{"id":27541,"date":"2014-06-27T23:29:19","date_gmt":"2014-06-27T14:29:19","guid":{"rendered":"http:\/\/en.dailynk.com\/en\/?p=27541"},"modified":"2020-01-17T08:36:30","modified_gmt":"2020-01-16T23:36:30","slug":"the-hidden-world-of-nk-commerce","status":"publish","type":"post","link":"https:\/\/www.dailynk.com\/english\/the-hidden-world-of-nk-commerce\/","title":{"rendered":"The Hidden World of NK Commerce"},"content":{"rendered":"

Kim Il Sung<\/span>\u2019<\/span>s ageless promise of <\/span>\u201c<\/span>white <\/span>rice and meat soup<\/span>\u201d<\/span> for every
\nhousehold serves only to symbolize the extent and history of food insecurity in
\nNorth Korea. It<\/span>\u2019<\/span>s 2014 and yet the problem remains: Kim Jong Eun addressed it in his New
\nYear<\/span>\u2019<\/span>s Address, saying that standards of living must be elevated through
\nincreased food production.<\/span><\/o:p><\/span><\/p>\n

Alas, it is widely agreed that standards of living won<\/span>\u2019<\/span>t rise
\nsignificantly or robustly without greater economic liberalization than has
\noccurred to date. North Korea<\/span>\u2019<\/span>s anachronistic economic system cannot provide a solution to shortages
\nof food and consumer goods.<\/span><\/o:p><\/span><\/p>\n

Nonetheless, the regime continues to buy off a proportion of the
\ncitizenry with gifts on national holidays and just enough distribution to
\nsuggest that improvement might be around the proverbial corner.<\/span><\/o:p><\/span><\/p>\n

Daily NK recently interviewed Hwang Cheol Min, who left North Korea in
\n2012 after eight years as manager of a commercial administration office in
\nNorth Pyongan Province. He gave the latest details on the distribution of
\nconsumer goods and other products.<\/span><\/o:p><\/span><\/p>\n

-What
\nis the function of administration offices such as yours?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

It\u2019s<\/span> the agency that manages the
\ndistribution of goods in a given city or county. Goods produced by factories in
\naccordance with the national economic plan are transferred to <\/span>them<\/span>
\nthrough provincial, municipal, and county wholesalers, and we then supply <\/span>those goods<\/span>
\nto state-owned stores.<\/span><\/o:p><\/span><\/p>\n

-How
\nare the managers of such entities selected?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

Managers
\nof county-level ones are selected from among provincial Party cadres. Municipal
\nones are chosen through consultation between the Central and provincial arms of
\nthe Party. The necessary requirements for <\/span>the job<\/span> are, first, a good Party record,
\nand then a business degree and work experience in the sector. Many are
\ngraduates of Jang Cheol Gu Pyongyang Commercial University and Wonsan
\nUniversity of Economics.<\/span><\/o:p><\/span><\/p>\n

– What
\nis the affiliation of the<\/span>se<\/span><\/i><\/b> offices, and how are they
\norganized?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

They are
\npositioned under the commercial department<\/span>s<\/span> of municipal people<\/span>\u2019<\/span>s committees. Municipal ones are classified
\nas <\/span>\u201c<\/span>1st<\/sup> class
\nenterprises,<\/span>\u201d<\/span> and deal with various things
\nlike planning, commerce, accounting, labour, logistics, etc. This is what makes
\nthem bigger than county-level ones. Managers of <\/span>\u201c<\/span>general stores,<\/span>\u201d<\/span> which are under the administration offices,
\nmust be ratified by the municipal Party, while those responsible for ordinary
\nstores are chosen from within the executive branch of the administration
\noffice. Th<\/span>e executive branch<\/span> is composed of a junior Party secretary,
\ndepartmental secretary, and a manager, whose daily reports get reported to the
\ncity, provincial, and Central Party by the Party secretary.<\/span><\/o:p><\/span><\/p>\n

– Ho<\/span>w<\/span><\/i><\/b> are <\/span>they<\/span><\/i><\/b> <\/span>comprised<\/span><\/i><\/b>?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

