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Korea, Today and Tomorrow

Official Markets in N. Korea


ⓒ KBS News
It is common to see merchants in traditional markets in South Korea selling a variety of Korean-style pancakes and offering freshly made rice cakes to shoppers passing by, with buyers and sellers alike having broad smiles on their faces. Unfortunately, many traditional markets have lost vitality due to large supermarkets. To stay competitive, they have accelerated efforts to transform themselves in a modern way. South Korea is not the only country to undergo this change. Markets in North Korea are also changing, both on the outside and in quality. 

Today, we’ll take a look at North Korea’s official markets with Jeong Eun-yi, researcher at the Korea Institute for National Unification. 

The phrase “North Korean market” may remind many people of “jangmadang,” which refers to the private market in the communist state. As the seed of North Korea’s market economy, the jangmadang is a place where locals can get everything they want at anytime. 

The jangmadang is quite extensive, as it includes alley markets, grasshopper markets, retail markets and public markets. As the state rationing system collapsed during the Arduous March period in the 1990s, private markets sprang up in various parts of North Korea. The country legalized the markets as “general markets” in 2003. Afterwards, North Korea set up markets equipped with certain facilities in certain areas and collected market fees and taxes from merchants doing business at the markets. 

Due to the collapse of the socialist bloc, such as the dissolution of the Soviet Union in 1991, North Korea could no longer receive aid. To make matters worse, North Korea was hit by floods and droughts. As a result, the rationing system that had propped up North Korean society crumbled. 

As the food shortage in North Korea worsens, many laborers have been absent from work too often and an increasing number of people are wandering around the country in search of food. The aftermath of the food crisis is known to be pretty serious. 

During the harsh period known as the “Arduous March,” North Korean residents faced a life-or-death crisis due to the breakdown of the rationing system. They voluntarily created markets, which began to expand fast. Many in North Korea found it hard to survive without the markets. 

Since North Korean authorities approved “general markets” in 2003, markets in the country have been classified as official markets and unofficial ones. An official market refers to an official place where commercial activities are permitted by the authorities. In the official market equipped with buildings and facilities, merchants engage in market activities and pay taxes and fees. Jangmadang, on the other hand, is a slang term for a self-help illegal market spread by local residents. As North Korea legalized jangmadang by naming it “general market,” the country’s official markets have grown over time. 

Google satellite data show that there are over 400 markets in North Korea. The total area of the markets is equivalent to two-thirds of Yeouido Island in Seoul. In the North Korean capital of Pyongyang, each district has at least one public market or general market. Many cities have up to four or five markets each, while each rural area at the county level has one or more markets. 

In one of the notable changes, the markets have been organized in a systematic way. For example, not only restrooms but also a market management office, storehouses, bicycle storage and other facilities have been built inside the markets. 

As of 2022, there are 414 official markets in North Korea. The average number of markets per province is 45.5. There are 65 markets in South Pyongan Province, 46 in North Hamgyong Province, 48 in South Hamgyong Province and 30 in Pyongyang City. After an extensive renovation of old jangmadang markets, the country gave them new market names. Compared to 2016, the total market area increased by 107-thousand square meters. The average area per market is large enough to be one-third of Jamsil Baseball Stadium in Seoul. The largest official market is “Sunam Market” in Chongjin, North Hamgyong Province. 

Sunam Market is about twice the size of Seoul’s Dongdaemun Market. As of 2019, there are 17-thousand stalls at Sunam Market, meaning that some 17-thousand merchants are working there, if we assume one merchant is running one stall. Sunam Market in Chongjin has grown significantly since 2016. It is adjacent to cities close to the North Korea-China border. Chongjin City with a large population is favorably situated for transportation. Goods come in through border regions such as Rason, Hoeryong(회령), Musan and Hyesan and they are gathered at Sunam Market, a hub for transportation. 

Sunam market is located in the center of Chongjin City, a port city close to the Chinese and Russian borders. Initially, there was a market in Chongam, a district away from downtown Chongjin. Locals complained of inconvenience caused by the long distance, so Sunam Market was built in the heart of the city. Covering an area of over 30-thousand square meters, the market has subsections specializing in different product categories such as industrial goods, meat and fish, used clothes and general merchandise. Its clothing section, in particular, is on a par with “Okjon Market” in Pyongsong, South Pyongan Province. Okjon Market is located close to North Korea’s largest clothing production base. 

