 years.

The person said, “Most of the crew do secret trade. They think that they have offered that much, so they should earn that much as well. There are many instances where even the customs is aware of what is going on.”

He said that the product which is usually traded is cigarettes. “Cigarettes are brought in North Korea at around 4 boxes (around 2,000 packs) per a person.”

“They relay goods that outsiders send and also goods that cannot legally come out of North Korea. Please understand my difficulty in revealing the situation in greater detail. All kinds of goods can be secretly brought onto trains.”

The cigarettes are a favorite good which both the North Korean and Chinese customs make efforts to pay back the duties. However, by bringing these cigarettes secretly into North Korea without the payment of duties, the making of money is inevitable.”

The source said, “According to what I have heard from Chosun (North Korea) crews, there is a saying that failure to earn several hundreds of thousands of dollars during the two years is moronic. How many train crew are there? They consider the international rails as private trading floors, so what is there that they cannot do? I know of workers of the international freight trains who saved over 50,000 dollars.”

He said, “While observing North Korean railroads for over 10 years, I only saw once one person working as a crew for the freight train for four years.”

International rail between China and North Korea operates twice weekly. 2-3 passenger trains on the back of the Pyongyang-Shinuiju rail and 1 freight train have been divided as international rails and operate to Beijing.”

Posted in Black markets, International trade, Labor conditions/wages, Railways, Transportation | Comments Closed

Price of Rice and Inflation

Sunday, August 19th, 2007

Korea Times
Andrei Lankov
8/19/2007

Sometimes even Stalinist propaganda tells the truth. When the North Korean newspapers occasionally told grossly exaggerated horror stories about South Korean inflation, they stressed that nothing like that could possibly happen in North Korea. This was the case indeed. For nearly half a century, from the late 1950s to the late 1980s retail prices in North Korea remained essentially unchanged. One kilogram of rice cost 0.08 won in 1960. It was still the same price in 1990.

This was possible because almost nothing was actually “sold’’ in North Korea. Communist states often rationed goods distributed through retail trade, but in most cases it was only a handful of most prestigious goods that were subjected to rationing _ like, say, cars. North Korea went much further: by the early 1970s, retail trade in the North ceased to exist, being completely replaced by an elaborate public distribution system. Rations depended on a type of work performed, but also on one’s position within a complicated hierarchy of social groups, as well as one’s place of residence (inhabitants of major cities, and Pyongyang in particular, enjoyed much better rations than those in the countryside).

There were some markets, of course, barely tolerated by the government. But until the late 1980s markets were small, with their trade volume being almost negligible. It seems that most people were reasonably satisfied with what they could get from the state distribution system _ of course, it helped that they knew next to nothing about the situation in other countries, so they could not compare.

The situation began to change around 1990 when the old distribution system collapsed under the pressure of an economic crisis. From 1993-94 there were increasing problems with rations, and from around 1996 rations pretty much stopped altogether. Some food was still distributed in major urban centers, but even there the distributed amount was so meager that nobody could survive on rations alone. A large-scale famine ensued, with at least half to one million dead (the oft-cited figure of three million victims seems to be an exaggeration).

People turned to trade and handicrafts, and with this arrival of a market economy inflation became a North Korean phenomenon as well. Even in the 1980s market prices exceeded the official prices in the state shops. By the mid-1990s, the difference was much greater. In theory, rice still cost 0.08 a kilo, but by 2000 its price on the market reached 45-50 won. Official wages remained unchanged, however, so around 2001 the average salary was approximately 20 times less than the income necessary for physical survival. People had no choice but to augment their income.

The government understood that there was no way to restore the old system: a decade of economic crisis had undermined the basic machinery of distribution and obviously the system was beyond repair. Thus, in 2002 the much trumpeted “July 1 Reforms” were introduced.

It’s difficult to describe these measures as “reforms”–the government simply gave official recognition to the situation which had existed for quite a few years.

The distribution system (long defunct) was curtailed. There was a dramatic increase in the retail prices of basic goods and services _ obviously in an attempt to approximate the prices of the market. Thus, that one-kilo of rice which cost 0.08 won since July cost 44 won.

