North Korean Economy Watch

Korea Times
Jung Sung-ki
10/28/2007

North Korean leader Kim Jong-il has expressed intention to model after the Vietnam-style economic reform and openness policy, dubbed “Doi Moi,” a report said Sunday.

Vietnam adopted the reform policy in 1986 to establish a market economy such as liberalization of trade and finance with foreign countries, decentralization of state economic management and reliance on the private sector as an engine of economic growth.

Kim made the remarks during a meeting with Nong Duc Manh, secretary-general of Vietnam’s Communist Party, in Pyongyang last week, Yonhap News reported, citing the Sunday edition of the weekly Yazhou Zhoukan, a Hong Kong-based international Chinese business daily. The newspaper carried an interview with Vietnamese Foreign Minister Pham Gia Khiem who accompanied the secretary general on his Pyongyang visit.

“Chairman Kim highly evaluated the achievements Vietnam’s Doi Moi has made in the past 20 years while meeting with Secretary General Manh,” Khiem was quoted as saying, adding the North Korean leader accepted Manh’s proposal for Kim’s visit to Hanoi.

The ongoing visit to Hanoi by North Korean Prime Minister Kim Yong-il aims to prepare for Kim’s visit to Vietnam, the report said.

The North Korean premier, who arrived in Hanoi Friday, visited several industrial and tourist sites in Vietnam, including Halong Bay, one of the biggest tourist attractions for foreigners, reports said.

Diplomatic sources in Hong Kong, however, were quoted as saying it is remarkable that Kim Jong-il expressed an interest in Doi Moi, but it is not likely for the communist North to closely follow the reform program.

The reason why the North is eyeing Vietnam’s economic program could have something to do with China’s lukewarm attitude to Pyongyang’s efforts to build special economic zones near the North’s border with China, they said.

Hanoi’s reform has often been referred to as a model for North Korea’s underdeveloped economy to emulate.

Chief U.S. nuclear envoy Christopher Hill said during a visit there in May that North Korea should “move on in the way that Vietnam has done so well.”

North Korea, Vietnam agree to boost bilateral ties
Yonhap
10/27/2007

North Korea and Vietnam said Saturday they have agreed to forge closer cooperation in the sectors of agriculture, culture and tourism, in their first high-level meeting in five years.

The agreement was reached after a meeting of visiting North Korean Premier Kim Yong-il and Vietnamese Prime Minister Nguyen Tan Dung.

Kim, who is in charge of economic policy, arrived in Hanoi on Friday for a five-day stay, as part of the first leg of a tour to Southeast Asian nations that include Malaysia, Cambodia and Laos.

Vietnam has shifted to a market economy since the mid-1980s and Hanoi’s reform is seen by many as a model for North Korea’s underdeveloped economy to emulate.

Joong Ang Daily
10/23/2007

Regulatory filing requirements to invest in North Korea will be eased, and the Export-Import Bank of Korea will manage information on investment activities in the North, according to a Ministry of Finance and Economy release yesterday.

For an amount below $300,000, an investor will no longer need to hand in an annual financial report to the bank handling the company’s foreign exchange deals for investments in the North.

For an amount below $1 million, an investor will only need to report briefly.

The bank dealing with foreign exchange transactions will need to report the investor’s financial information to the Export-Import Bank of Korea instead of the Ministry of Unification and the Finance Ministry.

Daily NK
Lee Sung Jin
10/22/2007
(Click on image for original size)

According to DailyNK’s research on prices in North Korea conducted in late September, the prices in Pyongyang are similar to the prices in other parts of the country. The finding shows that Jangmadang (markets) economy has been going through integration and similar distribution process across North Korea.

In the past, domestic commodities were sold cheap, and foreign products were sold expensive in Pyongyang.

DailyNK has been conducting quarterly research on prices in the central such as Pyongan Province and Hamkyung Province and northern areas.

This time the research result shows that the price of rice in a Jangmadang in Pyongyang is 1,350 won/kg, which is similar to the price of rice in Sinuiju, 1,400won/kg. In North Korea, the rice price serves as a gauge for price trends.

In Pyongyang, the exchange rate is about 330 thousands won to 100 dollars, which is the same as the exchange rate in other places. The most famous imported cigarettes, Cat (Craven A) is sold at the same cost of 1,500 won in Pyongyang and other areas.