They
\nhave a Commercial Administration Section, Food Services Section, Conveniences
\nSection, and Services Section (this office oversees <\/span>things
\nlike <\/span>bathhouses,
\nmassage parlors, and hairdressers). The Services Section was once classified
\nunder the Conveniences Section, and the Food Services Section was under the
\nCommercial Administration Section, but they were both hived off after<\/span> <\/span>jangmadang<\/span><\/i> (markets) <\/span>cropped up<\/span>
\nin the 1990s.<\/span><\/o:p><\/span><\/p>\n

Each
\nFood Services Section has about 500 restaurants within its remit, of which less
\nthan 100 are state-owned; all the rest are private. <\/span>But
\nt<\/span>o run a private
\nrestaurant you need a certificate confirming approval from the Food Services
\nSection. It used to cost 50,000 won a month in fees, too, which the Food
\nServices Section must transfer up to the relevant people<\/span>\u2019<\/span>s committee. <\/span>Individual
\ntargets<\/span> <\/span>for <\/span>the
\nFood Services and Services sections are set by the planning section of the
\nrelevant people<\/span>\u2019<\/span>s committee<\/span>, while<\/span>
\nthe overall  Commercial Administration Office plan is set by the State
\nPlanning Commission. Food Services and Services sections often bribe people<\/span>\u2019<\/span>s committee<\/span>s<\/span> to get the<\/span>ir<\/span>
\ntargets reduced so they <\/span>have a chance to<\/span> make a profit.<\/span><\/o:p><\/span><\/p>\n

–
\nHow many shops are in the average city and what is their function?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

Shops
\nare the places that directly supply and sell<\/span> the<\/span> goods to residents. There are
\nthose that sell foodstuffs and <\/span>others<\/span> that sell light industrial
\ngoods. In a city of seventy thousand households, there would be seventy stores<\/span>;<\/span> one per
\nevery thousand families, and six of the larger general stores.<\/span> S<\/span>tore
\nmanagers submit a list of their households to the commercial administration
\noffice, and in turn they get goods like doenjang<\/i> [fermented
\nsoybean paste], soy sauce, salt, shoes, toothbrushes, etc. from the office,
\nwhich they <\/span>are <\/span>then <\/span>meant to <\/span>supply to residents.<\/span><\/o:p><\/span><\/p>\n

-What
\ngoods do these offices distribute?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

Those
\nmanufactured in North Korea, and those supplied by the UN. During the
\n[presidencies of Kim Dae Jung and Roh Moo Hyun], volumes of UN goods rose
\ndramatically. When UN goods arrived at the port at Nampo, they were greeted by
\nthe United Front Department of the Party and the Central Wholesale Office. The
\nformer body divided them up by origin (China, US, and South Korea), removed all
\nSouth Korean labels and handed them over to <\/span>the latter<\/span>. They took bribes from local
\ncommercial offices seeking to receive a greater share of the UN goods [<\/span>\u2026<\/span>] UN goods supplied the seed money for Kim
\nJong Il<\/span>\u2019<\/span>s <\/span>\u201c<\/span>gift politics.<\/span>\u201d<\/span><\/o:p><\/span><\/p>\n

-What
\nare <\/span>the <\/span><\/i><\/b>key parts of such an office<\/span><\/i><\/b>\u2019<\/span><\/i><\/b>s plan?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

The
\nagencies must distribute Class 1 consumer goods such as alcohol, doenjang<\/i>,
\nshoes, soap, toothbrushes, toothpaste, etc. to individual families on the four
\nmajor holidays (Chinese New Year<\/span>\u2019<\/span>s Day, February 16th, April 15th, and Chuseok). However, an even more
\nimportant thing is keeping the 4th<\/sup> <\/span>W<\/span>arehouse [for strategic goods]
\nstocked. If the manager fails to send 5% of production to the 4th<\/sup> <\/span>W<\/span>arehouse
\nthen he can be held legally responsible.<\/span><\/o:p><\/span><\/p>\n

