More residents looking to sell at the ‘jangmadang’

This is “NK Market Trends,” bringing you news about the
North Korean economy every week. This week we sat down with reporter Kang Mi
Jin to discuss North Korea’s market trends; but first, let’s take a look at how
the jangmadang [market] did this past week.

We’ll begin by providing a rundown on the price of rice, the
currency conversion rates, and the cost of other goods in North Korean markets.
The price of 1 kg of rice was 5,000 KPW in Sinuiju and 5,200 KPW in Hyesan. The
USD was trading at 8,130KPW in Pyongyang, 8,290 KPW in Sinuiju, and 8,480 KPW
in Hyesan, which represents a slight rise compared to last week’s rates. As a
result, the cost of 1 kg of corn kernels was 2,000 KPW in Sinuiju and 2,150 in Hyesan.
One kg of Pork was selling at 11,000 KPW in Pyongyang, 9,450 KPW in Sinuiju,
and 8,450 KPW in Hyesan. Finally, 1 kg of diesel fuel was selling at 5,100 KPW
in Pyongyang and 5,200 KPW in Sinuiju and Hyesan. This has been a weekly
rundown on North Korea’s latest market prices.

1. We’ve heard that market purchases are through the roof in
North Korea these days. We now turn to Kang Mi Jin to see exactly what factors
are injecting this excitement and purchasing power into the marketplace.
 

It’s true, these days, more and more residents are resolving
to try their hand at selling goods by purchasing and operating a stand in the
jangmadang
, according to an inside source. Everyone already knows that in order
to sell safely and stay free from harassment, you need a stand to do it.
Residents have come to understand that rather than selling outside the market
and moving from place to place, selling in the market presents a better
opportunity. 

There’s no need to worry about being chased by authorities
or losing your goods. Our inside sources have reported that there have been
very few crackdowns and very little regulatory tightening recently at the
marketplace. That’s why we have seen the number of sellers operating stalls in
the jangmadang steadily increase over the past three years. 

2. So you are saying that because authorities have loosened
their control of the markets more residents have started to sell, and that this
has ultimately resulted in more residents purchasing the stalls as a means to
do business?

Precisely. According to our informants, the residents who
have been selling at the market have come into some bigger profits since the
authorities have relaxed regulations.  As a result, not only have said
residents been able to safely operate their businesses at the market without
fear of being chased by the authorities, this has also had positive effect on
their ability to save up. When some of these cash- infused sellers leave the
market in search of greener pastures and an easier living, their stalls are
left empty. 

In previous years, regulations and crackdowns made it difficult
to sell the stall rights to another trader, but now our sources indicate that
it has become much easier. Furthermore, the demand for said stalls has also
increased which means the stalls are fetching a pretty penny and going quick.   

3. So it appears that since the stalls are being sold off
quickly despite their high prices, there must be an abundance of buyers. But
I’m curious how much the stalls are going for. 

That depends. Currently, at Yangkang Hyesan Agricultural
Market, the cost of one stall is about 4,500 RMB [or 590,000 KPW] at the high
end and 1,800 RMB [or 235,000 KPW] for the cheaper ones. The 2.5 meter stalls
meant for the sale of light industrial goods go for about 4,500 RMB, while the
1.5 meter stalls designed for seafood and miscellaneous goods go for about
1,800 RMB to 2,000 RMB. When you consider the current cost of rice [5,200
KPW/kg], the price of one 2.5 meter stall is the same as buying 1,135kg of
rice. The fact that residents are willing to spend so much to invest in a stall
is an indication that they’re able to net a profit despite the high costs. 

From
a big picture perspective, it indicates that the market is pretty healthy right
now. Those who missed out on a chance to buy a stall, even at such extreme
prices, are reportedly regretting not taking the risk. It is currently very
difficult to find a stall available for purchase, due to their high demand and
the fact that they sell as soon as they become available. 

4. Most of North Korea is currently in the grips of the dry
season, right? What could be the reason for the upsurge in demand for stalls
during what is traditionally looked at as an economically difficult season?    
 

Yes, that’s correct. The dry season stretches from the
beginning of spring to the end of July and is typically a rough time for
residents. So it is natural to be curious why people are lining up to buy
market stalls during this difficult time. But the truth is that over the last
few years, the lives of ordinary residents have improved to some degree. People
have a bit more free time and are living a bit more comfortably when compared
to years before. Generally, when defectors talk over the phone with their
families still inside North Korea, this is the sense that they get. And since
the residents who operate a stall at the jangmadang have a fixed or guaranteed
position there, they’ve always got “a seat at the table” so to speak. 

These sellers operate sell directly to customers, of course,
but they are also selling to retailers who buy wholesale. It’s impossible not
to make money. Moreover, sellers who deal in cloth, home appliances, and
miscellaneous goods are known to earn much more than those who sell foodstuffs.
That’s why those stalls are so desirable. Everyone knows the market is bullish.

