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2008 Top Items in the Jangmadang

Thursday, January 1st, 2009

Daily NK
Park In Ho
1/1/2009

The marketplace has become an extremely important ground in North Korean people’s lives. 70 percent of North Korean households in the city live off trade, handicrafts and transportation businesses related to trade. If the jangmadang works well, people’s living situation is good, otherwise it is not. In the situation where the food distribution system has broken down, the whole economic existence of the populace is bound up in jangmadang trade.

Trade is bound to generate successful merchants but also failures, due to a lack of know-how or confiscation of products by the People’s Safety Agency (PSA), or simply because a competition system operates. These failures in the jangmadang do not have any second opportunity to rise again so they frequently choose extreme acts like defection, criminality or suicide. Failure is serious.

However, the revitalization of markets has caused great changes in North Korean people’s values. The individual-centered mentality among the people is expanding and the belief that money is the best tool is also spreading. Due to such effects, the North Korean communist authorities in 2008 made the regulation to prohibit women younger than 40 years old from doing business, but of course the people use all necessary means to maintain their survival.

Daily NK investigated the 2008 top ten items in the jangmadang, so as to observe developments in North Korean society.

1. Rice in artificial meat, the first instance of domestic handicraft

Since 2000, the most ubiquitous street food has been “rice in artificial meat,” which is made from fried tofu with seasoned rice filling. This food is found everywhere on North Korean streets. One can find women who sell this snack in alleys, at bus stops and around stations. It costs 100 to 150 North Korean Won.

Meanwhile, the most popular street food is fried long-twisted bread. Individuals make the fried bread at home and sell it on the street. The length of the fried bread is around 20 centimeters and it sells for 100 won.

In around 2005 corn noodles were popular on the streets, but now street-stands for noodles have largely disappeared due to the existence of a permanent store controlled by the state.

These days, if one can afford to eat corn noodles, at approximately 1,000 won for a meal, one can safely say that one is living comfortably.

2. Car battery lights North Korea

The reason why North Korean people like car batteries is that the authorities provide a reliable electricity supply during the daytime, when consumption is less than at night, but at night they don not offer it. The authorities shut down the circuit from around 8 PM to 9PM, and from 12 AM to 2 AM: when the people watch television the most.

As a result, the people charge their car batteries during daytime and use it at night. A 12V battery can run a television and 30-watt light bulb. If they utilize a converter, they can use a color television, which needs more electricity.

Ownership of batteries is a standard of wealth. Officials use electricity from batteries in each room. They usually draw thick curtains in their rooms, to prevent light shining through that might draw attention to their status.

3. The strong wind of South Korean brand’ rice-cooker, Cuckoo

A South Korean brand pressure rice-cooker called Cuckoo appeared as a new icon for evaluating financial power among North Korean elites.

It has spread from the three Chinese northeast provinces into North Korea. In North Korea, Chinese rice and third country aid rice, dry compared to Korean sticky rice, generally circulates, but if the lucky few use this rice-cooker, they can taste sticky rice the way Korean people like it.

There are Cuckoo rice-cookers from South Korean factories that arrive through Korean-Chinese merchants, and surely other Cuckoo products from Chinese factories. These two kinds of rice-cookers, despite having the same brand name, sell for different prices.

The Chinese-made Cuckoo sells for 400,000-700,000 North Korean Won (approximately USD114-200), while the South Korean variety costs 800,000-1,200,000 (approximately USD229-343). A Cuckoo rice-cooker tallies with the price of a house in rural areas of North Korea. According to inside sources, they are selling like wildfire.

4. An electric shaver only for trips

The electric shaver is another symbol of wealth.

It is not that they use electric shavers normally, because one cannot provide durability. At home, North Korean men generally use disposable shavers with two blades made in China or a conventional razor. However, when they take a business trip or have to take part in remote activities, they bring the electric shaver.

There are North Korean-made shavers but most are imported from China. Among Chinese products, you can see “Motorola” products and fake-South Korean products with fake labels in Korean. A Chinese-made electric shaver is around 20,000-40,000 North Korean Won.