Hyesan Market is the fastest growing official market in North Korea, in terms of speed, not size.  

Until the 1990s, Hyesan was very poor. The collapse of the rationing system forced North Koreans to depend on markets to make a living. Against the backdrop, Hyesan became the most active North Korean city in smuggling, which was relatively easy in this town across a narrow river from China. The market in Hyesan flourished as well, as goods from the North Korea-China border areas were concentrated there. Hyesan is the one of the cities that has grown the most since the 1990s. 

Hyesan in Ryanggang Province, where Hyesan Market is located, is a border city lying on the upper stream of the Yalu River. In the city, commercial activities are so active that houses near the market are used as secret stores. 

In line with the Samjiyon construction project, in particular, Hyesan Market has enjoyed a boom. 

Hyesan City has benefited from the development of Samjiyon. If North Korea launches a large-scale construction project in a certain area, materials and money will be concentrated in that area. Likewise, Samjiyon has siphoned off funds, so to speak. But the funds are not spent in Samjiyon only. Some of the materials and money flow into adjacent regions like Hyesan. It is easy to understand that the development of Samjiyon has spurred the growth of Hyesan.  

Samjiyon in Ryanggang Province is located southeast of Mt. Baekdu. It is where regime founder Kim Il-sung carried out anti-Japanese activities and his son Kim Jong-il was born. 

Samjiyon is touted by North Korea as a sacred place of revolution. The area began to draw foreign attention after Kim Jong-un took power. 

Under the instruction of the leader, North Korea began to develop Samjiyon County in earnest in 2016 with an aim to build a world-class international tourism special zone. The small county with a population of less than 40-thousand was upgraded to a city and a railroad was also completed. 

The “Hyesan-Samjiyon Railway” connecting the two regions was built to promote tourism to Mt. Baekdu. It means Hyesan City benefited directly from the construction of Samjiyon City. As a result, Hyesan Market has been crowded with people. 

Located near the Chinese border city of Dandong, Sinuiju is North Korea’s largest trade, logistics and commercial city. Namjungdong Market in the city serves as a channel for Chinese imports entering North Korea’s national distribution network. Meanwhile, Tongil Street Market and Chung District Market in Pyongyang, as other official markets representing North Korea, mostly deal with expensive imports. Indeed, the official markets comprise the center of North Korean commerce. So, who does business there and how? 

Merchants should all be registered in the market, and the requirements are rather strict. For instance, they must have dependents without a job. An age limit is set, too. Also, one merchant is supposed to have one stall at the market. In reality, however, some operate more stalls under other people’s names. Stalls are quite small, with each one measuring only 70 to 80 centimeters in width. Therefore, sellers can’t just put all their stuff on their stall, which is less than one meter wide. That’s why some choose to use the names of their relatives to buy one or two more stalls. 

To enter the official markets approved by the authorities, merchants have to go through a difficult registration process and purchase their own stall. Once they start doing business at the markets, the market management office collects money from the merchants in various ways. The “market tax,” in particular, is the fee for using a market stall. It is the official tax revenue that North Korean authorities collect through the markets. There are more than 1.1 million merchants at the official markets in North Korea, assuming that one merchant runs one stall. This is approximately 4.7 percent of North Korea’s total population. The country is estimated to have collected 290 million US dollars as “market tax” from merchants nationwide in 2020. 

Markets in each region fall under the authority of public agencies in that region. For instance, Sunam Market is under the jurisdiction of administrative agencies or party organizations in the Sunam district. That means part of the market tax collected from a regional market could be absorbed into the central government. 

According to my research, most of the tax is used for that region. For example, money needed to build a road in the Sunam district is covered through the tax collected from the market. Therefore, local governments regard markets as a very important financial asset and they continue to modernize market facilities. 

For the markets to disappear, the authorities must secure sufficient funds. Based on the strong financial capacity, North Korea needs to revive the rationing system. In reality, however, the country’s financial resources are simply inadequate. It has no choice but to rely on markets. 

Official markets have become an important source of finance in North Korea since the authorities embraced markets. These days, some markets, in a shift from the previous format, look like a department store, which is divided into different sections specializing in product categories with the purpose of increasing the sales effects of product displays. 

North Korea now perceives official markets as the center of economic activity. The markets will likely continue to grow, as long as they are used for policy purposes by central and local governments. 

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