Subsidiary food is more expensive in Pyongyang. The price of cabbage is 400 won/kg, 50 won/kg higher than cabbage price in Sinuiju. The price of pork ranges from 3,500 to 4,000/kg, 500~1,000 won/kg higher than the pork price in other areas.

The prices of seafood such as brown and green seaweed, and dried Pollack are cheaper in Pyongyang. Seafood caught in Kangwon Province and neighboring areas is transported to markets in Pyongyang in refrigerator car. Since the demand is high, seafood is sold in great quantities, and the price remains low in general.

Movie ticket prices range from 200 to 400 won. Telephone service is charged five won per minute. Overall, the price range for each commodity is high, and many different kinds of goods are available in Jangmadang.

Imported items from China such as socks, sports shoes, or underwear are expensive being sold at a cost of 1,000 won in Pyongyang. That is because there are extra shipping rates and labor costs imposed on Chinese goods transported to Pyongyang. On the contrary, in Sinuiju, imported goods from China are circulated on the market right away.

Often, retail prices are higher in Pyongyang because of high levels of consumption among Pyongyang citizens. However, cigarettes or liquor produced in Pyongyang, or clothes from South Korea circulated to other areas via Pyongyang are sold cheap in Pyongyang.

However, in these days the differences in regional price levels have almost disappeared.

A defector from Pyongyang, Ahn Chul Min (a pseudonym) who came to South Korea in 2006 said, “Prior to 2002, there were individuals who hung around from place to place and made money on price differences. But nowadays, the retail prices are almost uniform across the country because people just use a telephone and find out where to get items they want at what prices.

“Since there is no big difference in retail prices, retailers are not doing well in business,” Ahn added, “Instead, individuals driving a truck and selling goods wholesale are making good money.”

Ahn said, “Not everyone who lives in Pyongyang is well-to-do. Despite of their locations whether in Pyongyang or Chongjin, all markets have goods from South Korea and China. The poor people even if they live in Pyongyang should buy cheap and low quality of products from China. In contrast, those who live in Chongjin and have money can buy goods from South Korea anytime.”

Market Prices Consistent Throughout DPRK
Institute for Far Eastern Studies (IFES)
NK Brief No. 07-10-25-1
10/25/2007

The results of a survey conducted by Daily NK on the price of goods in Pyongyang at the end of September show that prices in the capital were similar to those in rural areas. This is an indication that markets throughout the country are integrated, and evidence that goods can be circulated from region to region.

In the past, the price of domestic goods in Pyongyang was relatively cheep, while imported goods were sold at high prices. During that time, Daily NK carried out local price surveys in central regions such as Pyongan and Hamkyung provinces, as well as in northern areas. According to this latest survey in Pyongyang, the cost of one Kg of rice, the standard measure of the cost of goods in North Korea, was 1,350 won, similar to the 1,400 won price in Sinuiju, and the 1,250 won cost in Hyeryung. An exchange rate of 3,300 won per USD is also in line with rural exchange rates, as is the 1,500 won price tag on a pack of Craven A cigarettes, the most favored imported cigarette in North Korea.

Non-essential food goods are more expensive in Pyongyang than in outlying areas, with one Kg of lettuce selling for 400 won, 50 won more than in Sinuiju. Also, pork in the capital runs between 3,500 and 4,000 won per Kg, which is 500 to 1,000 won more than it would cost elsewhere in the country.

On the other hand, seaweed, dried Pollack, and other marine products are cheaper in Pyongyang than elsewhere. Ocean harvests from Kangwon and neighboring provinces are brought to Pyongyang markets by way of refrigerated trucks. Because of high demand, a variety of goods get delivered, yet overall, prices are held fairly low.

Overall, the price range on a particular ware was very wide, indicating that there was a variety of products available in the markets. The survey found that goods such as undergarments, socks, sneakers imported from China were selling for the high cost of 1,000 won each. In Sinuiju and other northern areas, goods from China are brought directly to markets, but by the time these same goods reach Pyongyang, additional labor and transportation costs force prices up. Pyongyang residents typically have more money to spend than those in rural areas, also leading vendors to raise prices on some goods, however cigarettes and alcohol produced in Pyongyang and distributed to rural areas, as well as South Korean goods which reach DPRK markets by way of Pyongyang, are slightly less expensive in the capital.

