Jangmadang Marketization in North Korea

An image taken by Roman Harak displaying “luxury items” for sale three days before the North Korean National Day.

By Abraham Reiss, HRNK Research Intern
Edited by Michelle Dang, HRNK Research Intern, and Rosa Park, HRNK Director of Programs and Editor

October 4, 2021

Since North Korea’s jangmadang market system first emerged during the “Arduous March” of the 1990s, it has become a central pillar of life in the country and has brought about drastic changes to life under the regime. In addition to introducing commercial trade and economic opportunities, molding new roles for women, and connecting the population to an information distribution network, these markets have begun to turn many young North Koreans away from their government’s propaganda. However, while the new perspectives of the “Jangmadang Generation” create hope for change, immense hurdles remain as North Koreans face a deteriorating situation headlined by food shortages and worsening human rights denial under the repressive control, coercion, and surveillance of the state.
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The Origins and Rise of the Jangmadang

North Korea’s first private markets developed as a survival mechanism during the exceedingly difficult “Arduous March” period. Declining growth at the outset of the 1990s, combined with the end of USSR support and Kim Jong-il’s insistence on overinvestment in the military, led to the deterioration of the state’s Public Distribution System (PDS), which dispensed food, clothing, and other essentials to the population .[1] Destructive floods in 1994 and 1995 escalated the already dire situation, destroying 1.5 million tons of grain and tearing down enough infrastructure to take out 85% of the country’s power.[2] The PDS rapidly collapsed. Between 1994 and 1997, rations were slashed from 450g of food per day to just 128g and, over the same period, the PDS, once the primary source of food for most of the population, shrunk to provide for only around 6% of the North Korean population. The result was a catastrophic famine between 1994 and 1998 during which an estimated 600,000 to 1 million people died. [3] In order to obtain what they needed to survive, the North Korean people began to fend for themselves through entrepreneurial pursuits, including collecting and selling grains and vegetables, hawking household possessions, selling home-made food, and engaging in small-scale trade with China. [2] Under pressure from the population, the regime decided to allow restricted, yet largely unsupervised, markets for small crafted items and foods.[2] The jangmadang were born.

This new market system introduced new concepts of profit and consumerism to the North Korean people and incentivized higher production for the first time.[1] Many flocked to the markets, expanding out of the small, state-approved system in larger-scale illegal operations. As the PDS and other state-sponsored forms of support continued to splinter and disappear, the jangmadang evolved and expanded. Eyeing higher profits, traders created sophisticated networks and enlisted smugglers to bring in highly lucrative foreign commodities including trending fashion, technology, media and information sources, and items like coffee, beer, chocolate, and CocaCola. Some traders even began to sell shares of their operations. [2] Today, many North Koreans understand that they can buy anything they want, as long as they have the money. [3]

Towards the end of Kim Jong-il’s rule, however, the regime made many efforts to rein in and even eradicate the jangmadang, including banning the trade of some foodstuffs in 2005, setting restrictions on traders’ age in 2008, and, in 2009, forbidding foreign currencies and devaluing the national currency in an effort to destroy traders’ private wealth and close down the markets. [4] Since then, the regime has been far more accepting of the jangmadang, lifting many restrictions on the markets under Kim Jong-un’s supervision. Today, the jangmadang have come to hold a nebulous, semi-official position in the eyes of the DPRK regime, leading some to refer to them to as “gray markets.”[2] While private markets defy the regime’s economic doctrine that prohibits private trade and private property, the DPRK grudgingly recognized the modern jangmadang system in 2002, when it passed liberalization reforms that allowed markets to set prices instead of the state. [4] As of February 2018,[1]  at least 482 markets were officially recognized by the regime.[5] While foreign imports and unreported production are banned under North Korean law, the regime often tolerates illegal transactions conducted at the jangmadang, realizing it is nearly powerless to stop them.[1] Further, the state not only recognizes that these gray markets are essential for the population, but it also often enables and profits from the jangmadang system. For instance, the regime collects a “stall tax” from vendors facilitated by formalized systems of corruption set up by North Korean officials, who routinely help smuggle goods and even issue vendors electronic cards to pay for their spots in the market. Moreover, the wives of these officials often work as traders themselves [6]

Positive Socioeconomic Impacts of the Jangmadang

Today, the jangmadang system has grown to play a central role in the economic life of the North Korean population. As of 2015[2] [3] , an estimated 83% of North Koreans aged 16 or older participated in the markets, which saw an average of around 10,000 visitors across the country each day. [1] As many as 730 large markets and many more smaller-scale operations are estimated to exist inside the country today.[7] Estimates suggest that as much as three-quarters of the population are dependent on the jangmadang system for their survival.[4] Jangmadang is the outlet for around 90% of North Korean household expenditures and an average traders’ earnings reach a level 80 times higher than formal sector wages, where an average month’s salary is 26 cents.[3] In addition to acting as the bedrock of economic livelihood for most of the population, the markets also serve as financial centers that boast a range of important practical services. Visitors can borrow money, exchange currencies, invest in community commercial operations, seek employment, and hire services in industries ranging from transportation to beautification.[4] These evolutionary developments in the market system provide important opportunities that have enhanced the economic life and general well-being of the population.

