National Unification Broadcasting (국민통일방송) published this video of the old Rajin Marketplace (filmed in Spring of 2014).
Since filming, the North Koreans have opened a new marketplace to replace this one. Here is a satellite image I published with RFA showing the old market and the new:
The old marketplace is inside the yellow box on the left. The new market is inside the yellow box on the right.
According to the Daily NK:
The North Korean authorities officially determine product prices in North Korea. However, according to inside sources, these prices are being ignored more and more in favor of prices determined by market forces. Instead of official price designations, the authorities have posted ‘price ceilings,’ but they are not strictly enforcing them.
In a telephone conversation with the Daily NK on November 13th, a source from North Hamgyong Province said, “Official prices have almost completely disappeared from the markets. Reflecting this trend, even the market management offices located in each official marketplace are listing ‘price ceilings’ instead of official prices.”
Daily NK spoke with a source in South Hamgyong Province who confirmed this to be the case there as well.
“Furthermore, the price ceilings are being determined by the market rates, so the meaning of these regulations is fading. For example, if the going rate for rice at any given time is 5,000 KPW [0.58 USD] per kilogram, than the price ceiling would be set at something like 4,500- 5,000 KPW [0.52-0.58 USD],” she said.
“These ceiling prices are indeed posted, but they are not enforced. Ministry of People’s Safety [which act as the North’s police forces] officers are not able to command merchants to lower their prices. The atmosphere is such that if they even tried, they would likely be insulted and cursed at by the vendors.”
She added, “At the market, it has been quite some time since people realized that the official prices are meaningless. If a buyer asked a merchant for the official price of a given product, that merchant would likely to scold the buyer for not having proper control of his mental faculties.”
In a true indication that the national prices are being disregarded on a wide-scale level, even the authorities have shown signs that they are interested in understanding how market rates work.
For example, from Provincial People’s Committees, cabinet ministers are being kept abreast of the local market rate for product prices on a daily basis. “They are trying to understand the exact market prices for given quantities of goods like electronics and foodstuffs,” the source explained.
When asked to describe how ordinary North Korean folks were reacting to this news, she said, “People are saying things like, ‘The authorities explain that they want to understand rice prices so they can think of measures to improve the lives of the people, but that just makes us laugh. The best thing they can do to help is to stay out of the way.’”
Read the full story here:
Authorities tacitly recognize market-determined prices
Daily NK
Lee Sang Yong
2015-11-16
According to the Daily NK:
Recently in South Pyongan Province, the practice of renting out sections of state-run factories to individual entrepreneurs is taking off. This latest development is further evidence of de facto private enterprise flourishing on the back of state facilities.
“There is a factory that manufactures coal mining equipment located in a building that is now partially rented to a donju [literally ‘money masters,’ or new affluent middle class] who is making shoes there. By renting out the building, the authorities can also make ‘a little extra’, which is a nice benefit for them,” a source in South Pyongan Province reported to Daily NK on October 27.
“‘A little extra’ refers to profits falling outside of enterprise work quotas utilizing state labor and raw materials.”
An additional source in the same province corroborated this news.
She added that the officials in charge of the factory must first make sure that they will be able to sell enough of the extra goods manufactured by the donju on the market to make it worth their while. If they calculate that it will be a profitable good to sell, they go ahead and agree to rent out part of the factory warehouse.
Winter is, without fail, a busy season for shoe markets in North Korea. Demand explodes for cotton wool and fur shoes to prevent frostbite. North Koreans put cotton wool into black or army green cloth to make shoes known as “Tong (a mispronunciation of the word Chinese-derived word in Korean meaning ‘winter’) Shoes”. Fur shoes are boots made of synthetic leather and stuffed with compressed cotton wool or sheep wool.
As North Korea’s primary shoe factories, “Pyongyang Shoe Factory” and “Sinuiju Shoe Factory” receive a quota for the number of shoes they should produce to distribute seasonally, they cannot adjust their production levels to meet actual market demand. This leaves a hole in the market the donju are keen to step in and fill.
What really determines the quality of wool or fur shoes is the sole. The donju buy rubber in the general markets and hire laborers to construct soles from it in, as might be expected, exceedingly unsafe work environments. With no access to safety masks, let alone other protective gear, workers inhale overwhelming quantities of noxious gases in the process.
Nonetheless, workers eager to do the job are never in short supply– those hired for the task are paid who wages 2-3 times that of typical day laborers working for the donju.
Although it is possible to sew the leather outer parts and midsoles of shoes at home, proper equipment is required to produce quality insoles. Rubber is pulverized, reconstituted using a machine, and then mixed with fresh rubber to fabricate insoles. However, a compressor is needed to complete this task, which is where the factories come in.
These days, although it is possible to earn a fair amount of money producing goods at home, “if you’re more ambitious and want to enter into large-scale production you’ll run into an electricity supply problem,” the source noted.
