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Management Report

Management reports, briefs and video-clips issued by Samsung Economic Research Institute

2011 Top Ten Hits in North Korea

2011 Top Ten Hits in North Korea

DONG Yong-Sueng

June 1, 2012

Transcript

Welcome to our video program. I'm Yong-Sueng Dong from the Global Studiest.

What were the most popular items in North Korea last year? Even though the North Korean economy is still grappling with sluggish growth, people who have visited Pyongyang recently say it seems livelier and its people better dressed than before. This presentation will explain the ten hottest items in North Korea, which mirror the realities of its economy.

The ten hottest items in 2010 were pine mushrooms, crab, fertilizer, mobile phones, women’s pants, pork, Shin Ramyun, draft beer, new notes and DVDs of South Korean TV series. The popularity of pine mushrooms, crab, fertilizer, Shin Ramyun and Korean TV dramas was linked with external factors, while the rest were related with the succession of leadership.

How did the list change last year? Based on interviews with North Koreans, media reports and trade statistics, Samsung Economic Research Institute selected ten items: coal briquettes, platform shoes, mobile phones, bottled water, delivery service, amusement parks, Choco Pies, instant coffee, USB flash drives and restaurants.

What distinguishes the list from the previous one is that different items have different reasons for popularity. This reflects the influence of the market, which is spreading not only vertically but also horizontally throughout North Korea’s society.

How did the list change last year? Based on interviews with North Koreans, media reports and trade statistics, Samsung Economic Research Institute selected ten items: coal briquettes, platform shoes, mobile phones, bottled water, delivery service, amusement parks, Choco Pies, instant coffee, USB flash drives and restaurants.

What distinguishes the list from the previous one is that different items have different reasons for popularity. This reflects the influence of the market, which is spreading not only vertically but also horizontally throughout North Korea’s society.

These days, it is not rare to see North Koreans drying briquettes made with different kinds of coals. In the North, individuals produce and sell coal briquettes due to the lack of electricity. Pyongyang and Eastern Pyongyang thermal power stations do not generate enough electricity. Thus, people living in the countryside have to use wood or brown coal for heating.

Due to the lack of power, coal production and distribution have become a popular job in the provinces. People form associations to pay to rent lots at major provincial stations. Most distributors are women, who make coal briquettes by themselves or distribute them to other merchants. They can make money by selling 1-2 tons of briquettes at a time.

In 2011, production of coal, North Korea’s No. 1 export item to China, increased sharply to US$840 million. This accounts for almost half of North Korea’s exports to China, indicating that North Korea has opened massive coal exports to China to gain something else in trade. Pyongyang has raised the utilization rate of its coal mines to import Chinese goods. This, in turn, expanded coal supplies in the country, creating opportunities for briquette sellers to make a profit.

People who visited the North in 2010 have said that North Korean women’s attire has changed significantly. Reportedly, the first thing Kim Jong Un did to gain public support after his succession was to suggest to his father that women should be able to wear pants. This boosted Kim Jong Un’s popularity among North Korean women.

At the same time, those who visited the North last year say women’s height was taller than before. This is because North Korean women began to use platform shoes as they became more concerned with style. It is not difficult to see women in high-heeled shoes in the streets of Pyongyang these days. This change, along with the increase in the number of women who are active in markets or overseas restaurants, reflects the improving status of North Korean women.

Mobile phones were on the list once again. Orascom Telecom, the Egyptian mobile phone service provider in North Korea, estimated that the number of North Korean mobile subscribers was over one million by the end of 2011. In a sense, this is attributable to the increase in the number of those who can afford mobile services.

A more fundamental reason for growth is the pricing structure for chips needed to operate mobile phones. Once a customer buys a chip for 3,000 won, the rest of his/her family can buy another chip for about 15 euro per month. This means the more a family buys cell phones, the cheaper the service fees are. It is still too early to say that the surge in the number of cell phone users in North Korea is related with social changes.

In May 2011, Radio Free Asia (RFA) reported that bottled water supplies in the North are unable to keep up with demand even though the price, 500 won, is worth 1 kilogram of corn. Water supply facilities in North Korea are not good, spurring demand for bottled water from party officials and rich merchants.

Bottled water is one of the rare products where North Koreans favor domestic brands. Kangsuh Yaksu and Shinduk Saemul, famous for their high-quality water, are examples. North Korea expanded bottled water supplies while people believed the Tohoku earthquake in Japan changed underground water streams, disrupting water production. This created greater demand for bottled water. Pyongyang promoted the supply increase as a project that turned a “disaster” to a “blessing,” which reportedly attracted many investors.

There are many porters in places which people come and go, including markets and train stations. There is even a delivery system to link Beijing with homes in North Korea. Porters are mostly those who do not have enough money to start a business while the delivery service is presumably operated by the North’s Ministry of Posts & Telecommunications to earn money to support itself.

It may be too early to call North Korea’s transport providers as a full-blown “delivery” service, but a similar form of mobile selling has appeared in the North, and is on a steep rise. North Korea has become a place where people who do not make money will starve, providing strong motivation to accumulate funds. Those who cannot afford to rent lots at markets go around selling rice and vegetables in handcarts or open mobile stalls in apartment complexes in provinces.

The next presentation will explain the remaining five items and demonstrate the social issues mirrored by the hit products.

Thank you for watching. I'm Yong-Sueng Dong.

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