The jangmadang markets have been especially transformative for North Korean women. Before the famine and the advent of a private market system, women were seen as homemakers and were largely confined to a dependent role.[2] While men worked at state factories, farms, and businesses, women were barred from working at any state-operated enterprises.[4] However, because of the necessity imposed by the famine and the requirement for men to work full-time in formal sector jobs, it was the ajumma, middle-aged wives of the lower and middle class, who established the first private enterprises.[3] This opportunity spurred a drastic change in socioeconomic status for these women. The development of the jangmadang not only allowed women to move out of their homes, but it also empowered them to become the breadwinners of their families as they came to earn profits that would dwarf their husbands’ wages.[4]

Information Distribution and the “Jangmadang Generation”

One of the most crucial impacts of the rise of the jangmadang system is its profound cultural influence. By facilitating the spread of outside information and fostering a culture of entrepreneurial self-reliance, the markets have changed many North Koreans’ perspectives on the regime. Jangmadang are hubs for information where North Koreans take advantage of a relative absence of supervision in order to swap rumors and news from the outside world.[1] South Korean, Chinese, and other foreign media are common at the markets and foreign TV shows and movies are widely popular.[8] In fact, most North Koreans have seen South Korean entertainment and listened to South Korean pop music.[2] Newspapers and books from the outside world as well as technology like cell phones, MP4 players, DVDs, small portable computers, and USB drives are also hot commodities.[7]

Raised as traders and consumers in the jangmadang system from a young age, the millennial North Korean generation that grew up during the “Arduous March'' came to think about life under the regime in ways fundamentally different from the generation before them. Defectors who grew up during this period attest that running businesses and having access to outside information and foreign media encouraged new cultural attitudes and weakened the grip the state’s ideology had on them and their peers.[7] In a 2018 study, researchers used questionnaires and data analysis to demonstrate that this young generation, often called the “Jangmadang Generation,” displays a significantly weaker consciousness of the regime’s ideology, a less developed instinct for compliance, and a much more developed business mindset when compared to older North Koreans.[8] The 2019 documentary, “The Jangmadang Generation,” details this development in interviews with North Koreans who began supporting their families at young ages by coordinating trade and smuggling operations. These young North Koreans argue that the jangmadang led them to develop a self-reliant and entrepreneurial worldview as well as a commitment to breaking the rules and a deep mistrust of the regime. Watching and reading foreign entertainment, news, and other media, many of these young North Koreans were introduced to concepts like freedom and repression. They came to see through the falsehoods in the pervasive propaganda and understand the nature of the regime.[9] For many of the “Jangmadang Generation,” the experiences of their upbringing not only made them more individualistic, capitalistic, and less risk-averse, but also triggered a profound sense of betrayal and discontent.[7]

This group of young North Koreans has become a bright beacon of hope for change from within the country. Commentators stress that the growing influence of foreign media, information and culture in North Korea will put pressure onto the regime by continuing to gradually instill resistance and distrust among the people.[6] The makers of “The Jangmadang Generation” documentary label their subjects as “the greatest force for change North Korea has ever seen.”[9] Changing attitudes are predicted to slowly decay the power of the North Korean propaganda machine and pose a serious real long-term threat to the state’s control.

Negative Effects of Marketization

The jangmadang system is not without drawbacks. To go along with widespread beneficial developments, marketization has imposed significant harmful effects and set crucial limitations. For instance, while the regime’s weakened grip on private markets has led to many positive developments, it has also ceded room to actors involved in black markets and organized crime, including the trafficking of drugs, weapons, and human beings.[10] The absence of legal order in these markets often allows these opportunistic criminals to create dangerous situations for the population. Gender-based violence is pervasive in North Korea and the market system enables harm against both female victims of trafficking as well as women who run trading operations without permits and are vulnerable to sexual abuse from officials or state police.[5] Another negative consequence of marketization is a shift in cultural attitudes towards older North Koreans. The capitalistic and individualistic belief system that the jangmadang encourages in young traders often inspires negligence and apathy towards elderly people who are not capable of being self-sufficient.[5] Further, North Korea’s songbun system caps the impact markets have on the bottom of the socio-political order. The discriminatory caste system determines where North Koreans live and work based on loyalty to the regime, creating wide disparities in the living conditions of different sectors of the population, as well as in terms of their market opportunities. Peasants and farmers in small rural areas often do not have access to the sophisticated networks that operate in larger urban areas and can only purchase bare necessities, as opposed to the wide range of goods and services available at large jangmadang. [5]