“While it can be said that utilizing the unused space of factories contributes to national production, in the end it’s really the factory’s supply of electricity that proves to be the lure.”
In fact, the first thing donju check when scouting a factory to approach is that the facility has a stable power supply. If all on this front checks out, the donju seek out the cadres in charge and set up a contract stipulating that said entrepreneur pay 30% of his or her profits from the sale of goods produced in the factory as rent.
The factories involved in these deals are typically those associated with the coal mining industry. These enterprises produce the majority of the equipment used in North Korea’s coal mines, and because iron is the most used raw material in the production of the related equipment, such factories receive a larger allotment of electricity than typical light industry factories.
There are, of course, other types of factories receiving steady streams of electricity, but for the time being, they are off limits, according to the source. By way of example, the source explained that because munitions factories harbor a litany of “national secrets, ordinary citizens cannot access them no matter how much money they spend.”
And yet, the fact that North Korea’s donju are now turning their focus towards the production of consumer goods can be interpreted as yet another sign of North Korea’s ever-expanding marketization.
She analyzed these trends as follows: (1) as the relative purchasing power of North Korea increases, demand is increasing as well; (2) markets are developing within North Korea, and state-operated stores are also being rented out and run as de facto private operations; (3), the number of retail outlets selling consumer goods is skyrocketing; (4) the use of ‘servi-cha’ has especially improved the distribution process; and (5) compared to goods directly imported from China, the price competitiveness of local goods has improved as well.
In the past, North Korea’s foreign-currency earning enterprises or the donju would go to Zhejiang Province in China or other regions with low labor costs and import large quantities of consumer goods at low prices to distribute within North Korea.
However, these cheap goods fall short of satisfying the market preferences of North Korean citizens today, the source concluded.
Read the full story here:
As factories rent out space, donju move in and set up shop
Daily NK
Seol Song Ah
2015-11-2
By Benjamin Katzeff Silberstein
The market is a common topic for debate in history. How did it impact the rise of the anti-slavery movement in the US and the UK? What impact did economic conditions have in the French Revolution? These questions are, and should be, asked in the current debate about North Korea’s socioeconomic development as well.
But despite the hope of many, the market might not simply be a story of growing individualism and disconnect from the power of the state. While such a trend may well be at work, it could also be the other way around.
This was recently illuminated through an interesting story by Reuters. In a visit to Pyongyang, they took a look at how markets and everyday business transaction function in North Korea at the moment. As they note, it is telling that a reporter from an international news agency can make transactions in the open, with a government minder by his side, at the black market rate. Business that previously had to be done in the shadows now happens in the open:
Shoppers openly slapped down large stacks of U.S. dollars at the cashier’s counter. They received change in dollars, Chinese yuan or North Korean won – at the black market rate. The same was true elsewhere in the capital: taxi drivers offered change for fares at black market rates, as did other shops and street stalls that Reuters visited.
The most obvious conclusion is that the state is adapting itself to the bottom-up development of the market. Indeed, this is the way the story is often told. In this narrative, the government is only reacting to developments and has long lost the economic policy initiative.
But one could also see a government that is confident enough to relax the rules. It just isn’t a certain fact that the state and the market are two opposing entities.
First, connections to the state still seem to be good for those wanting to trade on the market. For example, according to the surveys conducted by Stephan Haggard and Marcus Noland that laid the foundation for Witness to Transformation (2011), party membership is still considered one of the best ways to get ahead in North Korea (or at least it was at the time when the surveys were conducted). A somewhat similar trend can be discerned in survey results presented by Byung-Yeon Kim of Seoul National University at a conference at Johns Hopkins SAIS in late September this year. Kim’s results also indicate that there is a strong positive correlation between party membership and participation in both the formal and informal economy.
Second, the government is making money off of the market. DailyNK recently reported that the fees charged by state authorities for market stalls was raised. They also noted that regulations of the markets seemed to have gotten more detailed over the years. As noted in this report published by the U.S.-Korea Institute at SAIS, the space that the government allocates to markets has consistently increased in the past few years. Not only have official markets grown, many of them have also been renovated and given better building structures.
All in all, this paints a picture of a government that controls markets while allowing them more space to function. It is not clear that formerly black market activity happening in the open means that the market is gaining ground at the expense of the state. They may well be moving together. That is good news for those hoping for stability, but bad news for those banking on a market-induced revolution. Despite the hope of many that the market will cause the demise of the regime, the role of the market force in North Korea’s history is far from clear.
According to the Daily NK:
Daily NK has learned that the fees vendors pay for the right to sell goods varies depending on their goods and is now applicable to stall and street merchants alike. Home appliances and industrial items carry the most expensive stall fee, according to inside sources. This is because these products tend to be large, they sell for a high price, and they have good profit margins.
