High-end Department Store in Pyongyang Underscores Wealth Inequality in North Korea

Residents in North Korea are becoming more aware of wealth gaps and class divides because of exorbitant prices at a newly opened department store in Pyongyang.

The Daesung Department Store has been described by Kim Jong Un, who toured the shopping complex prior to its opening in April, as a “great comprehensive service base that improves the quality of the people’s cultural life”.

But sources say the store sells mostly luxury goods and everything is far too overpriced to the point that only high-ranking officials and a small group of rich people can afford a shopping trip there.

Due to both its exclusive clientele and the fact that all transactions are in foreign currency, the upscale store has taken on the ironic moniker of “dollar store,” according to a source from Pyongyang.

“The store has a luxurious interior and western-style business model,” said the source in an interview with RFA’s Korean Service.

“It’s pretty much a place for the privileged class only. It promotes their extravagance,” said the source.

The source detailed what could be found behind the counters and on the shelves of the store, as well as the type of people that roam its floors.

“It’s all mostly imported luxury goods from overseas, and they sell them only in foreign currency with super-high prices,” the source said.

“It would be total pie-in-the-sky for the average [North Korean] to [shop there, because] they have to live day by day on their salaries and business [income],” said the source.

The North Korean government pays every citizen a salary, but in recent times, the amount has been so meager that it doesn’t even cover living expenses. People make ends meet by starting small businesses and finding alternative sources of income.

According to the source, these people are resentful that they are made to toil, while the rich can casually drop cash on foreign luxuries.

“The store is being criticized by Pyongyangers for only catering to people who have no problem spending dollars. [They say] it only respects customers with power and money,” the source said.

The source also revealed how the country’s leaders stand to benefit from the department store’s success.

“All of the Daesung Department Store’s profits are deposited into Daesung Bank. It is totally separate from any of the distribution networks for ordinary people because Daesung Bank belongs to Bureau 39,” said the source.

Bureau 39, officially known as Central Committee Bureau 39 of the Workers' Party of Korea, is a secret organization that is tasked with maintaining a slush fund for Kim Jong Un, just as it had done for his father, Kim Jong Il, when he was in power. Bureau 39 was established under the rule of Kim Il Sung, Kim Jong Un’s grandfather.

Through the Daesung Department Store, the authorities are able to secure money, in dollars, needed to keep the party funded.

“They are focusing on earning foreign cash by specially renovating the Daesung Department Store and giving it the privilege of managing [itself] under capitalist rules. Even under the sanctions, the Daesung Trading Company and other national trading companies are focusing on high-end imports they can sell at Daesung,” said the source.

Both the UN Security Council and the European Union passed sanctions to prevent exports of luxury goods to North Korea in 2006. This was supposed to discourage North Korean elites, with the aim that they would pressure the regime to stop testing nuclear weapons.

But the flow of luxury goods into North Korea has not been completely stopped.

A second source, also from Pyongyang, said that when people heard the news of the department store’s opening and Kim Jong Un’s statement that it supports the people’s cultural life, they wanted to see for themselves if it was true.

“On the first day [the store] was open, crowds of Pyongyangers flocked to the area, but after seeing the price tags on each product, they turned around clicking their tongues,” said the second source.

“On the first floor of the store, there is a food stand and the furniture department. It has fine wooden furniture with prices in the thousands of dollars,” the second source said.

According to statistics kept by the South Korean central bank and other agencies, the average North Korean income is around $1300 per year.

The second source also said the department store has one of Pyongyang’s only restaurants serving western cuisine. There’s also a billiard room on the premises.

“On weekends, the families of high-ranking officials and rich people go to the store and spend more than $1000 in a single day, so the ordinary people are getting angrier at the gap between the rich and poor. They are resentful of [Kim] and the authorities,” said the second source.

Reported by Hyemin Son for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.