The Road Ahead

The transformative cultural power of jangmadang is also highly limited when it comes to bringing immediate change to conditions in North Korea. While the shifting attitudes of the “Jangmadang Generation'' may pose significant long-term problems for the government’s rule, in the short-term, however, the repressive power of the regime remains sturdy. As one of the most repressive totalitarian states in the world, the Kim regime continues to rule using systematic human rights denial and a reign of fear. Under Kim Jong-un’s authority, the regime coerces forced labor from its population, enables gender-based discrimination and violence, maintains a strict restriction on all basic liberties, and uses executions, torture, enforced disappearances, and the strict songbun classification system to threaten the population into obedience.[11] While the jangmadang has opened up valuable economic opportunities for the population, conditions remain highly restricted, as the country today still has the least economic freedom of any country in the world, according to the Heritage Foundation’s 2021 Index of Economic Freedom.[12] Additionally, Kim Jong-un’s spending priorities remain set on the military and nuclear programs, and efforts designated to service the elites in Pyongyang, meaning that the bulk of North Koreans are left without desperately needed investment and assistance.[5] During the COVID-19 pandemic, the regime has further intensified its repressive rule, using the pandemic as a pretext to enforce extreme restrictions on movement, travel, and the spread of information, increasing the country’s isolation.[13] North Korea now faces dire economic decline and a “mass humanitarian and food crisis.”[14] In response, the regime has rejected many foreign aid offers and decided to crack down on smuggling operations that are lifelines for the population.[14] In April 2021, Kim Jong Un warned his country of the approach of another “arduous march.” [15]
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The international community must act to protect North Koreans and work to encourage and empower efforts to make change. As North Korea faces its current economic, humanitarian, and food crisis, the United States, the United Nations, and other international actors and institutions should dedicate their resources and critical influence to the North Korean human rights situation and take action, including linking new humanitarian assistance to progress on human rights, protecting North Korean refugees, and sending information to the North Korean population in order to empower them to push back against the regime’s propaganda and forced isolation.

[1] Choe, Sang T. “The New Markets of North Korea: Jangmadang.” American Journal of
Management 15, no. 4, (2015): 62-68.
[2] Tudor, Daniel, and James Pearson. North Korea Confidential: Private Markets, Fashion
Trends, Prison Camps, Dissenters and Defectors. Tokyo: Tuttle Publishing, 2015.
[3] Jeppesen, Travis. “Shopping in Pyongyang, and Other Adventures in North Korean
Capitalism.” The New York Times Magazine, February 14, 2019.
https://www.nytimes.com/2019/02/14/magazine/north-korea-black-market-economy.html
[4] Ernst, Maximilian, and Roman Jurowetzki. "Satellite Data, Women Defectors and
Black Markets in North Korea: A Quantitative Study of the North Korean Informal
Sector Using Night-Time Lights Satellite Imagery." North Korean Review 12, no. 2 (2016): 64-83. 
[5] Collins, Robert. “Denied From the Start: Human Rights at the Local Level in North Korea.”
The Committee for Human Rights in North Korea, 2018.
[6] Lerner, Mitchell. "Markets, Movies, and Media: The Growing Soft Power Threat to
North Korea." The Journal of East Asian Affairs 29, no. 1 (2015): 41-70.
[7] Baek, Jieun. “The Opening of the North Korean Mind: Pyongyang versus the Digital
Underground," Foreign Affairs 96, no. 1 (January/February 2017): 104-[ii].
[8] Kyung-Hee, Chae. “A Comparative Study on the Characteristics of Jangmadang Generation’s
Consciousness in North Korea. Journal of the Korea Academia-Industrial Cooperation
Society 20, no. 1 (2019): 313-322.
[9] Vickery, Chad, and Park, Sokeel, directors. The Jangmadang Generation. Liberty in North
Korea, 2017. 51 minutes. https://www.nkmillennials.com/
[10] Yun, Minwoo, and Kim, Eunyoung. "Evolution of North Korean Drug Trafficking: State
Control to Private Participation." North Korean Review 6, no. 2 (2010): 55-64.
[11] Human Rights Watch. “North Korea: Events of 2020.”
https://www.hrw.org/world-report/2021/country-chapters/north-korea
[12] The Heritage Foundation. “2021 Index of Economic Freedom.”
https://www.heritage.org/index/ranking
[13] Human Rights Watch. “North Korea: Covid-19 Intensified Systematic Repression.” January
13, 2021.
https://www.hrw.org/news/2021/01/13/north-korea-covid-19-intensified-systematic-repression#
[14] Yoon, Lina. “North Korea in Crisis: Food Shortages and Information Lockdown.” The
Diplomat, March 16, 2021. 
[15] Neuman, Scott. “North Korea’s Kim Alludes to 1990s Famine, Warns Of ‘Difficulties
Ahead of Us.’” NPR, April 9, 2021.
https://www.npr.org/2021/04/09/985743058/north-koreas-kim-alludes-to-1990s-famine-w
arns-of-difficulties-ahead-of-us
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