In a telephone conversation with the Daily NK on the 6th, a source in Yanggang Province said, “The stall fees for market traders are either 1500 KPW [0.18 USD], 1000 KPW [0.12 USD], or 500 KPW [0.06 USD] according to the size and type of product. The fees for sellers on the street are based solely on the type of product, since size is less of a factor for those outside the market.”
Daily NK crosschecked this news with an additional source in the same province and a separate source in South Pyongan Province.
She explained that the small stalls are approximately 1.5 meters wide and are mainly used by food and fish vendors. Medium-sized booths [1000 KPW] are good for sellers of rice, cigarettes, and other household goods while the largest booths are 2.5 meters wide and home to the appliance and industrial goods sellers; these set a given merchant back 1500 KPW.
“As the number of stalls in the marketplace has increased, so have the profits for the authorities, who collect on the fees. In the past, the stall fees were uniform for all sellers, but now the regime has found a way to make more money by customizing the pricing model according to the stall size and the product’s profit margin.”
“Just a few years ago, there was very little regulation of the market. In this lax environment, we saw large increases in the number of market vendors and street sellers. Sellers could move about freely between areas and markets to try to get the best price. Now things are much stricter. To sell X, you first have to pay the fee to sell X.”
“Additionally, both market sellers and street merchants have to pay a fee now. In the past, the fee was exclusively for sellers in the marketplace, but now everyone has to fork over the cash in order to get a badge or label authorizing them to sell that day. Inside the marketplace, the market managers make the rounds at least once a day to make sure everyone is abiding the rules,” she said.
“Now they also make rounds outside of the market at least twice a day to make sure all those merchants are paying for the right to sell. The fees for street merchants are 500 KPW for vegetables and 1000 KPW for light goods. The market managers aggressively police the area to ensure that everyone has the appropriate credentials.”
According to the source, the market traders are only checked once a day because it is easier to track them down and verify that they’ve paid the stall fees. Outside traders go all over the place to sell their goods, which is why the market managers go out twice a day to check on them.
Read the full story here:
Stall fees raised for market vendors
Daily NK
Kang Mi Jin
2015-10-7
By Benjamin Katzeff Silberstein
Some shameless self-promotion: the U.S.-Korea Institute at Johns Hopkins SAIS released a report yesterday where I (with the help of Curtis and others) study how North Korea’s formalized markets have grown over time, and how they are distributed geographically using satellite imagery from Google Earth. The report is available here. These are the main findings:
The largest aggregate market space per capita can be found in cities in the southwestern part of the country. This suggests that trade on formal markets may be driven by other factors than those commonly assumed, such as sea route trade and agriculture.
By Benjamin Katzeff Silberstein
In Wall Street Journal, Jeyup Kwaak reports on a new defector survey by Seoul National University’s Institute for Peace and Unification Studies (08-26-2015) (added emphasis):
The Seoul National University Institute for Peace and Unification Studies annually surveys more than 100 North Koreans who defected in the prior calendar year. The results provide firsthand insight into developments in the isolated state, though its researchers said they shouldn’t be read as generalized facts due to the small pool of respondents.
[…]
The latest survey, of 146 North Koreans who escaped in 2014, shows significant growth from the previous year in the number of people saying they conducted private business activities and paid bribes to enable them. A little more than half said they received no money from the state, down from last year’s survey but up from the one released in 2013.
Experts say between half and three-quarters of North Koreans’ income comes from quasi-illegal market activities, such as trade of basic goods smuggled in from China, but sporadic crackdowns by national or regional security officials lead to irregular business and bribery. Defectors say officials often collect fees when they set up a booth at a market.
The results themselves do not present a new trend. Several previous defector studies indicate that markets are perhaps the most important source of income and sustenance for many (if not most) North Koreans. However, a few things are interesting to note.
The links may not be entirely clear, but it is at least symbolic that the current survey, albeit with a very small number of interviewees, suggests that support for Kim Jong-un and the leadership may not be waning, at the same time as market activity continues unabated. This at least calls into question an assumption that sometimes occurs that market trade would lead people to become more critical of the regime.
Again, too much shouldn’t be read too much into a small study with participants that probably are not geographically or socially representative of North Korea as a whole. Defectors as a group rarely are. But perhaps one could imagine that market trade being so institutionalized and regulated by the regime would make it more synonymous with the regime itself. I.e., if market trading is seen as something positive, maybe this reflects positively on the regime as well — perhaps the market has been co-opted.
The article also reminds us of the rather peculiar combination of dynamics seen under Kim Jong-un. On the one hand, market trade seems to continue unabated domestically, and initiatives like the new special economic zones and the agricultural reforms show that there is at the very minimum some new thinking going on.
But on the other hand, border controls have been tightened to a degree rarely seen since the mid-1990s, according to defector reports. Just today, DailyNK reports (in Korean) that resident in the Sino-Korean borderlands have seen their access to the Amnok river, often used for laundry by locals, increasingly restricted as of late. As the WSJ writes,
Just 614 North Koreans made it to the South in the first half of this year, compared with 2,706 in the 2011 calendar year, according to the most recent ministry data.