5. Chosun men’s fancy shoes

Dress shoes are one of the most important items for Chosun men when they have to participate in diverse political events, loyalty vows or greeting events at Kim Il Sung statues on holidays. Right after the famine in the late 1990s, it was considered a symbol of the wealth, but now general workers, farmers and students are wearing dress shoes.

The shiny enameled leather shoes with a hard heel cannot be produced in North Korea because of a lack of leather. The North Korean authorities provide the National Security Agency (NSA) and officers of the People’s Army with dress shoes, which are durable but too hard and uncomfortable.

Shoes for general citizens and students are mostly made in China and some are produced in joint enterprises in Rajin-Sunbong. The price of shoes ranges from 30,000 to 100,000 Won depending upon the quality.

6. Cosmetics prosper despite the economic crisis

Cosmetics and accessories for women are getting more varied. Lately, false eyelashes have appeared in the jangmadang in major cities. Chinese cosmetics are mainly sold, alongside fake South Korean brands. In Pyongyang, Nampo, Wonsan and Shinuiju Chinese and even European cosmetics are on sale.

“Spring Fragrance,” a North Korean luxury cosmetics brand, is famous for being Kim Jong Il’s gift that he presents to women soldiers or artists when he visits military units or cultural performances. It costs more than 200,000 North Korean won.

Lotions for women, made in China, are approximately 2,000-4,000 won, foundation cream is 3,000-5,000 won, and lipstick is from 500 won to 2,000 won. Hand cream is 3,000-5,000 won.

7. Hana Electronics recorder, the biggest state-monopoly production

“Hana Electronics” was originally set up to produce CDs and DVDs of North Korean gymnastic performances or other artistic performances, so as to export them foreign countries. The company has been producing DVD players since 2005.

Due to the state monopoly, the DVD player of the Hana Electronics dominates the market. North Korean people call a VCR and a DVD player a “recorder.” Since around 2005, after the booming interest in South Korean movies and dramas, the players have been selling very well.

At the beginning, North Korean visitors to China brought the DVD or CD players into North Korea, but as they got popular among the people, Chinese-made players were imported from China and since 2006 they have been really popular in every jangmadang.

Accordingly, since 2006, the authorities have started blocking the importation of the Chinese player and are selling the Hana Electronics players, which sell for around a 20 or 30 percent higher price than Chinese players in state-run stores. Now, they can be sold in the jangmadang by private merchants and comparatively free from inspection by the PSA. The prices are 130,000-150,000 won.

8. Bicycles are basic, the motorcycle era is here now

In major cities, numbers of motorcycles are increasing. Especially in border regions where smuggling with China is easier than in other cities, motorcycles are common.

The motorcycles are ordinarily used for mid or long distance business. Most motorcycles are made in China and some are Japanese second-handed products, which sell for 1.5-2.5 million won. 125cc new products are over 5 million won. The cheapest second-handed motorcycle is 500,000 won.

9. Vinyl floor covering for the middle class and vinyl for the poor

Demand for vinyl floor coverings and vinyl has been increasing since the late 1990s, when residential conditions improved. In the late-1990s people had to use sacks of cement or Rodong Shinmun (newspaper) as a floor covering, but now they are using vinyl floor coverings.

Uses for vinyl are unimaginably diverse: from a basic protection against wind and cold to when people take a shower at home in the vinyl tunnel hung on the ceiling of the bathroom.

Depending on the thickness and width, there are four or five kinds of vinyl in the jangmadang for from 150 to 500 won. Vinyl floor covering is a Chinese product selling for from 3,000 to 10,000 won.

Posted in Agriculture, Black markets, Clothing, Cosmetics, Economic reform, Electricity, Energy, Food, General markets (FMR: Farmers Market), Manufacturing, Ministry of People’s Security (Criminal Police), Ministry of State Security (MPSS, NSA, SSD), Price liberalization, Television | Comments Closed

Distribution of Soy Sauce Resumed

Monday, December 29th, 2008

Daily NK
Lee Sung Jin
12/29/2008

A source has relayed news that North Korea has begun to so-called “essential food factories” in provincial capitals for the first time since Kim Il Sung’s death, and that distribution of soy sauce and soybean paste to civilians in those cities has resumed.