Also,
\nmilitary goods in the warehouse must be replaced once every three years with
\nnew ones. These warehouses are often located in remote mountainous spots, and
\nnobody can go in there except the Party secretary, commercial administration
\noffice manager, and 4th<\/sup> <\/span>W<\/span>arehouse employees.<\/span><\/o:p><\/span><\/p>\n

-What
\nis their present condition?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

Take the
\ncosmetics factory in Sinuiju that Rodong Sinmun<\/i> <\/span>[recently] <\/span>said
\nwas operating normally. The <\/span>C<\/span>ommercial <\/span>A<\/span>dministration <\/span>O<\/span>ffice<\/span> should<\/span>
\nreceive seventy thousand bars of soap monthly from the factory, but if they don<\/span>\u2019<\/span>t pay a monetary sum worth roughly thirty
\nthousand bars of soap at market price to the factory, they won<\/span>\u2019<\/span>t get it. The agency will then immediately
\nsell forty thousand bars of soap on the open market in order to recoup the
\npurchase price. The same goes for shoes as well. The purchase price of a pair
\nof running shoes is two pieces of rubber. The agency must pay the market price
\nof rubber to the factory in order to receive the shoes.<\/span><\/o:p><\/span><\/p>\n

In this
\nsituation, the commercial <\/span>side<\/span> will cooperate with store managers to
\nengage in trade. The store managers obtain loans from donju<\/i> [money
\nmen, often Chinese-Koreans], then use the funds to order goods from the administration
\noffice. The office is permitted to buy and sell goods nationally, and has a
\nlicense to trade with China, so they use the money to trade in sugar, flour,
\noil, refrigerators, etc. from China. These are <\/span>then <\/span>sold at wholesale prices to
\nstores. The stores will then sell the goods at a price slightly higher than the
\nmarket price. <\/span>If<\/span> the scale of the trade gets bigger, the
\noffice can enlarge operations by obtaining bank loan<\/span>s<\/span> on the pretext of <\/span>\u201c<\/span>bringing
\nto fruition the Party<\/span>\u2019<\/span>s plan of enhancing citizens<\/span>\u2019<\/span> living standards.<\/span>\u201d<\/span><\/o:p><\/span><\/p>\n

-Do
\nNorth Korean banks charge interest on loans?<\/span><\/i><\/b><\/o:p><\/span><\/p>\n

There is no interest on bank loans in North Korea. A commercial trader
\nis backed by the name of a state agency, so once his credit has been confirmed
\nthe bank manager sets a lending schedule and <\/span>just <\/span>transfers the cash. However, if the borrower
\ndoes not <\/span>give<\/span> 20% to
\nthe bank manager<\/span> at the
\ntime of the transfer<\/span> then he <\/span>won\u2019t be able to<\/span> transact future loans. Just like the saying <\/span>\u201c<\/span>money
\ngoes to money,<\/span>\u201d<\/span> the bank manager profits readily at the expense of the nation.<\/span><\/o:p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Kim Il Sung\u2019s ageless promise of \u201cwhite rice and meat soup\u201d for every household serves only to symbolize the extent and history of food insecurity in North Korea. It\u2019s 2014 and yet the problem remains: Kim Jong Eun addressed it in his New Year\u2019s Address, saying that standards of living must be elevated through increased food […]<\/p>\n","protected":false},"author":122,"featured_media":27543,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"wikipediapreview_detectlinks":true,"footnotes":""},"categories":[644],"tags":[],"class_list":["post-27541","post","type-post","status-publish","format-standard","has-post-thumbnail","category-analysis-and-opinion"],"yoast_head":"\nThe Hidden World of NK Commerce - North Korea News \u2014 Daily NK | Latest DPRK Updates 2026<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.dailynk.com\/english\/the-hidden-world-of-nk-commerce\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Hidden World of NK Commerce\" \/>\n<meta property=\"og:description\" content=\"Kim Il Sung\u2019s ageless promise of \u201cwhite rice and meat soup\u201d for every household serves only to symbolize the extent and history of food insecurity in North Korea. 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