The drop in North Koreans who visited China on legal visas so far this year should perhaps also be seen in this context.
Taken together, the tightened border controls on the one hand, and the seemingly changing (one could say “progressive”) rhetoric on economic matters on the other, paint a mixed picture.
In the early days of Kim Jong-un, the question was whether he was a reformer or a hardliner. A few years into his rule, it seems he might be neither and both at the same time.
According to Reuters:
From the dark alleys of Pyongyang, the showpiece North Korean capital, tiny specks of torchlight shine carefully into the eyes of passersby, leading to bustling and illegal street markets where traders, usually women, call out “buy, buy!”
The “maeddugi shijang”, or “grasshopper markets,” get their name from the lightning-quick way traders must pack up and hop from place to place to evade authorities in a country making a grudging embrace of free enterprise.
As markets have taken hold in North Korea, the government has sporadically legalized and formalized them, while at the same time imposing new crackdowns, taxes, and bribes, forcing smaller traders back on to the streets where they set up “grasshopper markets” selling goods for cash.
“The grasshopper markets form in places near stations, on the roads to the (official) market, and around schools and parks,” said Seol Song Ah, a defector who left North Korea in 2011 and now works with the Daily NK, a Seoul-based website with sources inside North Korea.
“Wherever there are people, there are grasshopper markets.”
The markets are less well-stocked than official shops but offer convenience, carrying items from pots, socks, batteries, and cigarettes to fresh meat, according to residents of Pyongyang and defectors from the isolated country.
The informal, movable markets represent the new, grassroots driven economic reality in a country which is no longer truly collectivized, or communist – a change that began during the devastating famine of the 1990s and has since gained momentum.
‘TICK MERCHANTS’
Grasshoppers date to the 1980s, when old women started selling sweet potatoes and bean curd by roadsides, according to Seol, and have proliferated in recent years as more people, squeezed by new government regulations on the marketplace, have returned to underground trade.
In recent months, those who trade in the grasshopper markets have become known as “tick merchants” because they are hard to remove, and have therefore had restrictions on them slowly eased as security services struggle to shut them down, according to the Daily NK.
Still, because grasshopper markets are illegal, they are highly sensitive in the authoritarian country. A diplomatic source in Pyongyang who has visited grasshopper markets said he was followed by the “bowibu”, or secret police, down the dark grasshopper alleys.
“Trying to take a photo of a grasshopper market is one of the only times I’ve been seriously apprehended by the secret police,” the diplomatic source said.
A former foreign resident of Pyongyang said he had also never managed to photograph a grasshopper market.
“The one time I tried, the market ladies had vanished in the time it took me to get my camera from my pocket and raise it to take the shot,” the resident said.
“They are used to disappearing very, very quickly”.
Read the full story here:
In North Korean grassroots capitalism, ticks and grasshoppers skip
Reuters
James Pearson
2015-8-3
Pictured above (Source here): A Choco Pie wrapper in Pyongyang (October 2014)
UPDATE 6 (2015-7-14): The Daily NK reports that the DPRK’s ‘Choco Pie’ knock-off falls far short:
Daily NK has obtained a North Korean snack rolled out to squash demand for a popular South Korean treat that had first become a sensation among factory workers in the inter-Korean industrial complex and spread across the country. Known as ‘Chocolate Danseolgi,’ the snack displays a striking resemblance with the much-loved South Korean ‘Choco Pie’.
The new treat is said to have been produced to cut off fantasies about the capitalist world its workers may harbor.
Starting last month, North Korea has been providing its Kaesong factory workers with ‘Danseolgi’, according to a source who has ties with the North and passed on the new snack to Daily NK on the condition of anonymity. This comes after Pyongyang banned supplies of the famed ‘Choco Pie’ within the industrial complex last year, as they were being sold by the workers on the black market for good returns and gaining greater popularity across the country.
The South Korean ‘Choco Pie’ snack was first introduced to Kaesong workers in 2006. Due to its soaring popularity, many had come to develop a sense of curiosity or fantasies about the South, the source said. Seeing the chocolate cake snack with marshmallow filling win over so much love, Pyongyang set out to create an alternative in the hopes of choking off demand.
Last year, after banning ‘Choco Pie’ supplies, the North tried to force South Korean firms to provide its factory workers with a home-grown chocolate double-layered cake snack, and this year in March, it even rolled out a chocolate coated rice cake treat also similar to an existing South Korean product.
Despite these efforts, local goods have failed to take off, as Kaesong workers are already acquainted with tastes from South Korea and are only eating the ‘Danseolgi’ as they have no other choice, according to the source.
The treat is one of the “latest products” put out for Kaesong workers. “It was smuggled out of the country by way of a North Korean trader in the Rason Economic Special Zone who works with Chinese traders,” she explained.
