Markets blossom in Pyongyang
Consumerism taking root with booming market economy in urban areas
In today’s North Korea there is a growing competition between domestic companies themselves as they try to attract customers and establish reputable brands.
Michael Spavor
PYONGYANG: Like all North Korean adults, Song Un-pyol wears the faces of leader Kim Jong-un’s father and grandfather pinned neatly to her left lapel, above her heart. But on her right glitters a diamond-and-gold brooch.
Song is what a success story in Kim’s North Korea is supposed to look like. Just after Kim assumed power in late 2011, she started managing the supermarket floor at a state-run department store, which has freezers stocked full of pork and beef and rows of dairy, bakery and canned goods. She watches as customers fill their shopping carts, take their groceries directly to be scanned at the checkout counter and pay with cash or bank debit cards.
Song is part of a paradigm shift within North Korea: Three generations into the Kim family’s ruling dynasty, markets have blossomed and a consumer culture is taking root. From 120 varieties of “May Day Stadium” brand ice cream to the widespread use of plastic to pay the bills, it’s a change visibly and irreversibly transforming her nation.
Kim’s trademark two-track policy focuses on the development of both nuclear weapons and the economy. His acceptance of a more consumer-friendly economy is meant to foster economic growth and bring profits into the regime’s coffers.
In keeping with his father, whose motto was “Military First”, Kim devotes nearly a quarter of North Korea’s estimated US$ 30bil (RM128.4bil) GDP to defence spending, which is a far higher military burden than any other country in the world. But his new slogan of “Parallel Development” reflects an inescapable reality of his era.
In the 1990s, North Korea nearly imploded when the Soviet Union and its satellite empire collapsed. Reeling from floods, famine and an overwhelmed bureaucracy, it could no longer afford the public distribution system many North Koreans had depended on for their basic needs. This change sparked a wave of grassroots barter and trade, which has swollen into the burgeoning market economy today.
Life in rural North Korea is still marked by far more hardship and scarcity than in its urban areas, and is hard even to compare to the showcase capital, Pyongyang. Yet there is, surprisingly, a bustling, almost booming, feeling in many parts of the country.
Under a five-year plan for the economy Kim announced last May, North Korean factories are putting a new priority on making more and better daily-life products. Managers, meanwhile, have more freedom to decide what to make, how much to pay their workers and how to forge profitable partnerships.
Along the roads into virtually every city, street vendors, usually weather-beaten old women, sell fruits, vegetables and other food. In the cities, bazaar-style markets, shops and department stores are full of people. The shelves are lined with dozens of brands of domestically made cigarettes, sugary soft drinks and colourfully packaged chips or canned soups.
In specialty shops, the latest “Pyongyang” model smartphones – probably Chinese- made but rebranded to have a locally made appearance – go for US$200 (RM860). Apps to put on them, like the popular “Boy General” role-play- ing game, are US$2 (RM8.60) a pop. Pyongyang’s premier brewery, Taedonggang, just added an eighth kind of beer to its product line, which already includes beers dark and light, and even one that is chocolatey.
Despite the ever-tightening sanctions, consumer products are still coming in from all over the world. Buying a can of Pokka coffee from Japan is easy, and costs about 80 cents (RM3.43). Purchasing a Mercedes-Benz Viano might require some connections, but it is doable – for a US$63,000 (RM270,689) sticker price.
On the country’s bumpy highways, caravans of cram-packed long-distance buses and trucks hauling goods from city to city are common. More products made in Pyongyang are found in rural areas these days, and vice versa. Although the use of US dollar or Chinese yuan remains widespread, more people are using prepaid cards or local bills at the checkout counter – suggesting greater buying power in general and more confidence in the stability of the national currency.
Some blatant manifestations of commercialism remain taboo. There are only three billboards in Pyongyang, a city of about three million. They advertise the local automaker, Pyonghwa Motors, and are more for the benefit of impressing foreign visitors than selling cars. There are no advertisements on television or in the newspapers.
But stores are under instruction to be more consumer-friendly.
“At first, we opened the store from 10 in the morning to six in the evening,” said Song.
“But in 2015, our dear respected Marshal Kim Jong-un made sure that we serve from 10 in the morning to eight in the evening as many working people often used the shop during the evening after work.”
Stores now commonly offer buytwo-get-one-free type sales and discounts on products the management wants to move off the shelves. Posters for new medicines or sports drinks can be seen inside shops and customers can sign up for “loyalty cards” to get points toward ever more discounts.
“In today’s North Korea there is a growing competition between the domestic companies themselves as they try to attract customers and establish reputable brands,” said Michael Spavor, a Canadian entrepreneur who visits the North frequently and is one of the few Westerners to have ever met Kim Jong-un.
Spavor calls it a “brilliant strategy”.
The goods and trading opportunities spilling across the Chinese border are also spurring the growth of profitable enterprises, which has substantial financial benefits for well-connected individuals and, at least initially, the regime’s elite. For this tier of North Korean society – and for farmers who can profit from their excess produce – the new economy has opened up a way to get money from sometimes underthe-table businesses.
Loyalty to the regime and party ties remain an important means of social advancement. But, in North Korea these days, so is a good sense for how to run a proper side hustle to augment what are often paltry official paychecks.
However, the same opportunities have widened the gap between the rich by North Korean standards and the poor. The haves benefit disproportionately from the new economy, while a far larger number of have-nots live mostly outside the Pyongyang bubble of affluence.
The regime is not blind to what’s happening. It knows the new consumerism can be a destabilising force. But it also knows it needs the markets.
North Korean officials insist markets are a stopgap coping measure for the economy that will be overcome.
Kang Chol-min, a researcher with the Economics Institute of the Academy of Social Science, said the regime is trying to produce more, and better, goods to woo consumers away from the markets and back to state-run businesses.
“The number of people relying on the state-run commercial networks is increasing,” he said.
But many outside experts believe state enterprises and farms are too inefficient to provide enough goods and services for the whole nation without the help of markets and private activities.
If they are right, it’s hard to imagine North Korea’s economic future will lie in Kang’s vow to produce more goods locally. Nor is it likely to be model worker Song, the state-sanctioned success story.
It might, however, be a Miniso store.
Miniso is decidedly not trying to appeal to the shoppers by filling its shelves with products made in North Korea. It’s an international brand name – found in Hong Kong, Tokyo, Sydney – selling bargain-priced goods such as backpacks and consumer electronics. Its Pyongyang store just opened in April, near two of the capital’s most prestigious universities in a newly built high-rise district appropriately called Ryomyong Gori, the “Avenue of Dawn.”
It’s the trendiest shop in town. And it’s a joint venture. With China.