Overall, the quality of life improved during my seven-year stay. I eventually noticed more exhaust pipes from makeshift heating devices heating what would otherwise have been bitterly cold apartments in the winter. More balconies were used by families to cultivate animals to be sold for a profit or to generate meat for the family, a sign of the privatization of the socialist economy discussed in depth later.
Items as diverse as war memorabilia and Japanese Hello Kitty bags were scattered around the rooms. To cope with frequent power cuts after nightfall, flashlights, candles, and matches were common. When I was in charge of a pharmaceutical joint venture, we took advantage of that need by giving away small pocket flashlights as promotional gifts. They were quite a hit, a small gadget that solved a regular problem for North Koreans.
Blankets were another household item, providing warmth during the harsh winters. The walls were usually covered with rough wall-paper from recycled paper, and floors used to be covered by paper. They’re now more often covered with plastic-like vinyl, which is cheaper than hardwood, tiles, or carpets and more durable and easy to keep clean.
Like the country itself, apartments were kept meticulously clean. Until the 1990s a so-called sanitation month was proclaimed by the government twice a year, during which all homes had to be repaired and scrubbed down. Now campaigns are less frequently held and less followed, but homes are still amazingly tidy given the shortage of water and detergent.
Everything had a cover: a cover for the radio, the fan, the sewing machine, and the television, often beautifully embroidered, as many North Korean women learn to embroider during their childhood. A large number of dwellers used to embellish their homes not only with embroidery but also with potted houseplants and even aquariums with various kinds of fish. In a country better known for its food shortages than for its livability, there were popular specialized shops that sold aquariums and accessories. It was not the North Korea I saw on CNN. Nor was it the “heart of darkness” that I anxiously awaited ten years ago.
Chapter 2
Malaise into Opportunity
When written in Chinese, the word “crisis” is
composed of two characters. One represents
danger and the other represents opportunity.
—John F. Kennedy
How did North Korea get where it is today, carrying through the end of the cold war, surviving a devastating famine, and remaining a bastion of communism in a world rapidly turning to the free market?
In the 1960s, there were only two industrialized countries in Asia: Japan and the Democratic People’s Republic of Korea. The latter was founded in 1948 on the ashes of Japanese occupation from 1910 to 1945, following the devastation of World War II.
But despite all the destruction and mayhem, socialist North Korea managed to prop up one of Asia’s fastest-growing economies from the 1950s until the beginning of the 1970s. For a long time the country’s growth and gross domestic product (GDP) per capita rivaled that of capitalist South Korea’s, which for a long time was an agrarian and fractious state that depended on the American military presence for protection.
North Korea bolsters a mainly state-run economy, with all bodies reporting to one of three national pillars: the Korean Workers’ Party, the Korean People’s Army, and the Council of Ministers headed by the prime ministers.
But more interesting are the North Korean companies that resemble the South Korean chaebol, conglomerates like Samsung and Hyundai. The government oversees some 200 businesses that, by North Korean standards, would be considered medium and large enterprises, employing at least a few hundred but in some cases more than 10,000 employees.
Some groups, such as the Korea Sonbong Export & Import Company (exporting marine products and importing foodstuffs) and the Korea SEK Company (exporting cartoon films on order and importing movies and fine-art materials), are more focused on a handful of core operations. Other conglomerates have diversified into a wide range of non-core business activities, such as the Korea Rungrado General Trading Corporation (Sindok spring water, marine products, knitwear, clothes, metallic and nonmetallic minerals, natural shell buttons) and the Korea Kwangmyong Trading Group (agricultural produce, marine products, vessel equipment, nonmetallic minerals, clothes, essential oil, processed jewels).
Although diversification tends to be wasteful, companies added business lines partly as a measure to diversify risks in economically uncertain times “due to hostile foreign forces,” according to the government. The diversification also forced businesses into tougher competition with each other, a move that was seen as a countermeasure against waste, as Mr. Ham, a senior official of the State Planning Committee, explained to me. In short, the state didn’t want to have all its eggs in one basket in case a crisis erupted.
With the support of the Korean residents living in Japan since the time of the Japanese colonization, Kim Il Sung founded the country’s largest conglomerate, the Korea Daesong Trading Group. Today it continues to operate under party provision. Daesong was to become a model group for the rest of the North Korean companies, dabbling in a kaleidoscope of sectors like mining, light industrial factories, ginseng cultivation, shops, and even a large and well-managed ostrich farm, which I visited. Like the South Korean chaebol, Daesong also has its own bank that’s set up as a separate business unit but that helps finance its vast operations.
During the first few decades of its existence, the DPRK boasted significant development progress with fast electrification and mechanization. By 1984 the state had six to seven tractors per 100 hectares. It also saw widespread “chemicalization”—that is, more widely used fertilizers and pesticides in agriculture and land irrigation, which increased from 227,000 hectares in 1954 to 1.2 million hectares in 1988.1
As there were no economic incentives to flee to South Korea, defectors rarely ran off during that period. In fact, the opposite was more common. Among the South Koreans who defected to the North, Ri Sung Gi and Choe Deok Sin were the most famous. Ri, a chemist, ran away in 1950 and was later accused of being involved in North Korea’s nuclear weapons programs when he headed the North Korean Atomic Energy Research Institute. He also played a leading role in setting up the massive Vinalon Complex in Hamhung, producing a garment material that became a symbol of national pride and, as many scholars have argued, the material embodiment of Juche. The DPRK-produced Vinylon, also known as “Juche fiber,” that was produced there has become the national fiber of North Korea and has been used for the majority of textiles. It has outstripped the use of cotton and nylon. Choe was a South Korean foreign minister who defected in 1986 with his wife to North Korea.
Other prominent defectors were O Kil Nam, a South Korean economist who defected with his family in 1985 to Pyongyang and asked for political asylum in Denmark one year later. The final one was Ryu Mi Yong, current chairwoman of the North Korean Chondoist Chongu Party, who defected in 1985 with her husband to Pyongyang.
PATCHING UP THE ECONOMY
Things took a dramatic turn downward in the 1980s, when North Korea’s annual growth dropped substantially to a modest 3 percent per year on average. In the 1990s, the country suffered a further setback when its economy shrank by an annual average of about 4 percent. Most scholars attribute the collapse to the fall of the Soviet Union and Eastern European states, which previously offered food and fuel subsidies to the regime. Combine that with the huge natural calamities such as a drought in the 1990s and, last but not least, structural problems like its obsolete, underinvested state economy.
While global geopolitical changes in the 1980s kick-started China and Vietnam on the road to economic reform, North Korea took no such path. Three reasons explained why the DPRK was less willing to reform than China and Vietnam. First, the U.S. refused to sign a peace treaty with the DPRK, which made the country feel threatened and froze it in a militarized, defense-oriented