Archive for the ‘Reatail’ Category

Local products sold at Kwangbok Area Supermarket and Department Store No. 1

Monday, July 6th, 2015

Pyongyang Department Store No. 1 to provide local products catered to consumers
Institute for Far Eastern Studies (IFES)

The manager of North Korea’s Pyongyang Department Store No. 1 has revealed the store’s ambition to provide domestic products suited to the demand and tastes of its customers. In an interview with the North Korean website ‘Naenara’ on July 14, 2015, Manager Chong Myong Ok said, “If customers buy and use products that they like, they will come to know the true value of domestic products better.”

According to manager Chong Myong Ok, the Pyongyang Department Store No. 1 product exhibition, which started in December of 2010 and is held twice every year, is selling products produced with the goal of “regional industries catching up with central industries and central industries producing internationally competitive products.”

In July 2011, Kim Jong Il attended the second Pyongyang Department Store No. 1 product exhibition and visited the oil stand as many as three times, instructing the store to sell more than five types of oils, including soybean oil, sesame oil, perilla oil, rapeseed oil and corn oil.

Also, as Kim Jong Un emphasized in his 2015 New Year’s address the need for quality consumer goods, school supplies and children’s food, the Pyongyang Department Store No. 1 reported that it goes to over two hundred factories to procure goods.

“The light industry factories, which have a strong material and technical foundation and are modernized to meet the demands of this new century, are widely praised by the people and are churning out internationally competitive, high quality products,” said manager Chong Myong Ok.

He also revealed his hope that “in the future we can continue setting up product procurement businesses suited to the people’s rising standard of living while prioritizing the interests of the people and making progress in all matters that arise in commercial services like manufacturers’ order contracts.”

North Korea, which has set the goal of taking the lead in the global market by producing outstanding products, is trying to shed its present reliance on imports through enhancing the quality of its own products. This is consistent with its overall goal of achieving ‘self-reliance’ and the localization of its economy by producing goods that can compete in the global economy.


Surge in local product sales at Kwangbok Area Supermarket
Institute for Far Eastern Studies (IFES)

According to the Tongil Ilbo, there are now a number of local products sold at Pyongyang’s Kwangbok Area Supermarket, which was built in October 1991. “By achieving the informatization and computerization of all business activities, from warehousing to the sale of goods, the Kwangbok Area Supermarket guarantees accuracy and speed in its service. It is a commercial service center managed to guarantee the maximum convenience of its customers,” North Korea’s independent newspaper reported on July 11, 2015.

It explained that the Kwangbok Area Supermarket, which has a total floor area of 12,700 m2, sells household products, electronics, general textile products, and grocery products such as confectioneries on every floor. In addition, each North Korean brand is sold in the relevant department, including brands such as ‘Ryongmasan,’ ‘Kuryonggang,’ ‘Kumkop,’ ‘Hwawon,’ ‘Mirae,’ ‘Songchon,’ and ‘Bommaji.’

Located on the first floor, the grocery department displays local products produced by factories like the Pyongyang Flour Processing Factory, the Kumsong Food Factory, and the Kumkop General Foodstuff Factory for Sportspersons. “People like to purchase locally-produced products […] In the future public service networks like the Kwangbok Area Supermarket will emerge in other places as well,” the newspaper reported.

Kim Song Won, manager of the Kwangbok Area Supermarket, commented, “With the unprecedented growth of the country’s self-sustaining economic foundation, there is greater demand among the people for variety and quality in their products […] Accordingly, we are bringing in many domestic products and are working to provide services so that customers can purchase products that they like.”

The newspaper revealed that since many residents who live outside of Pyongyang also come to the Kwangbok Area Supermarket, for their convenience the store has prepared all sorts of food stands on the first floor in addition to the third floor restaurant. Manager Kim Song Won explained, “When you prioritize the convenience and well-being of the people, you receive their love […] We will continue to work hard to make the Kwangbok Area Supermarket a service center that customers enjoy coming to.”


Shopping at a socialist department store

Thursday, March 19th, 2015

Many of us imperialists have not had the chance to purchase goods in a socialist shop or department store. I did in the former Soviet Union, Eastern Europe and in the DPRK. Rather than collecting the items you want and taking them to a single check out line, you are required to stand in three separate lines. I never really saw a published source explaining it all (though I am sure Lankov has written about it in one of his books), but happened upon a declassified (FOUO) document published on May 18, 1979 (the bracketed and italicized sections are my own comments).

[Line 1: Ordering] It is said that at the state-operated North Korean store the customer requests to the sales clerk what he wishes to purchase and have the name of the product and the price written on a small piece of paper. [Line 2: Paying] Then the customer goes to the cashier. After paying for his purchase in cash [and ration coupon if necessary] he gets his paper stamped; then [Line 3: collection] he goes back again to the clerk who [gets] the paper.

The purchased item is then finally handed to the customer.

I am not sure how many official retail establishments in the DPRK still practice these archaic control procedures. This practice is not used in the markets. In one encouraging sign, the recently refurbished Kwangbok Area Supermarket has transitioned to market-style shopping where individuals collect goods and pay for them in a single line.

Here is the citation for the quote:

“Translations on Korean Affiars (FOUO 1/79)”, U.S. Joint Publications Research Service, 18 May 1979. Release 2007/02/09: CIA-RDP82-00850R000100050036-6


On the DPRK’s official retail sector

Friday, June 27th, 2014

The Daily NK has published an article describing how the DPRK retail sector works. It is far from perfect, but it explains some of how the complicated retail and distribution systems work.