Wages increased as well. Obviously, the wage increase was not even, and some groups have gained _ or lost _ more than others. It was estimated that the average increase in wages has been approximately 2500 percent (that is, 25 times). At the same time, prices have increased 3000-4000 percent (that is, 30-40 times). This necessitated the issue of 1000 won bills _ the largest denomination in North Korean financial history since the 1959 currency reform. Later, 5000 won bills were issued as well.

But the measures had another effect. The increase in salaries meant that the market was instantly flooded with cash. Needless to say, the only outcome could be inflation. Some people speculated that this was the intention of the Pyongyang leaders who hoped to kick-start the economy in such a way. Perhaps. But I would not be surprised if in 15 or 20 years down the track we learn from interviews and talks with the planners of this reform that they did not really expect inflation. Pyongyang economic managers have not had much exposure to market theory, and are sometimes very naive in their understanding of these questions.

Indeed, by October 2002 the market price of rice had increased to 120 won per kilo. In 2003, the price doubled to 250-300 won, and now it is about 1000 won. Inflation has become a part of North Korean life.

What will happen next? Will the North Korean leaders manage to stabilize the situation, or will a new wave of economic crisis wipe out the entire North Korean system? We do not know yet. But it is clear that there is no return to old days when a kilo of rice could be had for 0.08 won _ that is, if you were lucky enough to live in an area where they distributed grain rations in rice, not in maize.

Posted in 1990s Famine, 2002 Economic reforms, Agriculture, Arduous March, Black markets, Economic reform, Fiscal & monetary policy, General markets (FMR: Farmers Market), International trade, Price liberalization, Public Distribiution System (PDS) | Comments Closed

Illegal Prostitution Occurring in Massage Parlors and Bathhouses

Tuesday, August 7th, 2007

Daily NK
Han Young Jin
8/7/2007

Defector Choi Young Lim [pseudonym] who entered South Korea this past January was a “broker” in North Korea who would receive money from defectors and deliver it to family members in North Korea. He was exposed while mediating money and arrested but was released after giving bribes.

Choi said, “Previously, even with just evidence that there was a connection to a South Korean, you were dragged to a political prison camp and your family members were exiled. However nowadays, even if it is exposed that a defector who entered South Korea sent money, the family members aren’t severely punished.”

“These days, even if there is evidence that you received wired money, unless there is hard evidence of ties to the National Intelligence Service in South Korea the national security agents just impose a fine and release you,” he said.

According to Choi the fine is around the range of USD $2000.

Most of the foreign currency that enters North Korea these days is done through wired transfers from defectors in South Korea to family members. The money that Korean defectors send to family in the North undergoes a 20-30% processing fee and is finally delivered to the individual. The process is from the defector in South Korea through Chinese exchange broker to North Korean broker.

If USD $100 is sent from South Korea, the brokers share $30 and the remaining $70 is delivered to the family.

Until the mid-1990s, regardless of reason, North Korean authorities would take any monetary matter related to South Korea and punish them as “spies”. However, as the number of defectors concentrated in the North and South of Hamkyung increased after the food crisis, a uniform punishment became difficult to impose.

Choi said, “Even the National Security Agency doesn’t consider receiving money from family in South Korea as a spy activity. If they punish everyone, there is a side effect that even their own personal connections will be made adversaries. Thus, they can’t touch this issue.”

The emergence of taxis targeting large city wealthy classes

Trader Hwang Sang Do [pseudonym] who had traveled Chongjin, Hamheung and Shinuiju to collect trade items to export to China entered the South Korea this March.

Hwang introduced a variety of daily activity that he experienced in North Korea. “Even in Hamheung and Chongjin, taxis are operated. The base fare is around 3,000 won. Some cars have the mark that says, ‘taxi’ but some operate as passenger cars without such marks,” he said.