“Currently in the North, the ‘Chocolate Danseolgi’ is being distributed to workers as supplies, and they’re not sold on North Korea’s regular markets,” she asserted. Every last ingredient used to make the snack, from the butter to the chocolate, is imported from China.
Predictably, Kaesong workers invariably far prefer the taste of the original chocolate snack from South Korea, the source said, adding, “North Korea will never be able to produce the South’s Choco Pie.”
One of Daily NK’s reporters who tried out the North Korean ‘Danseolgi’ described the snack as “decidedly lacking in chocolate flavor ” and “being overwhelmingly pungent of butter.” The wrapper claims to include marshmallow in the product, but our taste tester reported any semblance of its texture to be nonexistent and noted that the cake itself is incredibly prone to crumbling.
UPDATE 5 (2015-6-9): DPRK asks that all South Korean food served in the KIC be replaced by North Korean substitutes. According to Voice of America:
North Korea has asked South Korean businesses at the Kaesong industrial complex to replace all foodstuffs given to its workers at the inter-Korean park with North Korea-made products.
A representative of the South Korean businesses, who visited the complex Tuesday, told VOA’s Korean Service that South Korean companies began distributing North Korean substitutes for popular South Korean food supplies to the North Korean workers as early as March. Almost all South Korea-made food products have now been replaced with North Korean products.
Choco Pie, a popular South Korean snack cake, also has been replaced with a similar North Korea-made sweet. The chocolate covered cake with marshmallow filling has become one of the most popular items in the North’s black markets. Other North Korea-made foodstuffs given to the workers include instant noodles with chicken broth and condiments.
In an attempt to keep South Korean foodstuffs from the complex, the North is imposing an additional business tax on the companies for bringing in South Korea-made products. About 50 South Korean businesses supplying food for the complex face bankruptcy, according to representatives of the South Korean businesses.
Some business owners have expressed concern about the quality of North Korean foodstuffs. One representative said some workers are suffering from food poisoning after the switch.
A South Korean official who asked to remain anonymous told VOA the North Korean move is aimed at blocking the flow of South Korean products into the North and earning foreign currency.
South Korean companies have been providing about $60 per month in snacks to each North Korean worker. With approximately 53,000 workers at the complex, Pyongyang can now garner up to $3 million every month from the snack sales.
UPDATE 4 (2014-9-24): According to the Daily NK, workers in the KIC are receiving a different dessert than the Choco Pie now. Also, the Kumunsan Company is producing substitute goods, and they are winning over consumers:
[…] the once popular South Korean snack Choco Pie is seeing a decline in its asking price. In June, Pyongyang demanded that South Korean companies at the industrial complex stop distributing Choco Pies to workers there, as officials had found it problematic that North Korean workers were saving the snacks and selling them in the markets. More recently, the northern workers have been receiving Chaltteok Pie (찰떡) [a chocolate covered rice cake from the South], individually packaged coffee, yulmucha (율무차)[grainy tea made with Job’s Tears], and candy bars.
“In Pyongyang, at the ‘Geumeunsan Trade Company,’ (금운산, Kumunsan Trade Corporation) they have been baking bread for about a year,” the source said, adding, “Of all the different kinds of bread, the most popular are the ones with butter inside, and they are less than 1000 KPW– much cheaper than Choco Pie.”
The trade company is an affiliate of the Military Mobilization Department [Military Manpower Administration in South Korea], which deals with the procurement of military supplies among its many functions. They either directly import the goods or obtain them from military factories in various locations across the country, and oversee the manufacturing of military equipment and machinery.
Geumeunsan Trade Company maintains branches in multiple areas, including Rasun and Cheongjin, and the office in Pyongyang imports ingredients such as flour, sugar, and cooking oil directly from China. According to the source, the raw material prices are cheaper than in the North’s markets, and the products taste good, allowing it to monopolize the confectionery market there.
“The company has brought in foreign equipment and technology, putting it ahead of the South’s Choco Pie in price and taste,” he said, concluding, “This is why with the introduction of these different breads in Pyongyang, the price of Choco Pie [from the South] has dropped to 500 KPW from 1,200 KPW.”
See also this story in Radio Free Asia.
Read the full story here:
Kaesong Goods Fetch Highest Market Prices
Daily NK
Seol Song Ah
2014-9-24
UPDATE 3 (2014-7-1): Media reports claim that the DPRK has banned the use/possession of Choco Pies in the Kaesong Industrial Complex. According to the Washington Post:
By some estimates, as many as 2.5 million Choco Pies were traded monthly — though it’s unclear who exactly was so assiduously following Choco Pie markets.
Regardless of its volume, the trade will now surely be shrinking.
According to recent reports in the South Korean press, North Korean authorities have now banned the South Korean-produced Choco Pie at the Kaesong Industrial Complex following a lengthy crackdown on the chocolate treat that has made it scarce in Pyongyang.