Recently, regional price differences have nearly disappeared. Prior to 2002, some traders earned their living traveling from region to region exploiting price differences. However, now with one simple phone call, North Koreans can find out where and for what price goods are being sold, leading the majority of retail prices to be similar throughout the country.

Korea Times
Lee Hyo-sik
10/18/2007

Finance and Economy Minister Kwon O-kyu plans to call on the global financial community to increase support for North Korea’s economic projects when he attends the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington D.C on Oct.20-22. The country’s top economic policymaker will also ask international financial institutions to allow the Stalinist state to become a member.

Kwon is planning to brief IMF meeting participants as well as U.S. administrative officials and lawmakers on the outcome of the inter-Korean summit between President Roh Moo-hyun and North Korean leader Kim Jong-il early this month.

He has said the government will attract funds from the World Bank and other international financial institutions, as well as from the private sector, for a range of large-scale inter-Korean economic cooperation projects, which is expected to cost billions of dollars over the years.

Hyundai Research Institute projected that the establishment of a special peace zone in the West Sea area and other economic cooperation projects between the two Koreas will cost $11.2 billion (10.3 trillion won). The state-run Korea Development Bank (KDB) and other institutions have put forth even larger spending estimates for the envisioned economic cooperation between the two Koreas _ as much as 60 trillion won over the next 10 years.

While in the U.S., Kwon is also scheduled to meet with the U.S. trade representative Susan Schwab to discuss the ratification of the Korea-U.S. free trade agreement (FTA). He plans to ask Schwab as well as other U.S. administrative and congressional officials to urge the Congress to quickly approve the bilateral trade accord.

He will also have a series of interviews with the U.S. media to promote the trade agreement and publicize the second inter-Korean summit. Seoul and Washington signed the deal in June, and Korea submitted the agreement to the National Assembly last month for ratification.

However, there has recently been growing opposition to ratification of the Korea-U.S. FTA in the U.S. Congress. Many lawmakers, including Democratic Party presidential contender Hillary Clinton, are openly opposing the agreement, claiming it will have negative effects on the U.S. manufacturing industry and job growth. They also said Korea should do more to open its markets to U.S. industrial and agricultural products.

To promote Korea as a regional financial hub, minister Kwon plans to hold a meeting with heads of leading international investment banks and prominent financers to ask for more investment in Korea and increasing cooperation with Korean financial firms.

Additionally, a number of local bankers and heads of other financial institutions will converge in the U.S. capital for the meetings and hold talks with executives from global financial institutions.

Bankers include Kookmin Bank President Kang Chung-won, Woori Financial Group Chairman Bahk Byong-won, Shinhan Bank President Shin Sang-hoon, Hana Bank President Kim Jong-ryul and Export-Import Bank of Korea President Yang Cheon-sik.

Among others, Korean Federation of Banks Chairman Yoo Ji-chang, Korea Asset Management Corp. CEO Kim Woo-suk and Korea Investment & Securities CEO Yoo Sang-ho are flying to Washington.

Marcus Noland Response… 

N.K. needs technical help before joining int’l financial institutions: U.S. expert
Yonhap
10/19/2007

North Korea must first receive technical assistance from international financial institutions before it can join them and begin receiving monetary aid, a U.S. expert said Friday.

Pyongyang, viewed as one of the most secretive regimes in the world, has to provide certain economic data and follow standardized practices and procedures in order to be able to join financial institutions, Marcus Noland, a senior fellow at the Institute for International Economics, told Yonhap in an e-mail interview.

Noland proposed first inviting North Korea in as an observer “to begin the process of education and technical assistance to support their economic transition” into full membership.

North Korea had said it wanted to join such institutions in 1996, but lost all interest after finding out it would not immediately begin receiving money, according to Noland.

Since then, it has not indicated willingness to adopt the transparency and openness required for membership into the institutions, he said.

