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NORTH KOREA ALLOWS A SMIDGEN OF RETAIL REFORM

There may be no sharper economic contrast anywhere in the world than that between the two Koreas.

In Seoul you can buy Hermès scarves at any of 10 locations. In Pyongyang, 119 miles to the north, visitors find little to buy on the shelves at the top-ranked Department Store No. 1, where the electricity is sometimes switched off during store hours because of shortages.

North Korea’s inward focus has produced a bounty of hardship since the Korean War ended 53 years ago. Food and ordinary goods are scarce and expensive, and the country has suffered through recurring famines as a result of poor state planning.

But recent reports indicate that though the Pennsylvania-size country remains profoundly Third World, some cautious economic reforms instituted in the past few years are producing small improvements in everyday life.

The Seoul-based Korean Institute of National Reunification, which studies its neighbor to the north, reported this spring that private shops are showing up across the country and that wholesale outlets and even convenience stores are beginning to open in the cities. (The first convenience store, a South Korean FamilyMart, opened in the North Korean resort of Mount Kumgang in 2002.)

The institute’s report, based on interviews with defectors and Chinese and South Korean businessmen who travel to North Korea, says the government of dictator Kim Il Sung introduced reforms in 2002 aimed at improving living conditions. The government has turned to China and Russia for help reforming its economy and seeks partners from those nations willing to open shopping centers, the institute says.

Among the private enterprises Kim now allows are bakeries, restaurants and open-air markets. He also allows companies to pass above-target earnings on to workers in the form of bonuses.

These reforms may even lead to improvements at the hard-pressed Department Store No. 1. According to the South China Morning Post, a newspaper published in Hong Kong, the Shenyang Zhongxu Group of China paid $6 million for a 10-year lease on the store. The newspaper reported that the company plans to stock it with clothing, cosmetics and other consumer goods at prices about half those elsewhere in North Korea — but higher than those it charges back home in China.

— CH