In the North Korean black market 1kg of gasoline (North Korea ordinarily uses kg) costs around 2,000 won. Hwang says, “There are drivers who solicit customers in front of the Chongjin Station or Hamheung Square Station. There aren’t many customers so when veering outside of central city, they receive the round trip fare.” The customers are mainly trade workers, overseas Chinese emigrants or the wealthy class.

It is known that taxi drivers refurbish used taxis or passengers cars that come in from China, then register it as an institution or business entity and start business activity. As there was an order earlier this year to remove all Japanese cars within 3 years, most of the cars that are on the street are manufactured in China.

Massage Parlors, Skincare Salons – Prostitution Secretly Going On

In large cities of North Korea, motels, massage parlors and skincare salons have been established and prostitution has been going on secretly.

Trade worker Hwang says, “There has been an increase of places in Hamheung motels that also function as saunas or skincare salons. A Chinese style massage at a massage parlor is 10,000 won (around US$3.4) per 60 minutes and there is instantaneous prostitution with female masseuse.” It is told that prostitution goes on for about 20,000 – 30,000 won.

With North Korean bathhouses, a service culture to put women at the forefront has taken place. The owners here use jargons such as “selling a bed” or “selling flowers” to feel out a customer’s intention for prostitution. There are cases where women find private homes to prostitute themselves. Hwang says that because it is easy to make money through prostitution, there has been an increase of female prostitutes.

Previously, if prostitution was exposed, you would be sentenced to forced labor. Even now, the authorities ban prostitution. However, the reality is that related entities have secretly been increasing.

On the other hand, there have been several luxury restaurants that opened in Wonsan and Hamheung. These places have implemented the Chinese service system, so the interior facilities are luxurious and female employees greet customers with a “Welcome” at the door.

Previously, only overseas Chinese emigrants or Chinese businessmen invested in such restaurants but recently, there are many cases where North Korean residents open large restaurants as well. Hwang says that as the Chinese restaurant culture that competes with taste and service infiltrated North Korea, North Korea has been undergoing a huge transformation to gain customers through service.

A service concept to “treat the customer as a king” has been emerging different from 1990s.

Posted in Automobiles, Banking, Black markets, Civil society, Cosmetics, Finance, Fiscal & monetary policy, Gasoline, Price liberalization, Transportation | Comments Closed

Widespread Video Rooms

Monday, August 6th, 2007

Daily NK
Han Young Jin
8/6/2007

Frequently in the last couple years, it’s been said within North Korea and among defectors that “North Korea has changed a lot.”

North Korean citizens say, “North Korea is not in the same situation as it was in 10 years ago. The biggest difference is that nowadays, people will do whatever it takes to make money. Also, they confidently raise their opinions to the authorities.”

It is hard to find merchants being called out as “opportunist factions.” It’s also different than the mid-90s when people would sell whatever they could. The market is specializing in items and broadening as well. The market is taking its form.

North Korean authorities have also expanded micro-level autonomous management systems to factory enterprises as they are unable to give out rations.

Of course there are people who make ends meet but most people are merchants. It is hard to find people who work as “servants” or housemaids or people who starve to death. They unanimously say, “It is enough to suffer once. Even cows don’t fall into pits that they’ve fell into once.” This is to say that there will no longer be horrific incidents such as the Great Famine of the mid-90s.

We listened to five defectors who recently entered South Korea on changes in the situation of North Korean residents.

I’m the one who farmed

“I’m the one who farmed. Why should I hand it over to the government?” Defector Kim Kyung Sik [pseudonym] from Onsung, South Hamkyung Province, who came to South Korea in March, 2007 says, “There was an incident with a riot as laborers collectively protested the increase of land tax in 2006.”

After the measures taken on July 1st, 2002, North Korea had laborers other than farmers farm on designated areas according to household and expanded the policy of submitting a portion of the harvest to the government.

Concerned that this measure would be seen as a revolutionary liberal step, North Korea assigned the land according to company title and gave a square around 992 meters to each laborer in the company.

Kim said, “As people farmed on their own land, laborers would work wholeheartedly and there would not even be a patch of grass on the farming land. Because people would find some way to get fertilizer to spread, the size of the fruits was also different.”