Daily NK recently interviewed Hwang Cheol Min, who left North Korea in 2012 after eight years as manager of a commercial administration office in North Pyongan Province. He gave the latest details on the distribution of consumer goods and other products.

-What is the function of administration offices such as yours?

It’s the agency that manages the distribution of goods in a given city or county. Goods produced by factories in accordance with the national economic plan are transferred to them through provincial, municipal, and county wholesalers, and we then supply those goods to state-owned stores.

-How are the managers of such entities selected?

Managers of county-level ones are selected from among provincial Party cadres. Municipal ones are chosen through consultation between the Central and provincial arms of the Party. The necessary requirements for the job are, first, a good Party record, and then a business degree and work experience in the sector. Many are graduates of Jang Cheol Gu Pyongyang Commercial University and Wonsan University of Economics.

– What is the affiliation of these offices, and how are they organized?

They are positioned under the commercial departments of municipal people’s committees. Municipal ones are classified as “1st class enterprises,” and deal with various things like planning, commerce, accounting, labour, logistics, etc. This is what makes them bigger than county-level ones. Managers of “general stores,” which are under the administration offices, must be ratified by the municipal Party, while those responsible for ordinary stores are chosen from within the executive branch of the administration office. The executive branch is composed of a junior Party secretary, departmental secretary, and a manager, whose daily reports get reported to the city, provincial, and Central Party by the Party secretary.

– How are they comprised?

They have a Commercial Administration Section, Food Services Section, Conveniences Section, and Services Section (this office oversees things like bathhouses, massage parlors, and hairdressers). The Services Section was once classified under the Conveniences Section, and the Food Services Section was under the Commercial Administration Section, but they were both hived off after jangmadang (markets) cropped up in the 1990s.

Each Food Services Section has about 500 restaurants within its remit, of which less than 100 are state-owned; all the rest are private. But to run a private restaurant you need a certificate confirming approval from the Food Services Section. It used to cost 50,000 won a month in fees, too, which the Food Services Section must transfer up to the relevant people’s committee. Individual targets for the Food Services and Services sections are set by the planning section of the relevant people’s committee, while the overall Commercial Administration Office plan is set by the State Planning Commission. Food Services and Services sections often bribe people’s committees to get their targets reduced so they have a chance to make a profit.

– How many shops are in the average city and what is their function?

Shops are the places that directly supply and sell the goods to residents. There are those that sell foodstuffs and others that sell light industrial goods. In a city of seventy thousand households, there would be seventy stores; one per every thousand families, and six of the larger general stores. Store managers submit a list of their households to the commercial administration office, and in turn they get goods like doenjang [fermented soybean paste], soy sauce, salt, shoes, toothbrushes, etc. from the office, which they are then meant to supply to residents.

-What goods do these offices distribute?

Those manufactured in North Korea, and those supplied by the UN. During the [presidencies of Kim Dae Jung and Roh Moo Hyun], volumes of UN goods rose dramatically. When UN goods arrived at the port at Nampo, they were greeted by the United Front Department of the Party and the Central Wholesale Office. The former body divided them up by origin (China, US, and South Korea), removed all South Korean labels and handed them over to the latter. They took bribes from local commercial offices seeking to receive a greater share of the UN goods […] UN goods supplied the seed money for Kim Jong Il’s “gift politics.”

-What are the key parts of such an office’s plan?

The agencies must distribute Class 1 consumer goods such as alcohol, doenjang, shoes, soap, toothbrushes, toothpaste, etc. to individual families on the four major holidays (Chinese New Year’s Day, February 16th, April 15th, and Chuseok). However, an even more important thing is keeping the 4th Warehouse [for strategic goods] stocked. If the manager fails to send 5% of production to the 4th Warehouse then he can be held legally responsible.

Also, military goods in the warehouse must be replaced once every three years with new ones. These warehouses are often located in remote mountainous spots, and nobody can go in there except the Party secretary, commercial administration office manager, and 4th Warehouse employees.

-What is their present condition?

Take the cosmetics factory in Sinuiju that Rodong Sinmun [recently] said was operating normally. The Commercial Administration Office should receive seventy thousand bars of soap monthly from the factory, but if they don’t pay a monetary sum worth roughly thirty thousand bars of soap at market price to the factory, they won’t get it. The agency will then immediately sell forty thousand bars of soap on the open market in order to recoup the purchase price. The same goes for shoes as well. The purchase price of a pair of running shoes is two pieces of rubber. The agency must pay the market price of rubber to the factory in order to receive the shoes.

In this situation, the commercial side will cooperate with store managers to engage in trade. The store managers obtain loans from donju [money men, often Chinese-Koreans], then use the funds to order goods from the administration office. The office is permitted to buy and sell goods nationally, and has a license to trade with China, so they use the money to trade in sugar, flour, oil, refrigerators, etc. from China. These are then sold at wholesale prices to stores. The stores will then sell the goods at a price slightly higher than the market price. If the scale of the trade gets bigger, the office can enlarge operations by obtaining bank loans on the pretext of “bringing to fruition the Party’s plan of enhancing citizens’ living standards.”

-Do North Korean banks charge interest on loans?

There is no interest on bank loans in North Korea. A commercial trader is backed by the name of a state agency, so once his credit has been confirmed the bank manager sets a lending schedule and just transfers the cash. However, if the borrower does not give 20% to the bank manager at the time of the transfer then he won’t be able to transact future loans. Just like the saying “money goes to money,” the bank manager profits readily at the expense of the nation.

Some additional information on the DPRK’s official retail sector can be found here (page 414).

I am working on a more comprehensive organization chart.

Read the full daily NK story here:
The Hidden World of NK Commerce
Daily NK
Seol Song Ah