Before, workers could pocket as many as 20 pies every night of work. But now, South Korean factory staff said they’ll instead get sausages, instant noodles, powdered coffee or chocolate bars as a bonus.
More information here and here.
UPDATE 2 (2013-9-20): Is the DPRK manufacturing a counterfeit Choc Pie? According to the Daily NK:
Pictured Above: Ryongsong Foodstuff Factory, Ryongsong District, Pyongyang (Google Earth)
The price of a North Korean own-brand “Choco Pie” fell to just 500 won in domestic markets following news that the Kaesong Industrial Complex (KIC) was to reopen, Daily NK has learned. The local version of the chocolate snack, which is made by Orion in South Korea, had previously risen to 3000 won on the back of the protracted KIC closure.
A source in Pyongyang reported to Daily NK on the 19th, “Sometime around May, Yongseong [Ryongsong] Foodstuff Factory in Pyongyang started selling ‘Choco Pies’ in the markets. People hadn’t seen a Choco Pie since Kaesong stopped, so their reaction was really something.”
“People were surprised because the packets said ‘Choco Pie’ and ‘Choco Rice Cake’ [a similar product with a glutinous rice center], and they couldn’t tell the difference between them and those from the ‘neighborhood below’ [South Korea] unless they checked closely,” the source went on. “Sure, people could tell they weren’t the real thing as soon as they ate them, but they were still pretty satisfied.”
According to the source, after South Korean Choco Pies disappeared from North Korean markets following the closure of the KIC, domestic traders started looking into importing the original South Korean and similar Chinese versions of the popular treat. However, the cost and difficulty of doing so meant that very few ended up crossing the border.
Therefore, attention turned to domestic production. The source explained, “Production volumes were low at first, and the state tried to control the flow of the product into the markets. They were 500 won a piece at the end of the first month; but that had risen to 3000 won by the end of last month. But the price sank back down upon news of the KIC re-start.”
“As soon as Choco Pies stopped coming out of the KIC, Yeongsong Foodstuffs Factory moved quickly and must have made quite a bit of money,” he guessed. “They were trying to imitate the South Korean pies but the product was way too sweet, which is partly why the price collapsed on the news of Kaesong.”
Only 60% (32,000) of the pre-closure North Korean workforce (53,000) returned to work when the KIC re-opened for a “trial run” on September 16th. At the same time, South Korean businesses, many facing financial difficulties after five months of nonproductive shutdown, have reportedly reduced the quantity of Choco Pies and other snacks previously distributed to workers. It is unclear what effect these circumstances could have on the price of goods flowing out of the KIC over the longer term.
Read the full story here:
NK Choco Pie Price Falls on KIC News
Daily NK
2013-9-20
UPDATE 1 (2011-10-31): According to the Daily NK, North Korean management in the Complex requested back in August that South Korean businesses stop offering ‘Choco-pies’ (a South Korean snack) to North Korean workers and give them cash instead.
ORIGINAL POST (2009-5-20): Donald Kirk has a must-read article in today’s Asia Times on the subtle ways that the Kaesong Industrial Zone is undermining Pyongyang’s control over the North Korean people. He points out that the DPRK’s verbal attacks on South Korea, combined with demands for new land, labor, and road use contracts in the Kaesong complex, are an attempt to blame South Korea when Kim Jong-il finally closes the project.
Quoting from the article:
Think Choco Pie, the thick wafer-like confection, all pastry and cream, served in the Kaesong Industrial Complex as a daily dessert for the 40,000 North Koreans who toil for 100 South Korean companies with factories in the complex.
“North Koreans love Choco Pie,” said Ha Tae-keung, president of NK Open Radio, which beams two hours of news daily into North Korea from its base in Seoul. “It’s an invasion of the stomach.”
North Korean workers, and the friends and family members for whom they save their daily treats, may salivate over Choco Pie, but it’s giving a severe stomach ache to senior officials fearful of the infiltration of South Korean culture in all corners of their Hermit Kingdom.
Choco Pie – along with other favorite South Korean cakes and candies as well as instant coffee – has come to symbolize the image of the capitalist South as a multi-tentacle beast that may be impossible to digest.
For Kim Jong-il, suffering from diabetes, recovering from a stroke and hoping to survive a few more years while grooming his neophyte youngest son, in his mid-20s, to succeed him, the best way to deal with the Kaesong complex, 60 kilometers north of Seoul and just above the demilitarized zone between the two Koreas, may be to spit it out.
It’s for this reason, said Ha, that North Korea has precipitously scrapped the agreements under which South Korean companies operate in the complex, built and managed by Hyundai Asan, an offshoot of the sprawling South Korean Hyundai empire.
“He’s come to see Kaesong as a burden rather than an asset, and is inclined to shut it down,” said Ha.