He said, “As it became fall, the Management Committee (collective farm’s Leading Group) and the collective farm who had designated the land gave orders to hold off on the fall [harvest] until the standards of grain exchange came from above. Along with this an incident occurred and tens of laborers protested.”

Choi, a woman from the same region said, “As the laborers of Onsung Mine were told to submit 10% of the yield to the government, laborers strongly opposed saying ‘Who had farmed this?’ ‘Why should we hand it over to the government?’ It happened in 2003.”

Accordingly she said, “After dividing the land to the laborers, there has been a sharp decrease in the number of people starving. It will be hard to reverse such tide of change.”

Increase of “Audio-Video Places”

Recently in large cities of North Korea, places to screen multimedia CDs or videos called “Audio-Video Places” – comparable to video rooms in South Korea – have increased. As it is set in a square 50 meters that is decorated like a small theater and plays movies, citizens of the region have been reacting positively.

Defector Suh Kang Chul [pseudonym] from North Hamkyung Province Chongjin who had defected July 2006 said, “There are three screening rooms around the Chongjin Train Station. It is 50 won to see a film. You must watch 2-3 films at once to be satisfied. This is not a small amount of money.”

Screening rooms of North Korea renovate the interior of a building and with the goal to screen “North Korean or Russian films,” they receive the government’s approval. However, most play Chinese or Hong Kong movies. As long as they don’t play South Korean, American, Japanese or pornographic films, there are no severe punishments. The reason people go to screening rooms is because movies are screened for 24 hours without a power outage.

Suh said, “If there is a power outage, the store owner hurries to change to a car battery to play the film. The films people like are Bruce Lee’s “The Big Boss” (1971) and “Fists of Fury” (1972) or Jet Li’s action films.”

Foreign multimedia have been a strong catalyst to change the thoughts of North Koreans. Even Korean dramas that have been copied on to CDs have secretly spread the “Korean Wave” in North Korea. Bae Yong Joon of “Winter Sonata” is recognized as a famous actor.

Many years ago, the “109 Inspection Team” (Bureau to oversee VCDs and videos) was established to regulate illegal screenings and even on the 3rd, in the name of the People’s security, there was an order that “Public officials, institutions, entities and groups must rid all karaoke rooms, movie rooms, computer rooms that were established without the government’s approval for the purpose of making money.”

However, Kim says, “as the ratings of Korean dramas rise, it becomes a situation that cannot be controlled.” Thus, most of the viewers are tied to the Security Agency or an acquaintance of the People’s Safety Agency that it will not be easy to eradicate this problem.

North Korean authorities have made declarations on the “Exposure of Liberalist Corrupt Culture” but in reality the regulating institutions have stopped at indirect responses.

In a phone conversation with a reporter on the 2nd, an internal North Korean news source also said, “It is planned that the Great North Korean Defamatory Broadcasting that was based around the Kaesung area will now move to the Tumen River area. People have been saying that there have been many cases where people are tricked into believing the broadcasting and betraying the country or watching Korean films to get fantasies and crossing the border, but such acts will be severely punished.

Posted in Agriculture, Art, Black markets, Civil society, Film, Television | Comments Closed

Foreign Sales of Drugs Decline, North Korean Citizens Surface as Consumers

Tuesday, July 17th, 2007

Daily NK
Kim Min Se
7/17/2007

Only six, seven years ago, drugs inside North Korea secretly circulated among a portion of the upper-level officials and the specially affluent class, such as Chinese emigrants. Opium or heroine, produced in North Korea, were sold abroad to make foreign currency.

North Korea produces and exports drugs at the national level. Events where North Korean vessels and diplomats, through drug transport or charges of sales, are prosecuted by third-party countries is common. South Korean government, in the midst of North Korea’s breakdown in foreign currency supply in 1998, has deduced at one point that foreign-currency earners through illicit drug sales and illegal activities had amassed 100 million dollars.

