The North’s subterranean cookie economy

Today in North Korea they say South Korean chocolate-covered cookies with marshmallow filling are essentially keeping the Kaesong Industrial Complex going.

The innocuous treats, called Choco Pies, have become popular trading items among shrewd North Korean merchants.

Here’s the story.

At the Kaesong complex, built in 2003 as a symbol of inter-Korean cooperation, 116 South Korean firms employ about 42,000 North Koreans. And each of the workers receives about two or three Choco Pies as a snack each day. Since they were first provided in May 2007, monthly consumption has quintupled to 2.5 million.

But those working at Kaesong say it’s difficult to find evidence of the pies. That’s why the complex is sometimes referred to as the “Black Hole of Choco Pies.” An official there said, “At first, the workers were taking them home to feed their children or younger siblings.”

But today, people are taking Choco Pies to the underground market.

“Choco Pie collectors have popped up [across North Korea],” said an official at the Unification Ministry in Seoul. “In Sinuiju, a northern city near the Chinese border, there is even a retail market.”

Kaesong workers have their possessions checked before they leave work, but that hasn’t prevented the massively popular pies from exchanging hands in other places.

Kaesong Retailing Corp. is the exclusive distributor of Choco Pies in the North. In the South, Orion Confectionery is the creator of the snack, but the North chose less expensive versions made by Orion’s rivals, Lotte Confectionery and Crown Confectionery - which started making the pies years after Orion.

The pies cost 125 won (10 cents) per pack, or less than half the retail price in the South. Lee Jeong-goo, president of Kaesong Retailing, said the snack occupies a prominent place in the hearts of Kaesong employees.

“Given North Korean workers’ preferences, price and logistical convenience,” Lee said, “no single product could replace Choco Pies.”

Instant coffee mix sticks have also become a new favorite in the North. North Korean officials at a Kaesong office handling inter-Korean cooperation enjoy their cups of instant coffee as energy boosters. Drivers and workers also get their caffeine fix from coffee mix powder. A source at Kaesong said he replaced the mixes with instant coffee powder but soon had to bring back the mixes at the behest of his colleagues. Gone are the days when coffee, once viewed a dubious part of capitalism, was taboo in the North.

While workers are munching on their pies and washing them down with coffee, customs workers at Kaesong are busy sorting out pornography. One South Korean worker was recently caught carrying a USB flash memory stick with some lascivious video clips. Another was fined by North Korea for watching a film of such nature on his office computer.

A South Korean company manufacturing lingerie once had to convince North Korean authorities that its package featuring a scantily clad female model, stripped down to the company’s products, shouldn’t be considered pornographic. The North demanded that such packages not be exposed to North Korean workers.

The company compromised by closing their curtains while only the South Korean workers did the packaging. The company’s truck was once denied entrance to Kaesong because it displayed an image of lingerie. The North Korean guards argued that the South Korean company was “out to spoil our employees.”

Much to their chagrin, North Korean customs workers once found a bikini calendar in a heap of discarded paper. A massage parlor inside the complex that employed female ethnic Koreans from China closed its doors after Kim Yong-chol, head of the policy bureau at the National Defense Commission and an influential figure in the regime, said, “There’s no need for such a place.”

At least employees at the Kaesong conclave are well fed. There are the usual meals and snacks, plus occasional servings of ramen and kalguksu, a dish of handmade, knife-cut noodles. After about three months, most of them put on an extra pound or two.

Better still, there’s air conditioning in the summer and heating in the winter. Employees can take a hot shower year-round. All of that makes working at Kaesong immensely popular - and expensive. Sources say people sometimes pay up to 600,000 North Korean won (pre-currency revaluation) to get a job there. That’s equivalent to the annual expenses of a typical North Korean household.

The industry is also a significant cash cow for North Korea, which receives yearly wages of about $40 million - salaries that are paid in greenbacks. It’s little wonder, then, that the North was willing to embark this week on a joint inter-Korean tour of foreign industrial complexes, despite a series of provocations toward the South earlier in the year.

By Lee Young-jong [jeeho@joongang.co.kr]