Russian goods replacing Chinese products in North Korea's local markets

2015-07-22

Goods bound for North Korea at a customs checkpoint near the border in Dandong, China, April 11, 2013. AFP

Russian products, including food and medicine, are rapidly replacing Chinese goods at North Korea's local unofficial markets since late last year, as they are generally seen to be of better quality at cheaper prices, according to sources inside the country.

A resident of Yanggang province, along the border with China, said customers at North Korea's "jangmadang," or black markets, preferred goods from Russia, despite China's advantages in transport of products and trade relations, due to the country's proximity to the North and role as the hermit kingdom's biggest ally.

"Russian goods began to appear at the jangmadang last December, and demand for Chinese goods has since fallen, while Russian products have gained a following," the source told RFA's Korean Service, speaking on condition of anonymity.

Russian food products – such as cooking oil, flour, powdered milk, sugar and dried fruit – are particularly outperforming their Chinese counterparts, according to the source, while Russian medicine is also preferred over similar products from China.

At a jangmadang in Yanggang's Hyesan city, 4.7 kilograms (10.4 pounds) of Chinese canned cooking oil is selling for 45 Chinese yuan (U.S. $7.24), while 5 kilograms (11 pounds) of Russian cooking oil – which the source said is of "far superior quality" – sells for 43 yuan (U.S. $6.92).

One kilogram (2.2 pounds) of Chinese flour is selling at the market for 6 yuan (U.S. $0.97), while the same amount of Russian white flour and rye flour costs 2.80 yuan (U.S. $0.45) and 2.20 yuan (U.S. $0.35), respectively, he said, adding that while the quality of the Russian flour is slightly lower, it is almost undetectable.

A second source from Jagang province, which – like Yanggang – lies along the border with China, confirmed the growing popularity of Russian goods over Chinese ones.

"Russian goods have been increasingly found at jangmadang [in Jagang] since January," he said.

"Chinese cooking oil, sugar and flour are not really selling anymore because of Russian products."

Additionally, the source said, goods produced in North Korea are increasingly absent from jangmadang.

Many domestic companies – such as Ryeonmot Co. and Gold Cup Athletes Comprehensive Food Factory – used to produce confectioneries, but now only Songdowon General Food Factory does so, he said, citing an example of why fewer North Korean products could be found at the markets in recent months.

The increase in Russian products and scarcity of domestic products at jangmadang comes amid recent orders by regime leader Kim Jong Un for the public to purchase locally-produced goods.

The instructions, which are seen as part of a bid to improve an economy hampered by international sanctions over illicit nuclear and ballistic missile tests, have been satirized by North Koreans, who say "the only domestic item I own is my own body, yet I manage to take care of myself," the source said.

He said that the influx of Russian imports, despite Kim's call for North Koreans to only purchase domestic products, was part of a ploy by the regime to reduce its reliance on China.

"While we have been told to use domestic products, Kim Jong Un has railed against foreign-made goods, even as North Korea imports many Russian products," the source said.

"The government command was a mere excuse to remove Chinese products and bring Russian-made goods into the country."

Boosting relations

North Korea has designated 2015 "the year of friendship with Russia," and a recent agreement between the two countries aims to boost annual bilateral trade to U.S. $1 billion by 2020.

In March this year, sources in North Korea told RFA that the country's economy was likely to improve this year on the back of deliveries of Russian oil and grain under the terms of favorable loans.

Crude oil shipments sent from Russia had caused the price of gasoline and diesel to fall sharply in North Korean markets, and whole wheat sent from Russia had helped to stabilize food prices in the reclusive, nuclear-armed country.

Russia also promised to supply North Korea with electricity for this year's farming season, after a drought last year stalled much of the country's production of hydroelectric power, the sources said.

In March last year, Russia and North Korea agreed to ease visa procedures as part of an agreement to boost bilateral trade, which also includes settling payments in Russian rubles as well providing for Russian access to proposed special economic zones in North Korea, Russia's Far East Development Ministry said.

The move came following a visit of a Russian delegation to North Korea for talks in conjunction with the 65th anniversary of a bilateral cooperation agreement.

Russian officials said in April that business transactions between North Korea and Russia reached 3.5 billion rubles (U.S. $67 million) in value since the two countries began using the currency last October.

China remains king among North Korea's trading partners, however, with an annual volume of U.S. $6.5 billion – some 60 times the reclusive nation's trade with Russia, last valued at U.S. $113 million in 2013 – and Pyongyang is unlikely to abandon its main benefactor.

Reported by Sung-hui Moon for RFA's Korean Service. Translated by Soo Min Jo. Written in English by Joshua Lipes.

Link to original story on RFA website