A source from Yangkang Province said in a phone conversation with the Daily NK on the 28th, “Essential food factories situated in each province entered production in October and every household has been provided with a kilogram of soybean paste and a kilogram of soy sauce on a monthly basis ever since. Such provision is on a par with the amount rationed when the Supreme Leader (Kim Il Sung) was alive in the 1990s.”

A North Hamkyung Province source said, “At a North Hamkyung Province essential food factory in Chongjin, production began in October and a kilogram of soybean paste and soy sauce has been being provided to each household once a month.”

North Korea changed the name of “food factories” in each city and province to “essential food factories” in 1993, and remodeled the buildings. It also pursued the modernization of equipment for soy sauce and soybean production. However, due to the “economic crisis” following Kim Il Sung’s death in 1994, the operation of all food factories ceased.

Accordingly, the resumption of operations has triggered the analysis that the “confidence” of the North Korean authorities has been restored regarding both North Korea’s agricultural production and the food situation this year.

A source from Yangkang Province emphasized, “Soybean and peas which have been coming in as foreign aid have sometimes been used to produce the soybean and soy sauce to be provided to Pyongyang, the military and the construction units, but this is the first time that rations to average civilians have resumed since the Kim Il Sung’s death. The reason for the state’s display of concern for the civilian economy is because farming went well this year.”

He then said, “Not only in Yangkang Province, but essential food factories in Hamheung and Pyongsung have also been brought back online. The civilians are hoping that soybean paste and soy sauce distribution will be normalized.”

The source noted, “In the Hyesan Essential Food Factory, approximately 22 tons of ingredients for soybean paste and soy sauce, including peas and wheat, are used daily. At such a rate, a kilogram of soybean paste and soy sauce can be provided to civilians each month over a fixed term.”

He then went on to explain the backdrop, “The storage capacity of the soybean paste fermentation tank in the Hyesan Essential Food Factory is about 60 tons, but with the 22 tons of ingredients that have been coming in each day, only a portion of the production equipment has been operating.

According to North Korea’s central pricing system, a kilogram of soybean paste and soy sauce are 150 North Korean Won and 80 won, respectively. The source added, however, “The soybean paste produced from the factories has been extensively sold in the jangmadang for 300 won per kilogram. Homemade hot pepper paste has been being sold for 900 won per kilogram.”

Therefore, North Korean authorities are said to have held civilian education lectures nationwide, on or around the 19th, stressing the subject, “Regarding strictly adhering to the national grain regulations and preserving army rations as the top priority.”

The source added, “Within less than a month of the resumption of the essential food factories, some managers and cadres of the factories were found to have embezzled the soybean paste ingredients, so the state authorities held formal reeducation lectures for officials. Also, the civilians in the counties or farmlands have not been receiving soy sauce and soybean paste, because only the essential food factories have been operating.”

Posted in Food, General markets (FMR: Farmers Market), Price liberalization, Public Distribiution System (PDS) | Comments Closed

Behind North Korean Plan to Reopen State Stores

Wednesday, December 10th, 2008

Daily NK
Moon Sung Hwee
12/10/2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted in Agriculture, Black markets, China, Economic reform, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Light Industry, Manufacturing, Price liberalization | 2 Comments »

DPRK crackdown, restrictive measures on first phase of KIC

Tuesday, December 2nd, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-2-1
12/2/2008

On November 24, North Korea announced measures to the Kaesong Industrial Complex management committee and other organizations involved in the KIC that would suspend tours to the city of Kaesong and cut the number of South Korean personnel in the complex by half, but stated that businesses operations within the complex would be guaranteed.

Kim Il-kun, current director of the North Korean Central Special Zone Development Bureau who had served as chairman of the North Hwanghae Province People’s Committee until October of this year, led the DPRK delegation, and from the South, KIC Management Committee Chairman Moon Moo-hong, KIC Business Council Chairman Moon Chang-sung, and representatives from companies operating in the complex were included in the 103 people in attendance.

First, the North delivered the notice to the public relations officer of the management committee from 11:00 to 11:07 in the morning.