Outside aid to the North is heavily constrained by various sanctions, notably by the U.S., which brands Pyongyang as a state sponsor of terrorism. The designation requires Washington to vote against monetary loans and assistance programs to North Korea through international organizations, such as the World Bank and the International Monetary Fund (IMF).

In an annual IMF meeting here next week, South Korean Finance Minister Kwon O-kyu is expected to call on the global community to increase support for North Korea’s economic development, and to allow Pyongyang to become a member of global financial institutions.

His recommendations follow an inter-Korean summit earlier this month that highlighted economic cooperation and progress in six-nation efforts to denuclearize the Korean Peninsula.

Noland questioned whether Pyongyang would be willing to be subjected to the scrutiny required for a membership into the international financial system.

“Frankly speaking, the most important thing that the international financial institutions could immediately provide to the North Koreans is technical assistance,” he said.

“But again, it is not at all clear that they are particularly interested in becoming members of these organizations or reforming their internal practices in ways that would allow them to make full use of membership.”

Such assistance could involve setting up processes, procedures and regulations to reform North Korea’s laws and practices, he said.

North Korea also has to provide the necessary data, a process which international institutions could assist by providing basic standards, such as data collection standards.

North Korea and financial institutions also need to come up with a strategic plan, said Noland. If, for example, Pyongyang wanted to set up a stock exchange, the institutions would assist in starting it and revising relevant laws in the North, he said.

Europen Business Association
October 2007

18 European companies are participating at the European booth organized by the European Business Association (EBA) in Pyongyang. This has been the largest ever participation of European companies at a Trade Fair in Pyongyang. The 18 EBA-member companies come from 6 European countries and are engaged in banking, IT, pharmaceuticals, maritime transportation, railways, courier services, industry, mining, solar driven water pumps, energy saving technology, commodity inspection, cosmetics and other consumer goods and general trading. Some already operate in joint ventures with Korean partners or found other forms of close business cooperation, particularly in the fields of banking, mining, internet services, logistics, software development and pharmaceuticals.

The EBA will continue to make efforts to attract more European companies to invest and do business in the DPRK in the coming years and will share its experience to help make the endeavors of the newcomers and their Korean partners a success. The EBA closely cooperates with the DPRK Chamber of Commerce and the Korea International Exhibition Corporation to facilitate the participation at exhibitions, to intensify trade between European and DPRK-enterprises and to enhance the identification of suitable business and investment opportunities for European companies.

Pictures of the European booth will be published on http://www.eba-pyongyang.org/
Felix Abt, President
Dr. Barbara Unterbeck, PR-manager
European Business Association
President´s Office
Chang Gwang Foreign Residential and Office Building
10th Floor, No. 10-2
Central District
Pyongyang
The Democratic People’s Republic of Korea
http://www.eba-pyongyang.org/

Version 5: Download it here (on Google Earth) 

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fifth version.

Additions to the latest version of “North Korea Uncovered” include updates to new Google Earth overlays of Sinchon, UNESCO sites, Railroads, canals, and the DMZ, in addition to Kim Jong Suk college of eduation (Hyesan), a huge expansion of the electricity grid (with a little help from Martyn Williams) plus a few more parks, antiaircraft sites, dams, mines, canals, etc.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your additions to this project.

Korea Times
Yoon Ja-young
10/2/2007

The second inter-Korea summit is expected to lay the ground not only for the establishment of a permanent peace on the peninsula but for further re-rating of the Seoul stock market, analysts said.

They said that Seoul stocks, burdened so long with the so-called “Korea discount” due to geopolitical concerns, will get a fresh boost as President Roh Moo-hyun entered North Korea for a summit with the North’s leader Kim Jong-il.

The main index KOSPI closed above 2,000 points again Tuesday as it closed at 2,014.09 points, up 51.42 points, or 2.62 percent, on the balmy news from north on top of the bullish New York bourse.

Most analysts agree that the summit will have a positive effect on the bourse in the long term. They advise investors to pay attention to stocks that have to do with social overhead capital (SOC) projects in North Korea.

Samsung Securities said the summit will be a great boon for the bourse in the long run. “The political events between the two countries haven’t affected stock prices much. Opinions diverge regarding its effect in the short term, but it would greatly contribute to the revaluation of local stock market in the end,” said Ahn Tae-kang, an analyst at Samsung Securities.