While the Kim Jong il government focuses its attention on cultural infiltration from the South, there appears to be little it is doing, or can do, about cultural infiltration from China–the DPRK’s most significant trading and political partner to the north:
When it comes to South Korean cultural infiltration, however, North Korea has far more to fear from the entry of goods from China than from the Kaesong complex. South Korean DVDs and CDs, even soft-core porn movies made in the South, are now distributed surreptitiously throughout North Korea. Electronic gadgetry, MP3 and MP4 players, TV sets, radios and rice cookers, also shipped via China, are also available for those with the money to pay for them.
Read the full article here:
Pyongyang chokes on sweet capitalism
Asia Times
Donald Kirk
5/21/2009
UPDATE 1 (2015-6-29): Men under 60 banned from market activities. According to the Daily NK:
With Kim Jong Un at the helm of North Korea, the age limit for commercial activities has been removed for women; for men, however, this limit has recently been raised, allowing only those in their 60s or over to enter market life.
This runs contrary to not long ago, when one could easily spot men in their 40s inhabiting stalls in the marketplace, often selling shoes or offering bike repair services– a common occurrence since residents took to market activities to cope with the widespread famine ravaging in the mid-1990s.
This has changed in almost an instant under the new mandate. “Actions have been taken so that men under 60 cannot run businesses in the jangmadang (market), as the Central Party demands that men should remain loyal to their workplaces,” a source from Yangkang Province informed Daily NK through a telephone conversation on June 26th.
Daily NK’s sources in two other provinces confirmed the news of this directive but for their safety their locations remain confidential.
“At markets in Hyesan there used to be men in their 40s running shoe repair business, cigarette stands or barbershops. But they’re all gone now, and even the stores such as bike shop or key repair shop are being run by men in their 60s,” the source added.
Men’s role in the marketplace has been rigidly controlled since the Kim Jong Un came to power, aimed at preventing workers from doing business rather than fulfilling their roles at state-run factories and enterprises. Women, however, have enjoyed relative freedom in their commercial activities.
Some men have long turned to offering up ‘8.3 money’ to escape the workplace and go out to try their hand at doing business.
The term ‘8.3 Money’ is related to a program of limited enterprise autonomy put in place by Kim Jong Il in 1984. As part of the plan, workers are encouraged to earn money outside their state-mandated workplaces and present de facto tax payments back to their employers. Such contributions are not necessarily defined in monetary terms: wild edible greens and valuable medical herbs (some of which fetch a high price in China) can also be contributions, for instance.
“Most of these men run wholesale or transportation of goods, carrying goods for retail dealers using ‘servi-cha.’ Some men under 60, who once sold goods in the jangmadang, have now turned to the transportation business,” he explained.
In the past, trains were almost the only viable means of long-distance transportation in North Korea. Then, as private business began to grow and the railways further deteriorated, vehicles such as trucks and cars belonging to military bases, state security and state enterprises were pushed into service to earn money for moving people, known as the ‘servi-cha’ industry.
“Even at the beginning of the last year there were many young men selling coal briquettes, salt and other food products [at markets in Pyongsong] but now they’re nowhere to be found,” the source said, citing a merchant from Pyongsong, South Pyongan Province.
Women’s relative freedom in doing business has created avenues for men despite to stay in the game, allowing them to team up with a female counterpart in order to evade the new directive, he said, explaining that in these cases, “men take care of transportation and wholesale of goods, while women take care of actual selling of goods. In this way, they can avoid the regulations.”
According to the source, the Kim Jong Un era has seen little control over people’s market activities. As a result, the number of stores has increased in most of the marketplaces in the whole country, vitalizing residents’ commercial activities.
The logic behind the freshest regulation is that to the extent that the regime has allowed commercial activities–an autonomous means of living for the people who have been suffering chronic shortages of food–men should devote themselves to their state-ordered workplace.
ORIGINAL POST (2015-3-23): It appears there is an informal easing up on unauthorized street vendors near marketplaces. According to the Daily NK:
Alley merchants [also known as grasshopper merchants]– those who sell goods in alleyways to avoid crackdowns by Ministry of People’s Safety [MPS] officials–are now referred to as “tick merchants,” a term coined after their rapid proliferation, according to sources within North Korea.
Affiliated with city and county People’s Committees throughout North Korea, official marketplaces are run by a management center, charged with collecting and handling fees for vendors renting stalls from which to sell their sundry goods.
However, securing a location for their operations is not feasible for a multitude of residents. “Many don’t have enough money to afford to pay for a stall in the marketplace, so they either sell goods in the alleys of villages or by crossroads in close proximity to the jangmadang [North Korea’s system of markets],” a source in North Pyongan Province told Daily NK on February 9th.
Regulation of these “alley merchants,” of whom there are countless numbers, is carried out by the Ministry of People’s Safety and patrol units falling under its umbrella. Frequently, these officials are know to extort merchants under the pretense of regulating illegal market activity, confiscating their goods, only to turn around and return the merchandise as soon as their bribe demands have been met.