5. Are the residents selling their stalls without giving
notification to the authorities? If they get caught, do they have to pay a
fine?

According to our source, the authorities operating the
market management office are giving permission for market vendors to “buy and
sell” stalls.

The word “buy” in this context more accurately refers to the
payment of a transfer fee, initially paid in one installment by vendors to
establish their operations at a given market; new merchants wishing to take
over an existing space must pay this fee–factoring in appreciation–directly
to the previous tenant, which market management permits. The new occupant then
takes over payments of the daily selling fees, payable to market management,
required to do business in an authorized stall.

Most use the profits of a stall transfer as seed money to
start a new business, either selling something more profitable at the markets,
or in other cases, dispensing with small-scale retail altogether.

We know of merchants who have transferred their stalls and
then moved into the wholesale business. Vendors who have managed to save up
money through collecting on at increased rates oftentimes use these profits as
startup capital for a retail business. The source has told us that the
jangmadang sellers are earning money at the market, then packing up their bags,
folding up their tables, and going to other places to sell. They can do it from
their homes or go in the wholesale direction. This is ideal for those who live
close to the jangmadang. Those who live far away store their possessions in
someone else’s house. And in this way, even more economic activity has
developed.

These days people are beginning to prefer large-scale
business over small-scale sales at a stall. Wholesale ventures, distribution,
and home business ventures are cleaner, less time consuming, and more
profitable ventures. So those who have gathered enough money to invest in
themselves are beginning to prefer to move in that direction. During times when
control was very tight, the jangmadang management office would punish merchants who sold illegally by reclaiming their stalls. but these days, control has
been relaxed and there have been very little reports of people’s stalls being
reclaimed as punishment for a violation.

As far as the market management is concerned, the faster the
stalls are transferred, the faster they can collect on the stall fees, so they
might actually prefer to see them passed off.  If that happens, less of
the stall operators will be resting and the management can collect a higher
proportion of stall fees. Sources have reported that it is this permissive
atmosphere that has allowed residents to “buy and sell” stalls from one
another.

6. It occurs to me that the jangmadang in North Korea is
developing quite rapidly. I’m curious about how the residents are reacting to
the authorities loosening their grip on the jangmadang.

Yes, while crackdowns and regulations on the border regions
and surveillance have both increased, crackdowns on the jangmadang have
generally not been enforced. This situation marks a contrast to the past, when
residents went hungry because although they weren’t being issued rations, they
weren’t permitted to go out on their own and earn a living. Things are
comparably more comfortable now. 

It seems apparent that while it is true that while Kim Jong
Un’s regime has decided to use reinvigorated censorship and control projects to
clamp down on border regions and prevent information leaks from occurring, they
have also taken steps to secure a small improvement in the living standards of
residents.

In point of fact, while the past three years since Kim Jong
Un’s rise to power have seen consecutive purges and clampdowns on border
regions, North Korean residents are reporting that there have been very few
crackdowns on the jangmadang

On the one hand, in addition to the various political
lectures they are forced to go to, residents have also been mobilized to aid in
construction projects recently.  The result is that they have hardly had
any time to conduct business at the jangmadang. Because of this, their
exasperation with the government is growing. As if to show they accept the
residents’ anguish, the authorities are compensating by not further hindering
with market activity with crackdowns and strong regulations. 

Others have complained that market deregulation is just
another disguised way for the authorities to put their hands in the residents’ pockets.

7. So, it seems as if another prime motivation for the
regime to loosen regulations is so that the jangmadang management can get a
piece of the action. Does that sound right to you? 

Yeah, that looks to be the case. An informant told us that
off the strength of the market, the market management is able to tuck away a
handsome profit. We know that to be the case in the Hyesan, a border city in
Yangkang Province. The source said that even though these relaxed regulations
have allowed residents some freedom to trade in the market, and this atmosphere
has led to an increased demand for stalls, the state is receiving the stall
fees, so it’s clearly in their interest to let this go on unencumbered.

The source added that although some are taking a critical
look at the regime’s policies, some residents are glad merely to see the better
life that the permissive atmosphere has created for so many people. So the
result of the relaxed regulations on market trading has been positive for all
involved. Stalls, which were once out of the way and in hard to find places,
are now united into vast chains operating at full capacity. And as the stall
numbers continue to increase, so, too, do profits for the market management. 

The source explained that the management office at Hyesan
Agricultural Market collects a cumulative stall fee of approximately 4 million KPW over the course of a single day. That’s 100 million KPW per month, the
source explained.  Considering that Hyesan has five markets, it’s easy to
calculate that the state is taking in hundreds of millions of KPW on a monthly
basis. The source explained that with this much money at stake, it is no wonder
that regulations have become so relaxed over the past few years.

However, these days the work of collecting South Korean
products from travelers who enter China is also drawing attention. The source
also added that some people are saying the market stalls are going for cheaper
prices than they anticipated.