The number of de facto private enterprises thriving in North Korea’s nascent market economy continues to grow, with Chongjin fishing businesses emerging as one of the latest permutations.
Since coming to power, Kim Jong Un has frequently stressed the importance of developing North Korea’s fisheries industry, and sought equipment and resource supplies from the people.
“The people’s skills and effort make possible what the factories cannot. We need 3-ton and 5-ton boats to catch fish. The donju can make it happen, investing money and resources so that the factories can provide them,” a source in North Hamgyong Province told Daily NK.
“The quality and performance of the ships built with private investment is so much better than anything produced by the small and mid-sized state enterprises.”
Shipyards in North Korea are generally small and designed to produce small to medium-sized vessels, primarily operating under the auspices of the military. However the facilities are often in poor condition and suffer from significant supply side shortages.
Analysis of a shipyard in Chongjin using Google Earth appears to lend weight to reports of an expanding public-private shipbuilding industry, with a rapid proliferation of ships notable from 2012-2018, when such activities allegedly took off.
Chronic materials shortages in the early 2000s saw the beginning of this practice, with officials struggling to maintain operational funding, contributions to the government, and their own livelihoods. Under pressure for “self-reliance” and “regeneration through one’s own efforts,” many turned to the donju, North Korea’s emerging entrepreneurial class.
For Chongjin fisheries officials, a symbiotic relationship with the donju allowed for bigger profits without giving away the store, which is why such arrangements thrive in the complex rent-seeking and murky waters of business deals in North Korea.
“Everyone’s happy in this arrangement because it reduces the burden on the state. The authorities even run quality assurance assessments to ensure the vessels are fit for purpose,” a separate source in North Hamgyong Province said.
KINU’s 2016 report “Enterprise Operational Reality and Corporate Governance in North Korea” found that the North Korean government generally tolerates these private enterprises as long as they keep up regular payments (i.e. bribes) to the state and government-led labor mobilizations continue unaffected.
Elsewhere in Chongjin, a burgeoning cottage industry manufacturing South Korean-style clothing for sale in the domestic markets has emerged, according to a separate source in the region familiar with the industry.
Chongjin’s Sunam Market is one of the largest wholesale markets in the country, delivering a large volume of goods to meet nationwide demand despite state-driven crackdowns.
“Tailors start with secondhand South Korean clothing brought in from China and use it as a template. They get the rest of the fabric from Chinese traders in Rason. The final products, which they promote as “from South Korea” are sold in the markets, an additional source in North Hamgyong Province said.
“Setting up workshops in their homes, tailors mostly use Japanese-produced Denyo generators and sewing machines to create these repurposed clothes. The authorities don’t mind; indeed, they encourage it.”
Daily NK previously reported that entrepreneurs deemed as valuable to the state are being encouraged to expand their operations.