North Korea-Services and Marketing

Women waiting at a bus stop in P'yongyang
Courtesy Tracy Woodward

The Yonggwang Station of the P'yongyang Metro
Courtesy Korea Pictorial

As in other sectors, the service industries are either under direct state control or cooperatives. The sole, minor exception is the peasant market. One foreign estimate suggests that service industries accounted for 17.2 percent of GNP in 1990. In order to meet the increasing demand for services and distribution channels, the Third Seven-Year Plan calls for expanding retail trade by 110 percent, with particular emphasis on increasing the supply of consumer goods to rural areas. This expansion will be accomplished by extending the network of general and food stores, restaurants, and service centers.

Most retail shops are regulated and operated by the People's Services Committee, which was established in 1972. There are four types of stores. State-run stores include all department stores, vegetable and meat markets, and district shops. Several department stores are located in the national capital, and each provincial capital is supposed to have at least one department store. In the cities, the government planned to have one allpurpose store in each neighborhood, usually located on the ground floor of an apartment building. The second type of store is owned and operated by cooperatives, but since the mid-1960s most have been brought under the control of the People's Services Committee. A third type of store is the factory outlet, usually attached to light industrial factories. Shoppers can buy goods directly from the factory; the price, however, is the same as that of the other retail outlets. Fourth, there are separate stores for military personnel and for railroad workers as well as reports of special luxury shops for high-level cadres. There also are some hard-currency-only stores.

After the August Third People's Consumer Goods Production Movement was introduced, local governments were permitted to establish direct-sale stores within their districts. In January 1990, the number of workers active in the movement nationwide reached several hundred thousand, and the total value of sales under the movement was 9.5 percent of the total retail sales of the traditional distribution network of state and cooperative stores. In the early 1990s, there were 130,000 shops, service establishments, and "food processing and storage bases." Prices for all retail and wholesale goods are fixed by state ministries and do not vary from shop to shop.

The only exception to controlled marketing is the peasant market, where surplus farm products--mostly nongrain daily necessities such as eggs, vegetables, milk, fish, poultry, rabbits, beef, mutton, seasonings, and so on--are sold at freemarket prices based on supply and demand. Although North Korea is doctrinally opposed to peasant markets and considers them remnants of capitalism, these markets had gained considerable headway by 1964. The markets are used as stop-gap devices to provide consumers with daily necessities and as a way to reduce black-market activities. One or two of these free markets are located in each county and are opened two or three times a month in central locations. Local officials watch these markets carefully, even though prices are not regulated, to make sure that goods are not being diverted from the state stores.

Data as of June 1993