Despite the incessant threat of crackdowns and extortion by these officials, “grasshopper vendors” are determined to continue selling their items, desperate to hold onto their “lifelines,” according to the source, who noted a marked difference in this particular sector of the market economy since just last year.
Of this situation, she said, “With February 16th [Kim Jong Il’s birthday] fast approaching, the number of alley merchants has surged [to sell goods for residents preparing for the holiday], as has the number of MPS officials.” She went on to explain that last year, however, these “grasshopper merchants” largely abided orders, fleeing the premises after the MPS units arrived for fear of the repercussions. But this year most are staying put in these makeshift alleyway market areas, even saying things to the officials like, ‘If we got our rations, do you think we would be putting ourselves through this?’
This is how the newly coined term, ‘tick merchant’, came into existence: derived from a common expression in North Korea–regarding how impossible ticks are to remove and keep away before another comes along–these merchants are much the same–refusing to budge despite the consequences, determined to claim their spot in the market system.
Recently, investigations launched by the Central Party, aimed at rooting out reckless misconduct of MPS officials toward residents, are also thought to be contributing to the ease on regulation of these alley merchants. This, coupled with the bribe culture continually infiltrating the “tick merchant” realm–just as in the rest of North Korea–has seen the number of those engaged in these operations spike; nominal bribes of cash or goods ensure, at least for the time being, that they can do business in relative peace. Not unlike those with official stalls inside the market, some even reportedly pay periodic fees directly to the market management, all but guaranteeing their exemption from regulation.
The residents, and even the MPS officials themselves, are not overly preoccupied with regulations and clampdowns, because, as the source put it, “it becomes increasingly difficult for officials to crackdown on merchants selling in the surrounding areas of the markets, entirely reliant on selling goods to survive.”
Many are concerned that the leniency pervading these alley way operations may be fleeting, but the source asserted things will never return to the past. “When the investigations on the Ministry of People’s Safety officials are over, regulation of the alley markets is expected to become stringent again. Still, at this point, it’s next to impossible for these officials to make residents, largely dependent on business to maintain their livelihoods, obey them, meaning eradicating these ‘tick merchants’ is just as improbable,” she concluded.
And the DPRK has begun lifting age restrictions on market vendors. According to the Daily NK:
Amid relaxation of restrictions on market activities, the North Korean authorities began lifting age restrictions for vendors at the end of last year in some regions and, more recently, scrapping the ban nationwide.
“The authorities have been quite lax with clampdowns and regulations of official markets as of late,” a source in Yangkang Province reported to Daily NK on March 20th. “Those previously not permitted stall rights to sell their products are now being granted these privileges, greatly increasing the number of stalls. Also, women below the age of 50 are no longer prohibited from selling at the markets.”
In the absence of age restrictions, markets have seen a marked increase of women selling goods there. According to the source, the North Korean authorities previously regulated trade activities by women under 50 to deter shirking of ideological study sessions or–even more importantly– nationwide mobilization directives for agricultural or construction efforts, The authorities compromised by granting these women permission to participate in these compulsory organization activities only in the morning, freeing up the afternoon for market activities.
“Since last year, the authorities didn’t really implement clampdowns and have even showed a great deal of leniency to those selling in the alleys. As a result, women who previously idled away at home have been propelled into market life, selling everywhere they can,” she explained.
Unsurprisingly, most women are perplexed, if cautiously elated, by the leniency shown by a system that has wielded such stringent power and regulation over them for so long. “The shift in sanctions feels like hell has frozen over,” many have remarked, adding that they “finally have the opportunity to make ends meet.” Still, many are wary, noting that “you never know when the authorities will abruptly declare a new policy or revert to stringent clampdowns.”
She added that while the state did not lift the restriction to “improve people’s lives” as it claims, it has had a positive impact nevertheless. According to the source, North Korea’s motives for the lift begin and end with procuring funds. “There are thousands of stalls in Hyesan Market; this yields huge profits for the state who collect the fees vendors pay to use the space,” she pointed out.
That said, she maintained a sanguine outlook, remarking how empowering it is to see women effecting change in the markets by expanding their inroads into this sector, while making significant, if not dominant, fiscal contributions within their individual households. “Whereas there were only older women in the markets in the past, you can now easily spot women in their 20s and 30s in the industry,” she explained.
Surprisingly, the reduced regulations have increased rather than diminished participation in state mobilization efforts– such as compost collection or “loyalty singing sessions”– because women are afforded a bit more breathing room from unceasing concerns about how to secure their next meal. The positive results are already palpable, according to the source, who said that “most families are better off now due to women’s increased forays into the market domain.”
Read the full story here:
Crackdowns Ease Up on Alley Merchants
Daily NK
Seol Song Ah
2015-02-11
NK Lifts Market Age Restrictions
Daily NK
Kang Mi Jin
2015-03-23
