Land for sale in a socialist state: The new North Korean economy

Seol Song Ah  |  2016-12-23 10:34
Under the tacit approval of the regime, North Koreas market economy is expanding. Payment methods are also diversifying with direct cash payments, bartering, card transactions, and deferred payments becoming increasingly available. Strikingly, even middle school students are getting involved in selling and trading, another indication that the 'peoples marketization' is in full swing.  

Due to increasing competition, it has become more difficult to succeed unless creative approaches are used. In parallel, smartphones have opened up access to a stream of information from domestic and international sources. Just like their counterparts in the outside world, todays market traders in North Korea analyze the incoming information in real time to maintain an edge over their competitors.  

Theres a new expression in North Korea that goes, Its better to dig up the money underneath your feet than to try and catch it flying past in the air. The expression warns against using smuggling, panic buying, and other get-rich-quick schemes, and instead encourages a cautious and meticulous approach. Some of the donju (North Koreas newly affluent middle class) have found themselves homeless after bad investment decisions. On the other hand, an increasing number of residents have unexpectedly found success at the helm of small greenhouse farms. Although marketization continues to swell, safety nets are not in place to protect businesses and their owners. For this reason, speculative trading can be fraught with danger, and the cottage manufacturing industry is thriving. 

Meanwhile, North Koreas real estate industry is also developing rapidly. This not only includes private homes, but also state-owned companies that previously held exclusive control over land rights - which are now being sold on the black market. Residents who purchase such land rights are free to build greenhouses and launch businesses. These residents use smartphone applications to access information about farming techniques.  

Daily NK has been closely following the emergence of new products and industries that have appeared in the marketplace in 2016. In this second edition, we discuss developments in real estate, greenhouses, and barcodes. In the first edition, we discussed new marketing techniques, as well as shoe production and child care services. (You can read that here.)

Land exchange on the black market

Private home sales on the black market have gradually become more conspicuous. Such exchanges are officially illegal, but local governments and home provision agencies are generally complicit in the sales, meaning that the government tacitly accepts the practice. Land, however, is an exception. 

In particular, the exchange of public land for cash can be met with extreme punishment. However, donju are able to make propositions to cadres in the agricultural sector to develop housing on public land. This has given rise to land sales, with the donju able to use the homes to securely store their products and market supplies, and the cadres receive an estate of their own in return.   

Many donju are trying to purchase homes with wide plots of land, a South Pyongan-based source told Daily NK during a recent telephone conversation. There are rumors swirling around that some of the donju have amassed fortunes. This makes them nervous that a regime crackdown could target their wealth. Thats why more and more of them are using rural locations to store and protect their goods.    

The donju approach the Party chairman responsible for managing the agricultural region in question and propose that they provide state-owned land. The donju then build private homes on the land and the cadre gets a bribe. To facilitate the transaction, the chairman sends a notice to the land management office explaining that a certain portion of the farmland has become acidified and is unfit for farming. They can then secure permission from the management office to use the land to build homes, the source continued.

Another trend is that residents are beginning to sell their vegetable gardens for cash. Unlike years past, residents are now able to sell the gardens as a separate entity to their private home. This is another indication of the maturing real estate market.  

When residents sell their homes, they usually sell the vegetable garden separately or demand more money from the buyer to compensate for the cost of the land. Even vegetable gardens are now considered a commodity. This signifies that people are beginning to equate land with money. 

This past August, a man stationed at Sunchon Airfield finished his military service. In the process of turning over his home back to the unit. Unbeknownst to his fellow troopers, the man secretly sold the adjacent field he had cultivated to another household nearby. The families of the airfield troops are usually given an average of 100 pyeong (400 square yards) or more each to engage in farming.

Greenhouses becoming popular for winter farming, with solar panels providing heat

Urban residents were the first to engage in greenhouse farming on an appreciable scale. In large cities like Pyongyang, the donju grew fruits and vegetables in the winter and sold them at high prices. Cities in South Pyongan Province like Dukchin, Anju, and Sunchon are known as coal producing regions, but they are now also known for strawberries and cucumbers that reach peak season in January.   

In recent times, the greenhouse farming trend has spread from urban to rural areas.
Coal prices have risen, so residents in Sukchon County and Pyongwon County are using solar panels as a power source to grow cucumbers and peppers in the winter time, said a source in South Pyongan Province. The rural residents have much more experience than city dwellers when it comes to farming, so they tend to have a much higher yield when harvest time arrives. Transportation is not that complicated because the Pyongsong Wholesale Market is nearby.   

North Korean residents are also using smartphone applications to learn about greenhouse farming methods.

A smartphone app called Pyongyang was released this year. It contains a service called the Joseon Knowledge Dictionary, which introduces methods for raising cucumbers, tomatoes, and oriental melon in a greenhouse: Oriental melon requires a standard amount of soil and fertilizer. It is resistant to diseases and drought, but can be damaged by excessive moisture, the app says. 
Residents look to barcodes to identify product origins

In the North Korean markets, it has become common practice to look at product barcodes. Towards the goal of invigorating a socialist industry, the North Korean regime legislated the creation of a product identification number (barcode) law in 2008. However, inside sources note that the markets have only recently begun to comply.
These days, no matter where a product is from – China, Japan, or South Korea – a barcode is necessary for it to be perceived as trustworthy. Even chocolate snacks that the regime proudly proclaims to be a domestically manufactured product have a barcode, showing that the anti-capitalist regime has adapted at least some capitalist practices.
The introduction and widespread use of barcodes is driven by demand from discerning customers who seek to distinguish between imitation products and the genuine article. Even just a few years ago, Chinese products were often being pedaled as South Korean goods. But the barcode system makes this form of deception more difficult to pull off, with even homemade items now requiring accurate barcodes. 
Some of the seasonal garments for sale in the markets are imported ready-made. However, many of the garments are manufactured by North Korean cottage workshops using fabric and other materials from China. These products do not have an official barcode, but if the seller hopes to gain the consumers trust, he or she will clearly mark it with the region of origin and indicate it is an 8.3 product (denoting the fact that it was manufactured from surplus cloth), the source added. 

*Edited by Lee Farrand

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