The world was surprised when the two countries announced the summit plan in 2000 April, and the whole nation watched the historic scene on TV when former President Kim Dae-jung was greeted by North Korean leader Kim Jong-il in Pyongyang two months later.

The stock market soared after each of these events, yet change was not always predictable. When North Korea conducted nuclear tests in 2006, on the contrary, stocks continued to rise as foreign investors sought buying shares on cheap prices.

It is different this time, according to analysts. “It would be a remarkable bullish factor once the two come out with a concrete plan on economic cooperation and SOC,” said Lee Seon-yeob, an analyst at Goodmorning Shinhan Securities. It would be only symbolic if without concrete agreements, he feared, but it would still be meaningful, according to Lee.

“The two can talk about setting up special economic zones, which can give rising momentum to North Korea related stocks and improve overall investor sentiment,” Kiwoom Securities said in a report.

Samsung Securities’ Ahn cited decreasing geopolitical risk and consequent reevaluation of stocks, the economic cooperation between the two and decreasing cost of unification after North Korea’s adoption of a market system and opening of the market as meanings of the summit. “The growing possibility of the sovereign credit ratings raise and Seoul index’s incorporation into developed world indices and the risk premium decrease are some of the positive effects,” he said.

He advised investors to concentrate on large cap blue chips that will benefit from infra projects in North Korea. Hyundai Engineering & Construction, POSCO, Hyundai Merchant Marine, Hyundai Elevator, KEPCO, and Hyosung were among his top picks.

Goodmorning Shinhan’s Lee said cited SOC related businesses, including construction and power transmission as the ones to benefit from the summit. “In the first summit, all stocks related with North Korea skyrocketed, but not this time. Investors are taking out the ones that will have a visible benefit. Investors seem to know how to make a good investment,” Lee said.

North Korea-related shares rise on summit
Joong Ang Daily
Kim Bo-yung
10/2/2007

With just a day left before the second epoch-making inter-Korean summit, North Korea-related shares surged on the Korean stock market yesterday.

The power facility industry enjoyed a moderate increase. Geumhwa PCS Co. advanced 5.5 percent, and Doosan Heavy Industries & Construction Co. climbed 2.37 percent.

The electric wire sector also posted a bull run as LG Cable and Taihan Electric Wire Co. surged 5.3 percent and 2.8 percent.

Nam Hae Chemical Corporation, a local agrichemical product manufacture, increased 5.6 percent.

However, the companies that have penetrated into the Kaeseong Industrial Complex suffered a loss.

Romanson Co. tumbled 3.3 percent and JY Solutec Co. slid 0.8 percent.

The share prices of Ewha Technologies Information, Cheryong Industrial Co. and KwangMyung Electronic, potential beneficiaries of electricity transmission from South to North Korea, dropped by 6 to 13 percent.

The second inter-Korean summit is expected to improve investment sentiment, generating strong gains across the board.

However, some market watchers warn investors not to make impulsive investments in North Korea-related shares.

“Although investment sentiment surrounding the stock market is [expected] to improve once the inter-Korean summit kicks off, it will only have a short-term effect,” said Oh Hyun-seok, the investment information manager at Samsung Securities.

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.

Yonhap
8/26/2007

South Korea will likely lose 2.2 trillion won (US$ 2 billion) in its food loan to North Korea, because the price was set by international market standards, an opposition lawmaker said Sunday.

Since 2002, South Korea has loaned 2.1 million tons of rice worth 2.86 trillion won to North Korea to help alleviate chronic food shortages in the impoverished communist country.

The loan was offered at international prices at the time of the shipments, although 2.1 million tons of the shipment were homegrown products, whose domestic price is four times higher than international prices, said Rep. Hong Moon-pyo of the Grand National Party.

Citing data from unification and agriculture ministries, Hong said the total monetary value of the South Korean food loaned to North Korea during the period comes to 2.86 trillion won.

North Korea is required to pay back the loan at international market prices, which currently stand at US$380 on the average, the lawmaker said.

“According to the terms of the contract, South Korea will not be able to recover about 2.2 trillion won, so the difference should be offset by taxpayers’ money,” Hong said, adding that the government should unveil the exact amount of the loan and its conditions.

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.