The North’s KIC management committee announced in the notice, “50 percent of the management committee staff, including the committee chairman or vice-chairman, will evacuated by the end of November,” “Total workers, including those for construction and support activities, will be reduced by half,” “transit across the military demarcation line for those working on cooperative projects and exchanges within a one million-pyong area around the border will be strictly limited,” and stated, “The future of the industrial zone and inter-Korean relations depends on the stance taken by the South.”

From 11:10 to 11:20, the North announced the measures to the company representatives in the management committee assembly hall.

The North announced, “It was decided to guarantee as an exception activities of the businesses in the KIC, and so the resident workers of the South’s production companies are exempt from the measures restricting land crossings of the military demarcation line.”

The announcement proclaimed, “The responsibility for this kind of severe situation lies entirely with the Southern authorities who stubbornly pursue confrontational relations between North and South and fail to recognize the June 15 Joint Declaration and the October 4 Declaration…we do not wish for the South’s small and medium-sized enterprises to suffer from the imprudent confrontational policy of the South’s officials.”

In a separate notice, the North announced, “With the exception of those workers necessary to the KIC business operations, all South Koreans crossing the military demarcation line as visitors, tourists, for economic cooperation, etc. will be strictly limited or blocked,” “All unnecessary South Korean workers in the KIC, including the KIC management committee, will be evacuated, and land entry across the military demarcation line will be blocked, “The Inter-Korean Cooperation Council Office will be disbanded and all South Koreans related to it will be deported,” “Kaesong tours operated by Hyundai-Asan are halted,” “All Southern civic organization and entrepreneur coming in our region overland across the military demarcation line in the east and west seas for the purpose of cooperative exchange and economic transaction will be blocked from crossing overland, and if it is unavoidable that goods and their deliverers must cross by land strict inspections will be carried out,” and, “Train operations between our Bongdong Station and the Southern Munsan Stations are suspended.”

With the North’s new measures, because of the inability to repair inter-Korean relations, it appears likely that the number of new overseas companies looking to operate in the KIC will fall, orders from buyers will drop off, public opinion will sour, production will face difficulties, and the gradual withdrawal of businesses operating in the KIC coupled with the lack of new business interest could lead to the closure of the Kaesong Industrial Complex

Posted in Economic reform, Foreign direct investment, Joint Ventures, Kaesong Industrial Complex (KIC), Price liberalization, Special Economic Zones (Established before 2013), Tourism | Comments Closed

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

Friday, November 21st, 2008

Daily NK
Jeong Jae Sung
11/21/2008

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Price liberalization, Private property | Comments Closed

DPRK Looking forward

Wednesday, November 12th, 2008

Below is an excerpt from the Economist Intelligence Unit Views Wire 11/1/2008 (h/t Oliver):

INTERNATIONAL RELATIONS: The immediate outlook for North Korea’s foreign relations is positive. The country’s removal in October from the US State Department’s list of states regarded as sponsoring terrorism signals that the nuclear six-party talks (SPT, also involving China, the US, Russia, Japan and South Korea) are back on track, at least for now. The delisting also clears the way for North Korea, if it so desired, to apply to join the World Bank and the IMF, which the US was previously bound to oppose. However, the rollercoaster of the past three months, and the fact that the SPT are now in their sixth year, counsels caution as to the depth or irreversibility of any progress.

POLICY TRENDS: The omens for progress on economic reform are not propitious. Six years on from the “special measures” (the word “reform” remains discouragingly taboo) of July 2002, it is clear that these have not galvanised GDP growth, which was negative during 2006 and 2007, according to the Bank of Korea (the South’s central bank). Nor have they been a harbinger of wider or deeper institutional reform. Even though the North Korean state can no longer provide and most of its citizens must scrape a living from markets, the regime still seems perversely determined to keep markets in check.

ECONOMIC GROWTH: A reportedly better autumn harvest may bring some respite, but will not alter the fundamental plight of most North Koreans, who must scrabble to ensure even a meagre amount of food. Meanwhile, heavy industry, outmoded and worn out, has no potential to recover, and infrastructure remains in a parlous state. Transforming all of this would require two as yet unmet conditions: large-scale capital investment, which can only come from abroad, and the will to pursue genuine market reforms. The paltry energy aid and other assistance offered via the SPT is no substitute for the major investment needed, the precondition of which is complete denuclearisation.

