Although marketization has been progressing in North Korea as the authorities loosen control over market activities, there have been many repercussions. As the regime is primarily interested in collecting tax and has failed to established effective laws or a system to regulate the markets, ordinary merchants are suffering at the hands of North Korean mob members who wield control over local areas.
“The authorities have been loosening control over the market for several years, but many residents are saying that it has become more difficult for them to do business. Ordinary residents are lagging behind the competition while donju (newly-affluent middle class) are fiercely competing with each other to achieve monopolies over specific product lines,” a source in South Pyongan Province told Daily NK on August 30.
“Wealthy and powerful donju and merchants often hire mob members to secure their business interests. The mobs have contacts in powerful organizations, so as long as they pay bribes to various officials, they are untouchable by ordinary citizens.”
According to the source, there is an unwritten rule in North Korea’s markets to not intrude in each other’s business areas. There are also frequent cases in which trust has been established between merchants who acquire products and donju who provide cashflows, featuring transactions with ‘post-payment systems’ for half of their trade money.
For example, Sinuiju merchants can sell wholesale produce to donju in local markets like Pyongsong Market (in South Pyongan Province) for half of the initial price. The remainder of the payment is made after the products are sold and the donju again take credit on the spot.
But these kinds of close relationships reportedly would fall out with small conflicts of interest. If a merchant fails to acquire the products, the donju seek other suppliers, sometimes inducing a scuffle between the merchants.
“Recently, fist fights have become common in the markets due to fierce competition for the acquisition of products. There are frequent cases of merchants being beaten up by groups of other merchants and sent to hospital because they lower their product prices too much,” the source said.
Despite the disorder, the officials in charge of controlling the markets and the police (Ministry of People’s Security) often ignore the situation altogether. They regard it as foolish to intervene in fights between merchants.
So muscle has become the rule of law in the markets. “In July, a woman in Pyongsong City requested a mob member take care of a merchant who stole the donju she was trading with. The merchant was attacked with a knife and left with an ugly scar on his face, although he was not seriously harmed,” a separate source in South Pyongan Province reported.
As such, she explained, locals are increasingly saying that in order to survive in the markets, one needs to be fiercer than wolves without a conscience, and that the law is useless and safety is only assured via close relations with mob members.
In addition, the intensifying sanctions against North Korea have further aggravated the situation. “Recently, the importation of batteries for solar panels has been limited despite soaring demand. In such circumstances, the donju are competing with each other for business with more well-connected suppliers instead of their original merchants, inducing frequent conflicts,” she noted.