Since coming into power, Kim Jong Un has expanded the use of
enterprises in the restaurant industry to earn money for the regime by actively
spreading the business to China, Vietnam, Cambodia, and further afield.
However, following North Korea’s latest nuclear test and long-range rocket
launch, dwindling customer numbers have undermined a significant source of
foreign-currency for the regime.
Office 39 of the Workers’ Party, widely regarded as a regime
slush fund, is charged with earning foreign currency for the regime and
operates the broader Daesong Group in overseeing Pyongyang-based establishments
including the Changgwang Hotel, the Koryo Hotel, Okryugwan, Cheongnyugwan, and
Cheongchungwan. In addition, most trading companies operate restaurants abroad,
which funnel their profits back to Office 39. A headquarters of sorts has been
established in Pyongyang to cull through and arrange for attractive women to
work for three years at a time in the foreign restaurants.
The only applicants capable of passing the strict screening
process are daughters and granddaughters of cadres in the central authorities
and affiliated agencies. Normal applicants and those with overseas relatives
are excluded from the applicant pool. Selected applicants are trained to cook,
sing, dance, and entertain for six months at expert cooking universities and
foreigner service organizations before being sent abroad to work.
After being sent abroad, the workers are screened and
investigated by the relevant instructors. Not only do the young women have to
work grueling 12-hour days, they are also forced to participate in study
sessions. Accordingly, they have very little free time.
The wages are another problem. The Board of Labor assigns
“standard national laborer salaries,” in foreign currencies. Including bonuses
based on performance, the monthly wage is usually less than US $150. If we
consider what North Korean cadres have said in the past, the regime earns $500
per person per day in these businesses. This means that the workers are taking
in less than 1% of the profits that they help to generate.
The result is that the regime earns an average of $15,000
per worker per month. And the worker’s salary? A measley $150. The restaurants
are thus clearly another thinly disguised “loyalty fund” contributing
foreign-currency earning mechanism for the Kim Jong Un regime.
We know that restaurants in China end up contributing $200
million to the regime every year. However, if we consider that hundreds of
their North Korean employees are taking such a low paycheck, it is likely that
the earnings are actually much higher.
The author had a conversation with a top-level cadre in the
Ministry of Industry in 2011. His daughter was working at the Okryugwan
Restaurant branch in Beijing. Every vacation, she would take the money she had
earned for the year (about $1000), and buy expensive Chinese watches, perfume,
and expensive lingerie. The cadre sighed as he said this and explained that his
daughter was preparing to get married.
A trading bank cadre informed the author that funds from the
foreign restaurants get transferred directly to Office 39, so it is impossible
to know the total revenue. The total yearly accounts are drawn up on a graph
and the managers whose businesses are lagging behind are put in danger of being
replaced. That is why the competition has become so cutthroat. Managers
will do anything to make their cut so they can give loyalty funds to the
central authorities and survive another year.
As part of the recent sanctions effort, the South Korean
government asked people to refrain from patronizing foreign restaurants that are run by the North Korean regime, contributing, among other reasons, to the mounting financial troubles facing many of these establishments and an unprecedented number of related defections
to South Korea. While this author regrets the reality that this puts many
people out of a job, taking into account the fact that the restaurants are such a moneymaking
tool for the regime, this could actually be considered good news.