From year 1970, North Korea’s drug sales, which secretly began on a small-scale, by the decree of Chairperson Kim Jong Il, rose in reality as a national enterprise and began official productions. In the August of same year, Chairperson Kim named the opium seed cultivation work as “White Bellflower Business.”

Further, he bestowed the appellation, “White Bellflower Hero,” to the person who sold over 1 million dollars of drugs, and ordered, “For the acquisition of foreign currency, export opium on a large scale (information reported by the National Intelligence Service, Lee Jong Chan former Chair at the inspection of National Intelligence Service on November 6, 1998).” As for North Korea’s drug production factories, the Nanam Pharmaceutical Factory in Chongjin and Hamheung’s Heungnam Pharmaceutical Factory are well-known.

Drugs, which are costly to average civilians preoccupied with making a living, were considered as a portion of the special class’ acts of aberration. The North Korean government, besides the foreign-currency earners, strictly inspected acts of drug circulations, so one could not even dream about this as a means of making money.

After the collapse of national provisions, drug sales also increase.

However, the food shortage brought a huge change to North Korea’s drug production and circulation. When the planned-economy system, where the nation was in charge of the provisions, broke down, the citizens started doing sales for survival. In North Korea where means of making money are not abundant, the place where one can smell money is at the market.

The revitalization of the jangmadang (black market) and general markets gave citizens in the cities a certain of opportunity to make a living. Further, they learned the mentality that money is best for survival. The custom began to spread where the citizens went through thick and thin if it meant working at a money-making job. Drugs infiltrated this opening.

Drugs that are most highly circulated in North Korea are philopon and heroine. The center of philipon productions is in Hamheung, South Hamkyung.

Hamheung is considered as a chemical industry synthesis base within North Korea where companies related to the chemistry branch can be abundantly found.

The representative place is the 2.8 Vinyl Chemical Complexes. Besides this, there are Hamheung Chemical Industry College (in its 5th year), the Heungnam Fertilizer Factory, and the Heungnam Pharmaceutical Factory, which are the providers of North Korea’s top chemical researchers.

The reason why Hamheung became the main place of philopon production

The raw materials for the vinyl complex are limestones of the Ounpo Mine in Hongwon-gun and the raw materials of the Heungnam Fertilizer Factory are ramrods of Huhcheon-gun and emulsified steel of the Manduk Mine.

For this reason, many chemistry-related researchers and workers are residing in Hamheung. The problem is that after the food provisions were cut off, they turned their eyes to Philopon production when making a living became difficult.

They can produce high-quality philopon, if they just have a good laboratory and raw materials. In particular, outside demand for Philopon was explosive in early 2000, when there were no huge restraints in the North Korea-Japanese trade and when the North Korea-Chinese trade became active.

Hamheung citizen Choi Myung Gil (pseudonym) said, “In the initial stage, if the businessmen provided raw materials and funds to researchers, they made high-quality Philipon and kept half of the profit. Do poor researchers have any money? They made them because businessmen received orders from China and Japan and sold them. Also, there was nothing to fear because bribes kept the mouths of the National Security Agency and the Social Safety Agency shut. There is nothing one cannot do with money, so what kind of a researcher would crush such a money-making scheme?”

Mr. Choi said, “The cost of production of philopon is no more than 3,000 dollars per kilogram in North Korea. If one sells this, he or she can receive 6,000 dollars on the spot. Manufactured Philopon can be handed over to middlemen or if it directly enters Shinuiju and is given to dealers, it can bring in from 9,000 to 10,000 dollars.”

He said, “My friend, who worked as a researcher in the Hamheung Branch Laboratory, also lived poorly, but became wealthy overnight by making philopon. I also am benefitting from him. There are many people who have become wealthy in Hamheung by making philopon.”

Ultimately, when the North Korea-Chinese traders bring the raw materials from China, the Hamheung chemical researchers make the philopon and the merchants take these to China for sale. In this process, the Chinese crime syndicate have also intervened.

