Managers of state-run shops in Hyesan have recently been quitting in droves after a government order ended a profit-sharing scheme, Daily NK has learned.
A source in Yanggang Province told Daily NK on Friday that the order, declared on Oct. 11, said that managers of the shops can no longer take profits earned from selling goods starting Nov. 1.
Since the “Arduous March” of the 1990s, North Korea has given certain business people — including members of the country’s wealthy entrepeneurial class, the donju — the right to manage state-run shops. The business people who acquired these management rights have invested their own money to purchase goods for sale at the shops. So far, they have been giving a cut of the sales of those goods to the state, and using the remaining profits to operate the shops.
The state’s cut differs from region to region, but it is reportedly quite high. At one state-run shop in Hyesan, managers reportedly handed an average of RMB 1,500 to 2,000 (about USD 200 to USD 270) over to the government each month.
The managers have long been setting the sales targets of the shops on their own, importing goods from China to sell. Since the COVID-19 pandemic, however, some shops have been operating at a considerable loss as their owners struggle to get their hands on goods to sell given the closure of the border and the end of smuggling activities.
MANAGERS AND GOVERNMENT AT LOGGERHEADS
Then, Pyongyang’s leadership issued an order on Oct. 11 calling for merchants to turn over all profits earned at state-run shops to the government starting Nov. 1.
In response to the order, people who acquired rights to run state-run shops have been busy trying to remove their goods from the shops. This has led to conflict as government agencies have been mobilizing police in a bid to stop them from removing their goods.
The source said the authorities are telling business people who invested in the state-run shops that “since it’s Workers’ Party policy, leave all the goods behind if you’re going to go,” while the managers are angrily protesting that “the government, which should protect personal property, is robbing private individuals.”
In short, the government has essentially said that it will take away everything that the business people have built up, said the source. “Meanwhile, the managers say that private individuals should be able to take the goods they put on the shelves with their own investment,” he added.
People with knowledge of the order are saying it virtually amounts to the state confiscating the authority to manage the shops. Indeed, if the government has its way, “merchants at state-run shops would become unpaid laborers like ordinary workers,” the source claimed.
“Things were already hard enough due to the border closure, and now with the state telling them to give all their profits to the state, business people who initially invested in the state-run stores to make money are turning their backs on the shops,” he added.
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