Marketing In North Korea (10)
- How Jangmadang works behind the scenes
Jeon Byung-kil
Senior Consultant of YESInnovation
former of Secretary General of UniKorea Foundation
The informal market activity that took place there.
The first legal marketplace in North Korea was established in 1958 as a “farmers’ market” that provided daily necessities. The farmers’ market allowed limited transactions of agricultural and livestock products, excluding staple foods like rice and corn. Farmers from collective farms bartered items such as homegrown vegetables and chickens. During the years when North Korea’s economy functioned smoothly, these markets remained relatively unnoticed. However, after the “Arduous March” period in the 1990s, farmers’ markets were permanently established, and black markets proliferated, evolving into what is now known as Jangmadang. Goods in Jangmadang often traded at 80 to 100 times the government-fixed prices. This unique marketplace became instrumental in distributing agricultural products and other essentials, significantly influencing the daily lives and perceptions of North Koreans.
As the variety of goods traded at Jangmadang expanded, more farmers began participating in market activities. Currently, between 400 and 500 Jangmadangs operate across North Korea, with foreign goods primarily smuggled in or brought by Chinese merchants and Korean-Chinese traders. In addition to daily necessities, cultural products, including Korean dramas, are traded. Moreover, black markets have even entered the financial sector, with private loans and foreign exchange transactions occurring in various forms.
In this evolving marketplace, goods and services are traded through different distribution channels:
1. Direct transactions between manufacturers and consumers
2. Transactions involving manufacturers, wholesalers, retailers, and consumers
3. Transactions between manufacturers, specialty distributors, and consumers
4. Transactions involving manufacturers, middlemen, specialty distributors, and consumers
North Korea’s farmers’ markets align with the first type, typical in agrarian or ancient societies that operate on a barter system. The second type is the most common, with approximately 500 Jangmadangs in North Korea fitting this distribution model.
Growth of the Market and Middlemen
Market expansion is closely tied to the growth of the merchant sector, as well as the distribution business. Middlemen, specifically wholesalers, play an essential role in connecting producers and consumers. In North Korea, the rise of private distribution networks and middlemen began after the suspension of the public distribution system in the mid-1990s. This individual distribution network encompasses both consumer goods produced by local factories and imported products. Following North Korea’s economic reforms on July 1, 2002, local factories actively engaged in barter activities, which resulted in an extended distribution process with a rise in the number of middlemen profiting from increased transaction volumes. Factories and enterprises also began sourcing necessary parts through these intermediaries.
Consequently, distributors in North Korea are now segmented into large wholesalers known as chapan-jangsa (truck vendors), smaller wholesalers, and market stall retailers, all of whom supply daily essentials to North Koreans. Wholesale markets have been established nationwide, including in the capital, Pyongyang.
the Game “Sunam Jangmadang”
Jangmadang is a primary source of livelihood for many North Koreans, yet few fully understand its inner workings. In 2018, the South Korean game company Nolgong developed “Sunam Jangmadang,” a project designed to help players understand North Korea’s Jangmadang marketplace. Modeled on the Sunam Jangmadang in Chongjin City, this virtual marketplace was recreated based on interviews with North Korean defectors who shared their real experiences. The game categorizes eight different roles, each represented as a game character:
1. Grasshopper Merchant: Individuals selling goods illegally to avoid government crackdowns. They typically sell in market corners or backstreets and “hop” around to evade authorities.
2. Market Manager: Public officials responsible for managing the market, collecting taxes, and conducting inspections to prevent illegal trade.
3. Market Stand Merchant: Merchants who operate under market management, selling trendy items obtained at wholesale prices.
4. Inter-provincial Wholesaler: Traveling wholesalers who purchase regional specialties and distribute them across the country, contributing to North Korea’s distribution system.
5. Running Retailer: Retailers who primarily operate within one region, reselling goods obtained from other areas.
6. Donju (New Wealthy Class): North Koreans who accumulated wealth through private financing, now investing in various government projects.
7. Carrier: Individuals who provide luggage transportation services at train stations, forming a growing service industry.
8. Jangmadang Generation: North Koreans born between the mid-1980s and late 1990s, more familiar with the market economy than government ideology.
In the game, players select a character and navigate Jangmadang dynamics. They complete missions by answering questions based on their character’s role, progressing by collecting relevant items, which unlocks new characters and further insights into Jangmadang’s mechanisms.
Will Jangmadang lead to change
Jangmadang is not only a vital survival tool but also a learning environment where North Koreans experience elements of capitalism. While the government unofficially collects taxes from Jangmadang and officials collaborate with merchants, it remains a channel for information flow about South Korea and anti-government sentiments. Today, North Korea has two distinct generations: one that fully benefited from the state distribution policy and another relying on the Jangmadang system. The latter, referred to as the Jangmadang Generation, is increasingly seen as shaping the country’s future, with a more materialistic perspective replacing traditional ideological values.
As North Korea’s marketplace continues to evolve, questions arise: Will the Jangmadang Generation drive future change? How will technological developments reshape the marketplace?
Although precise answers are elusive, the resilience of Jangmadang—especially during times of political crisis—underscores its critical role. For many North Koreans, Jangmadang is not just a marketplace but a daily lifeline, bringing about incremental yet impactful change.