Posted in Black markets, China, Civil society, Economic reform, Heung Nam Pharmaceutical Company, International trade, Nanam Pharmaceutical Factory, Trade Statistics | Comments Closed

Chinese Government Demands Abolition of North Korean Drug

Tuesday, July 17th, 2007

Daily NK
Kim Min Se
7/17/2007

Researcher Raphael Pearl at the U.S. Congressional Research Service (CRS) maintained that recently, the Chinese crime syndicate has interfered in North Korean drug manufacturing and deals. Through the steady appearance of the up and coming wealthy class who have amassed a lot of money through sales, a significant amount of drugs began to be circulated in China.

North Korea-Chinese businessman Kim Myung Guk (pseudonym), who is in charge of North Korean mineral exports, frequently enters Hamheung to get minerals (uranium concentrate). Presently, Mr. Kim is in Dandong, China to meet Chinese businessmen.

Mr. Kim said, “The philopon from Hamheung is the best. In Pyongyang, Shinuiju, and Chongjin, Hamheung-made philipons are the most trusted. So I frequently receive requests to deal Hamheung philopon from other businessmen.”

Mr. Kim said, “It got to the point that the Chinese government requested inspection of the Hamheung factory, so the North Korean authorities carried out partial abolition. Nowadays, there is hardly anyone among the North Korean businessmen who do not know about the fact that Hamheung is the center of drug production.”

The Chinese government, when North Korean drugs started coming in on a mass-scale, pointed out the Heungnam Pharmaceutical Factory in Hamheung as a drug production factory in North Korea and demanded the abolition of the factory.

With exports to the outside closing, the great enterprise sold in North Korea

Currently in Shinuiju, philopon made in Hamheung is being sold for 9,000 to 10,000 dollars per kilogram. Drug dealers bring these into China and resell them at three times the higher price to Chinese drug dealers.

However, foreign sales of North Korean drugs is significantly decreasing as a whole.

In recent years, PSI and other international surveillance network have been strengthened regarding North Korea’s illegal actions, so drug exports have remarkably decreased. Further, North Korea-Japan relations have become worsened, so it seems to have exerted an influence on control of North Korean drug sales.

In Dandong, Chinese-North Korean businessman Kim Jong Man (pseudonym), who does trade with North Korea, said, “North Korea, before it ceased trade with Japan due to bad relations, sold a lot to Japan. It is a well-known fact that they were sold at high prices to Japanese yakuza via regular traders.”

However, with the worsening of relations, most avenues for drug sales have been closed. Also, the Chinese government, while proclaiming an all-out war with drugs recently, have significantly intensified control and inspections.

The Chinese government has shown a strong intention to control by broadcasting live via China’s CCTV the trial process of drug criminals through recent unconventional circumstances.

Mr. Kim said, “Due to the circumstances, the significant decrease in North Korean drugs going into China, compared to a year or two ago, can be felt.” Such an atmosphere is collectively acknowledged by other businessmen.

Inevitably, since routes for foreign sales have been closed, drug sales are increasing inside North Korea recently.

If such a trend continues, the day when North Korea will become one of the handfuls in the world known for its drug production and consumption does not seem too far off.

Posted in Black markets, China, Drug smuggling, Illicit activities, International trade | Comments Closed

Expelled for Watching Videos at Chongjin High School

Saturday, July 14th, 2007

Daily NK
Park Young Nam
7/14/2007

Even in North Korea, there are special schools for the gifted and talented. In particular, talented students are selected for high schools and special education. The writer also attended a special high school while in North Korea.

I enrolled at an elementary school in `92. Since 3rd I was taught separately and received special education. Under the care of my class teacher, I studied math and nature subjects in detail until 6 o’clock at night.

After completing 4 years of elementary school, I was selected as a representative for Musan and entered Chongjin No.1 High School in April `96. No. 1 high schools are special schools for the talented and are located in Pyongyang and each province.

I arrived at Chongjin No. 1 High School to find many other students as bright as me. On top of that, these students all came from good backgrounds.

