North Korean Economy Will Not Be Restored As Long As the Party Secretaries are Placed in Factories

Han Young Jin / Defector from Pyongyang, Reporter of the DailyNK

Chinese businessmen wish to break off business relations with North Korea

Those who are interested in North Korea might have heard of ‘Daean management system.’ The word ‘Daean’ comes from Daean district in South Pyongan province.

On December, 1961, Kim Il Sung visited the ‘Daean Electric Factory’ in Daean area, Nampo city and ordered a new management system. He placed the party secretaries into each factory as the chief executive (in the position for supervising without working) and gave them administrative power. Before the new system was implemented, managers of the factories or the companies were operated in a system called ‘sole manager management system’. After Kim Il Sung introduced ‘Daean management system’, ?he sole manager management system’ was abolished and changed into a new system where the party secretaries could directly control the factories.

‘Daean management system’ Failed

It was action of reorganization which allowed the power of the Party to reach the economic sectors and allowed the Worker? Party to monopolize the entire national system. Ever since then, when Kim Il Sung ordered something to factories or companies all around the country, they just obeyed without presenting alternatives. It meant that a vertical economic management system was set up.

Kim Il Sung emphasized ‘Daean management system’ by saying “all leading labor sectors should be considered as political business according to Chungsanri spirit and Daean management system which are introduced by the party….” in New Year’s Address from 1963 to 1993 until he died.

However, ‘Daean management system’ became the major factor that severely damaged North Korean economy because the party secretaries who did not know much about economy merely “operated” factories by making their positions as a hotbed of absurdity and corruption.

The title, ‘manager’ in North Korea is same as ‘president’ in South Korea. The reason ‘Daean management system’ was introduced outwardly was to operate factories and companies in cooperation between the party secretary, the managers and the chief engineers in order to prevent bureaucratic manipulations. However, it was like “Many go out for wool, and come home shorn themselves.”

After ‘Daean management system’ was implemented, hundreds of the party members who had nothing to do with making economic profit were appointed as factory committee members. Originally, the party secretary, the manager and the chief engineer should participate in the party committee and make decisions related to the company operation, but if the manager and the chief engineer are not cooperating with the party secretary, the party secretary has the right to fire them to the ground of lacking loyalty to the party.

Chinese businessmen, “we will break off the business relations with North Korea”

The party secretaries know much about politics and scholastic matters, but they do not know much about technical know-hows and administrative affairs. They allow reports related to the factory to be transmitted only if they like them and if they fits their interests. This kind of management makes a deadlock in economic activities and factories are finally bound to fail. In this case, all the blame goes to the managers, yet the party secretaries does not take any responsibility for the damages done.

This is an episode the cosmetic factory in Sinuiju a few years ago. Even though the factory has a long history because it was set up during the Japanese occupation, facilities and structure were not upgraded at all. Some countries suggested a joint operation, but all of them stopped the process because the investment agreement from the North Korean part was not clear. One day, a well known Chinese businessman suggested a joint work.

The factory and the businessman concluded a joint investment agreement and the businessman returned to China after asking his counterpart to fulfill the joint requirements. When he came back to North Korea after a while, he was not able to meet the manager who made the agreement with him, but met another manager. He asked curiously, “where is the manager?” and the new manager answered, “he was promoted and sent to another place.”

He was confused, but he concluded a new joint investment with the new manager. The new manager promised him that they will put special efforts to fulfill the requirements. When he returned to China, he got a call from another manager of the factory who said “the manager (he concluded the new contract with) was promoted and moved to another place.”

He got very angry about it and shouted “Are you pulling my leg?”, “You are all swindlers” and shouted”No more work with your country.” He never returned to work with North Korea after that. The truth about the previous two managers is that they did not get promoted but were fired because of some minor mistakes which occurred in the process of concluding the joint agreement. These mistakes were discovered by the party secretary and he reported it to the party. When you conclude an agreement with a North Korean company, you must involve the party secretary. If you conclude an agreement with the manager only because s/he is the person in charge, all you can expect is frustration.

The party secretary, ‘a hotbed of absurdity and corruption’

In terms of administrative affairs, the manager has the responsibility for everything, so some of them make his/her own voices heard. If the manager expresses his opinions clearly, the party secretary thinks that his vested rights shall be weakened. That is why they hand in fake reports about the manager to the party and eventually make him get fired. Participation of the party in the economic management does not support economic activities but hinders it.

That is why the party secretary became a hotbed of absurdity and corruption. Many people only flatter around them. The party secretaries who are blinded to “gain profits” take bribes from their flatterers and their personal affairs become inseparable from business, so they tend to ignore business principles. They do not hesitate to engage in illegal trafficking if such activities do not endanger their positions.

Kang Yoen Hee (alias, 43, living in Inchoen, South Korea) is a defector from Chongjin city of North Hamkyong province. Her father was the manager of Chongjin food factory. Her father was an honest man who operated the factory followings the principles and did not embezzle factory money. When the food crisis occurred, her father tried to maintain actual production by securing materials from other areas. Actual production could be maintained because of her father’s efforts, but the party secretary sold products to the black markets and made lots of money. Her father became very busy trying to secure materials by traveling all around the country, while the others sold the products from the factory in black markets. It was like filling a bottomless vessel.

The secretary placed beautiful girls as accounting clerks and had love affairs with them. Her father criticized the secretary’s immoral behavior in a meeting. The secretary held a grudge against him and made a false report about him and submitted it to the party. Her father was fired soon after.

“Do you know how difficult we were in the mid-1990s? He was fired for nothing and with nothing, but he tried to support the family. He eventually passed away.”
Kang added, “North Korea is maintained by the party and will also collapse by the party at the end.”

One beats the bush and another catches birds

Managers work hard and take full responsibility for everything. Secretaries give orders but never take any responsibility. Some managers who get sick and tired of secretaries’ behaviors report about their wrongdoings to the chief secretary of the party. Then the chief secretary lets the fact known to the related secretaries. Birds of a feather flock together. The related secretaries hold grudge against the managers and fire them with whatever it takes.

This kind of absurdity and corruption are common in North Korea right now. No North Korean movie that criticizes party members was ever introduced so far. This is because Kim Jong Il ordered not to make such kind of movies.
However, the party secretaries are the corrupted ones whose conduct s are immoral. Reformation and Liberalization are far off without solving this problem.