In shifting North Korean economy, state-run chain stores try giving customers what they want

Economic Indicators Associated Press

Workers in sharp new uniforms open the doors and turn on the lights about an hour before sunrise at their chain store on the corner of one of Pyongyang's main streets, right smack in the middle of a showpiece area of the capital.

Continue Reading Below

But unlike much of the neighborhood around it, this shop isn't a showpiece. It hasn't been profiled by the state media or been paid any visits by the leader. It's a real business — and a quiet but telling example of an ongoing shift in the North Korean economy as officials play catch-up with grassroots entrepreneurism that has been building for nearly two decades.

Business with a hint of capitalism isn't new in North Korea — it's how the common people have survived amid the breakdown in the government's ability to provide for them following the devastating famine and economic collapse of the 1990s. What's new is that, in a very real nod to the marketplace, this chain of state-owned stores is now fine-tuning their business strategy to actually give consumers what they need.

And their managers have no qualms about saying so.

The new chain stores — called Hwanggumbol, or "golden fields" — are open from 6:00 a.m. to midnight, unusually long hours in North Korea. They aim to provide a wide range of goods, with a stable supply, reasonable prices and reliable quality — none of which is taken for granted, even in the relative prosperity of Pyongyang.

"We thought that if we're selling the things that people need in everyday life, and our opening hours are longer than other shops, our prices are reasonable and we provide guaranteed quality, then people would like it," director Ryang Sung Jin recently said in an interview with AP Television News. "That's why we started this business."

Continue Reading Below

From the street there isn't much to see, just a little sign with the chain's name and an electronic tickertape display flickering above the doorway. Inside, women wearing light blue jackets and black trousers greet customers and take orders — as is typical in North Korea, you choose the item you want in one place, pay for it in another and then go retrieve it with the receipt.

The shops serve a comparatively privileged demographic in North Korea; outside the capital, life is much harder and goods more scarce. But they are also the result of broader policy changes cautiously rolled out since 2012, shortly after leader Kim Jong Un assumed power with promises to boost the nation's living standards.

Officially, there has been no economic reform. The avowedly socialist North Korean government calls the changes "our-style economic management methods."

North Korea's stance of developing the economy in tandem with pouring resources into the defense sector — including nuclear weapons — ensures the continuation of sanctions that curtail international investment.

But conversations with North Korean economists over the past five years show a gradual warming of attitudes and policies toward business.

Operating like a typical for-profit business still remains a challenge.

Commercial advertising is rare. Hwanggumbol shops have only a small display of their logo outside their doors, but it's repeated on staff uniforms, above shelves and on freezer units throughout the shops — going a little bit further than what is normal in North Korean retail.

The shops sell local and imported food and drinks, clothes, daily necessities like soap and shower gel, Tupperware-style plastic boxes, stationery and some consumer electronics. A bag of sweet buns goes for about 80 cents; a big bottle of cola costs about 40 cents.

Director Ryang said he wants to expand into a wide array of services, from laundry to train-ticket booking. There are five branches so far around Pyongyang. The company hopes to increase that to 30.

Whether the business climate will remain sunny long enough for that to happen is uncertain. But for the time being, Pyongyang shoppers are happy to have a place to go that accommodates their daily schedule.

"Because I go to work early in the morning and get back late, it's not easy for me to go shopping for food and daily necessities," said customer Ri Hye Hwa. "I'm really glad to have this shop that has opened near my house and that sells us the things we need."

___

AP's Pyongyang Bureau Chief Eric Talmadge contributed to this report from Tokyo. Follow him on Twitter at twitter.com/EricTalmadge and Instagram at erictalmadge.