Price War as Stores Take on Nimble Vendors

As volumes
of rice bought and sold in North Korea continue to rise, stores operated by foreign-currency earning entities and market
vendors are entering into greater competition for customers, inside sources in
North Korea report.

“Goods
including rice, beans and flour are flowing in steadily from China,” a source from
North Pyongan Province explained. “In the olden days the arrival of July would have meant the worst conditions for rice, but this year there have been no big shifts
and prices have stayed stable.”

A
second source in North Hamkyung Province corroborated the state of
affairs, saying,  “Every day a number of freight
trucks loaded with rice come in through the customs house at Hyesan, and there’s the smuggled stuff, too.”

“It
used to be the norm for rice to retail in the jangmadang [market]. Stores
only traded it wholesale,” the North Pyongan Province source went on. “But now stores
are retailing it, too. Any time rice comes in through customs, buyers are there
lining up to take it.”

“Stores”
run under the auspices of foreign-currency earning entities began
to spring up Pyongyang and other major cities toward the end of
2006. They were given formal permission to sell rice and corn alongside
manufactured goods, thus in effect ending the state’s official dominance of domestic grain circulation.

The
rice sold in markets comes from two sources: China, and domestic farms.  Stores mostly sell rice originating in China,
whereas market vendors tend to purvey rice from a variety of sources, sources say.
The ratio of Chinese to North Korean rice sold in public markets is roughly
6:4.
 

Lower
socio-economic groups and restaurants catering to the general public tend
toward Chinese rice, which is plentiful and cheap but considered
insufficiently glutinous. On the other hand, affluent groups are the main purchasers
of rice grown in North Korea. The stickiness of the product is higher, but so
is the price: roughly 500 KPW more per kilo than Chinese varieties.


“First
to attract customers, and then to turn them into regular visitors, both shops
and markets are competing on price and service,” one source explained. “The stores
sell their rice for 100 or 200 KPW less than the jangmadang, but customers
there cannot negotiate, and the seller never throws anything in for free.”


However,
this appears to be changing. According to the source, stores have now begun to grant greater price autonomy to shop officials, allowing for haggling
over price and other forms of value-added.

“Customers
can negotiate prices and get home or business delivery if they purchase more
than 100kg,” one source reported. “It’s just like in the market now.
Shops have started providing extra services, and delivery men, eager as they
are to earn money, have started crowding outside storefronts waiting for
customers where once they would have waited on the road.”

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