Undoubtedly, I was no different. My father worked for the People’s Committee and my mother was a doctor. At the time, my family lived an abundant life and had all the necessary electrical goods such as a TV and refrigerator.

High school days, shirking going to school

Unlike average high schools, we often missed classes and went on day trips. Again, punishment is severe at average high schools but we were not treated to harsh punishment because of our respectable backgrounds. Even if you were caught drinking alcohol on the streets and taken to the police, you were let go once you informed them that you attended “Chongjin No. 1 High School.”

Despite playing like this, I studied very hard at the end of each month in order to sit for the exams. I studied 10 days prior to each exam. During the summer, I could study a lot as the days are long, however in the winter, I couldn’t study because the sun set early and there was no electricity.

The winter was the worst as there was no central heating in the dormitories. Even if you wanted to cook rice, you couldn’t. The moment you placed a heater, which was made with twisted nicrome wire, in the socket and, the dismal light only became dimmer and if you put three of these wires into the wall socket the fuse went out. In the end, I became so frustrated that I shoved a spoon into the fuse socket only to find that it didn’t black out but operated fine.

Expelled for watching a video

That’s how I spent my days at school. Then things began to go wrong from about 4th grade.

In February `99, after I had begun 4th grade and sat for an entry exam for Pyongyang No. 1 High School. I sat for the test with the desire to go to a slightly better school but it ended in failure. At the time, I fell into misery and for a while I went around playing and my grades continued to drop.

In August `99, I went to visit a friend’s home who had come from Hoiryeong with 4 other mates. He had a TV and video player in his home. To be honest, the house had been under inspection by the National Security Agency because of this, but at the time, I didn’t even consider this. We watched three videos at that friend’s home.

I watched the old South Korean drama “Men from 8 Provinces,” and other American movies, “Titantic” and “Six Days, Seven Nights.”

I was alarmed after watching “Titantic” and “Six Days, Seven Nights.” The foreign movies were really enjoyable but what clearly remains in my memory is the thrill I had from simply watching the films. We watched the complete and unabridged version of Titanic, even the scene where the two main characters have an affair in the car. As part of the audience, I found this shocking.

While watching these characters traveling freely in the movie, I thought, why can’t we travel on boats like that and why can’t we play freely like that. It was inevitable that I felt culture shock.

However we were caught and were sent to the detention centre in early October. All 4 of my friends who watched the videos were also caught and we sat in the centre for about 10 days.

I wasn’t even sure what the crime was, but I had a feeling it was because we had watched foreign movies. Whether or not it was because we were young, we were let go after a few beatings with something like a broomstick.

After returning to school, there was no reason for us to be the centre of attention. We didn’t tell anyone where we had been but I think everyone generally knew. At the same time, my grades were really low and in the end I was expelled from school.

From expulsion until arriving in South Korea

Following that incident, I went to live with relatives in Pyongyang for 1 year.

I had a business in Pyongyang. When my mother brought clothes from China, I sold them in Pyongyang. With this money, I bought rice and then made profits by acting as an intermediary and selling the rice to Musan. Compared to Pyongyang, rice was expensive in Musan and as a result, I was able to reap in a lot of profits.

However, I couldn’t continue to do this. I felt bad living with my relatives. In the end, I returned to my home in Musan.

Having returned to Musan, I began to associate with children from the wealthy class and one day heard that they traveled in and out of China and in 2001, I crossed over to China in search of a better life.

I crossed the borders, not because I was hungry or because I was in danger. I was merely worried about my uncertain future and found living in North Korea suffocating. I yearned for a more abundant life.

Currently, I am preparing to enroll at POSTECH. However, for the 5 years since my expulsion, I have not had any opportunity to study while traveling from Pyongyang to China, then Korea. Re-starting my studies is not easy. The time I lost while defecting is such a shame.

Studying is something I had forgotten for a long time. I must acclimatize myself to an education system very different to that of North Korea. Nonetheless, I believe I will be able to do well if I try very hard.

Posted in Black markets, Civil society, Clothing, Economic reform, Education, Film, General markets (FMR: Farmers Market) | Comments Closed

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