Kim Jong Un gives ‘field guidance’ at a backpack manufacturing
company in Pyongyang on January 5, 2017. Image: Yonhap News Agency
Domestically-manufactured products continue to gain market share over their Chinese counterparts in North Korea’s local markets as the authorities ramp up their emphasis on self-reliance. However, whether or not the policy to shift economic responsibility to domestic industry is sustainable under ongoing international sanctions remains to be seen.
“In markets all over the country like in Hyesan and Sinuiju, domestically-manufactured products have become more popular than the Chinese-made ones because the quality is better and the prices are lower,” a source in North Pyongan Province told Daily NK on March 21.
A source in Ryanggang Province added, “It used to be that people preferred the higher-quality Chinese products, but recently the authorities have supported domestic light industry through their self-reliance policy, leading to improvements in quality.”
Domestic products that have gained in popularity are said to include snack foods, bread, shoes, socks, clothing, backpacks, school supplies, toys, and cosmetics. However, North Korean consumers still seem to prefer foreign-made electronic items like cell phones over the domestic alternatives, which are considered to be outdated in terms of features and quality.
The North’s efforts to improve light industry manufacturing began in 2015, after Kim Jong Un stated during the annual New Year’s address that “all factories and businesses must energetically shed the disease of importation and realize a change to domestic production of raw materials and resources.”
Kim first mentioned the “self-reliance-first” policy by name in his 2016 New Year’s address, stressing the need to ‘improve the lives of the people and the country’s economic development.’ Analysts believed that Kim was signalling a desire to move the country away from its economic overdependence on China.
In his 2017 address, Kim boasted that domestic production of light-industry raw materials will lead to better quality products and a more diverse array of goods available in the markets.
Kim then proclaimed in his 2018 address that the country’s “numerous light-industry factories in sectors including textiles, footwear, knitwear and foodstuff industries … made proactive efforts to propel the modernization of several production lines by means of our own technology and our own equipment.”
Experts believe that Kim Jong Un’s shifting attention towards “self-reliance-first” is evidence of the North’s belief that domestic manufacturing can sufficiently compensate for the country’s losses incurred by international sanctions.
“The North Korean authorities are taking action towards (improving) distribution of domestic goods before the economy gets worse,” said Lee Geun Young, Professor at the Yanbian University Department of Political and Public Administration. “They want to create better products that people are willing to spend money on as alternatives to the Chinese options.”
Lee believes that the authorities see it as a win-win, where “the government profits directly from the sale of the goods and public opinion of the regime improves due to the lower prices.” Lee also said that this “perhaps lends to Kim Jong Un’s confidence in his policy of self reliance.”
However, many analysts do not believe these sorts of policies alone are enough to completely make up for the foreign supplies of goods cut off by sanctions.
“Their policy of self-reliance may have some limited positive effects, but it cannot address the most fundamental problems with their economy,” said Cho Bong Hyun, a senior researcher at the IBK Economic Research Institute.
“They may improve their manufacturing capabilities, but they can never achieve 100% independence in terms of raw material and base machinery production,” Cho added. “They will eventually have to turn back to foreign imports, but this will be difficult under continued international sanctions.”