“Loyalty is a form of business marketing”

Countryside scene in the northern part of North Korea on June 13, 2014. (Attila Jandi, Courtesy of Shutterstock, Inc.)

Recent defectors from North Korea are different from the earlier generation who have settled in South Korea in one notable aspect. That is, that they are familiar with money making and having to pay tax.

This may seem unremarkable, until we remind ourselves that North Korea is officially a proud nation that claims to provide everything people need without requiring them to pay tax.

Its original system was that of a planned economy with everything owned by the state. However, with the catastrophic famine in the 1990s, when global communism collapsed and North Korea’s allies were no longer willing to help after bad harvests, the regime allowed markets to function. 

These jangmadang were formally institutionalized in 2003 and there are now over 500 around the country. Officially, they operate free of tax. Unofficially, it’s a different story.

Many of the more recent defectors ran businesses.

 “I’m from the tax-paying generation,” one defector joked. “Thanks to me, not only my family but also many officials from the Ministry of Social Security were able to put food on the table.”

The types of business connected to the jangmadang vary. They include “running” firms (bringing produce for sale), “sitting” businesses (selling from a designated spot within a market), “grasshopping” businesses (selling outside the markets without a fixed stand), money-related (loans and currency exchange), and transport-related (moving product and people).

Running businesses, for example, are mainly operated by people living just outside cities. The main mode of transport is the bicycle. For example, if a particular area produces, say, pears, cabbage, and spinach, locals will load up with produce and bike to cities where these items are in short supply and where they can charge more. 

“During the season, I had to work hard to earn enough money to buy a bicycle,” said a defector from North Hamgyong Province. “I would buy vegetables in places like Onsong or Kyongsong and bring them to Chongjin to sell.” Chongjin is the provincial capital and is around 130 kms and 30kms respectively from the two areas she mentioned. 

On the way back, she would sell pencils and stationery that she bought in Chongjin.

“When vegetables weren’t available, I would carry coal on a sled from Saenggiryong to sell in Ranam or Chongjin,” she said, referring to areas just south of the city. “I was able to start this because you don’t need initial capital for a running business. The advantage is that you don’t have to pay stall fees.”

People who can’t afford these informal taxes may also start grasshopper businesses. Typically, they operate just outside a market. They began during the famine. As they were illegal then, the police would crack down. When that happened, the traders scattered and regrouped, like grasshoppers. Hence the name. Now they are legal, but they still exist because some traders are unable or unwilling to pay the market fees.

Kim, 29, started a grasshopper business and later converted to a sitting business, getting a stall in a market that she paid for. She even kept her enterprise going after coming to South Korea. Five years later, in the South, she was able to buy an apartment. 

Born during the famine, her mother escaped to South Korea and Kim was entrusted to her grandmother. She had no education and started working when she should have been in elementary school in order to take care of her grandmother.

“I bought second-hand clothes from China and Hoeryong (on the border) and resold them in Chongjin,” she said, explaining that clothes without brand labels sold for more. 

“You have to remove labels from South Korean clothes before they reach customs. This creates the perception that clothes without labels are South Korean, so they sell better. So I removed labels from branded clothes. Nike and Adidas items sold particularly well.” 

She later started selling bicycles. 

One day she received a message via a broker. It was from her mother. It was the first ever contact. She was suggesting they meet near the border. Although she didn’t realize it immediately, her mother’s plan was to bring her to South Korea.

“When she asked to meet briefly, I felt like I needed to see what my birth mother looked like. So I went and ended up coming to the South.” She worked part-time in restaurants and tried various jobs. “Then I realized that business was in my blood.” 

Reflecting on her young life in North Korea, she observes that the outward expression of support for the regime functions to keep business going. 

“In all the social things we are forced to do, we have to pretend to be loyal to be able to continue conducting business without repercussions. Loyalty has become a form of marketing in North Korea.”

With the young generation, pretending to be loyal in this way is a strategy for them to make money and avoid entering the military or traditional employment.

Another Kim came to South Korea eight years ago after running a sitting business selling accessories. She paid the 1,500 won stall fee at the Hoeryong market and engaged in wholesale and retail business. 

“My wholesale business made 100 yuan a day. That was the equivalent of 20 kilograms of rice,” she said. “You might wonder why it did well but in countries where living standards are low, people pay a lot of attention to appearances. People bought accessories a lot, even at prices ten times higher than a handful of rice. I would give them extra items as a bonus. When I did that, they would bring more customers. Because of this, business went well and my family could afford meat two or three times a week.”

“Recently, my mother took over the business. It’s harder now though as people are buying less and the market fees, the taxes, are higher than they used to be,” she said.

As these cases indicate, now that the state no longer provides for people, making a living has become paramount and, with it, the loyalty of the younger generation is shifting towards money. In fact, the conventional notion that a man must join the party and do military service to succeed has evolved to the point that people now pay to avoid military service. 

One defector saw this change after completing his military service. “When I finished in the military, I was assigned to a job in my hometown of Hoeryong. But I found that in these border areas now money is the priority,” he said.

“I had no money in my pocket and my sister was supporting my elderly grandparents. I felt I had to do something and started working part-time at a bathhouse as a cleaner. Later, I worked as a driver, transporting goods from Hoeryong to other regions. 

“I learned that being able to earn money and buy meat for my parents was the ultimate act of filial piety, surpassing even going to the military or university or being a party official.”

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Lee Jia

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