Posted in Agriculture, Economic reform, Foreign direct investment, International Aid, International trade, Joint Ventures, Manufacturing, Price liberalization | Comments Closed

DPRK to tighten market restrictions in 2009

Thursday, November 6th, 2008

According to Yonhap (hat tip to Oliver):

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

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

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

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

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

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

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

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

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

Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Price liberalization, Private property | Comments Closed

Bicycle business growing in North Korea

Tuesday, November 4th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-11-3-1
11/3/2008

The Daily NK has reported that the use of bicycles for business and transportation around the city of Pyongyang is becoming more and more commonplace, with 7 out of 10 households owning a bike, despite the fact that the cost of a bicycle in the capital city has doubled in the last twelve months alone.

According to North Korean defectors, until the early part of the 21st century, bicycles were the most sought-after purchases, with only 30~40 percent of families able to buy them.

According to a source in Pyongyang, “If you go to a [market] these days, you’d see that people who sell or purchase goods mostly use bicycles,” adding, “With the exception of those houses with extremely difficult situations, most households have a bike.”

The source explained that the growing use of bicycles is not due to improvements in the lives of the people, but rather, due to a shift in mentality. In the past, someone wishing to purchase a bike would first have to save up money for it, while today they think they can borrow the money, even at high interest rates, and then repay the loan through business profits.

The Daily NK explains, “With the ubiquity of [market] trading and the increase in business competition, bicycles have become must-have items.”

In Sinuiju, as well, bicycles have become a necessity for traders. A source there reported, “In farmlands that are distant from the [market], bicycles are an important means of linking to city markets. The merchants can triple or quadruple their profit, compared with those that don’t own bicycles.”

Most traders with bicycles take orders from those living in farming villages, fill the orders in city markets, then barter the items in the villages for vegetables and grains which they then turn around and sell in markets for a profit. Competition is stiff as traders follow price differences between the markets in order to squeeze out even a 100 won profit.

Read two recent stories on North Korea’s bicycle culture here:
70% of Households Use Bikes
Daily NK
Jung Kwon Ho
10/30/2008

People’s Safety Agency Targeting Women Cyclists
Daily NK
Jung Kwon Ho
11/6/2008

Posted in Banking, Bicycles, Economic reform, Finance, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, Price liberalization, Private property, Transportation | Comments Closed

Famine in North Korea Redux?

Monday, November 3rd, 2008

Peterson Institute Working Paper
WP 08 – October 2008
Stephan Haggard and Marcus Noland

Read the paper here

Abstract: In the 1990s, 600,000 to 1 million North Koreans, or about 3 to 5 percent of the precrisis population, perished in one of the worst famines of the 20th century. North Korea is once again poised on the brink of famine. Although the renewed provision of aid is likely to avert a disaster on the scale of the 1990s, hunger-related deaths are already occurring and a dynamic has been set in motion that will carry the crisis into 2009. North Korea is a complex humanitarian emergency characterized by highly imperfect information. This paper triangulates quantity and price evidence with direct observation to assess food insecurity in North Korea and its causes. We critique the widely cited UN figures and present original data on grain quantities and prices. These data demonstrate that for the first time since the 1990s famine, the aggregate grain balance has gone into deficit. Prices have also risen steeply. The reemergence of pathologies from the famine era is documented through direct observation. Although exogenous shocks have played a role, foreign and domestic policy choices have been key.

Keywords: Famine, North Korea
JEL codes: Q1, O1, P2

Posted in 1990s Famine, Agriculture, Arduous March, Food, General markets (FMR: Farmers Market), Price liberalization, Public Distribiution System (PDS), UN, UN Food and Agriculture Organization, UN World Food Program | 1 Comment »

(UPDATED)Financial crisis hits DPRK

Sunday, November 2nd, 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted in Agriculture, Black markets, Economic reform, Food, General markets (FMR: Farmers Market), Institute for Far Eastern Studies, International trade, Labor conditions/wages, Manufacturing, Military, Mining/Minerals, Price liberalization, Statistics, Trade Statistics | 2 Comments »

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