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Chad O'Carroll has written on North Korea since 2010 and writes between London and Seoul.
North Korean state airline Air Koryo appears to have begun managing a famous department store in Pyongyang and is producing new beverages and food products, photos recently obtained by NK News show.
A recent receipt from the city’s Pothonggang Department Store, which opened in 2010 and was visited by the late leader Kim Jong Il before his death, includes the Air Koryo logo next to the words “sales statement,” suggesting the company is involved in a management role there.
The department store is in addition to a newly branded Air Koryo general convenience store, located near the city’s unfinished landmark Ryugyong hotel, which is at least the second such shop to emerge in the city.
And recent photos show the airline’s branding being used to market bottles of soju liquor, two new carbonated energy drinks, and canned food products which include pork, mackerel, and even porridge.
The developments are further evidence of the airline’s increasingly wide-ranging and rapid business diversification, a trend which observers have described as “early-stage Chaebolization” – a reference to South Korea’s monopolistic mega-conglomerates.
Since late 2015 the airline has built a major new taxi service, a domestic travel agency, new soft drinks and tobacco lines, branded shops and foodstuffs, and even appears to be operating Pyongyang gas stations.
“Air Koryo is the prototypical Pyongyang chaebol, and its diversification should be understood in a context of North Korea’s camouflaged capitalism,” said Sokeel Park, research director at the Liberty in North Korea (LiNK) NGO.
Coming amid economic changes which have in recent years seen a rapid growth in private business, trade, and entrepreneurship in North Korea, Park said the company’s involvement in such a variety of sectors could be indicative of cover for some emerging areas of domestic business.
“This grey economy has spawned a plethora of de facto private businesses operating behind the disguise and licenses of the state, which at the highest levels may seek protection and stability through links to top political families, and can be likened to the early heads of South Korea’s chaebol conglomerates,” Park said.
But defector Kim Jun Hyuk, who left Pyongyang in 2015, said the airline might also be working to repay debts accumulated in recent years from pressures from senior leadership.
“Air Koryo invested too much to modernize the Sunan Airport, to show a better image to the world,” said Kim. “Their management of old planes and crews and airport now causes them money problems.”
As a result, the military-owned airline has diversified its offering to generate foreign currency.
“The North Korean government is trying to make money by allowing companies to start new businesses…,” he said, adding that “capitalistic reforms” are also facilitating the growth. “Under this system, all companies do all business.”
Products pictured in photos of the airline’s increasingly diverse range of products show that its brand power is becoming increasingly prominent in the DPRK.
“There’s a process of diversification amongst North Korean companies as they seek to leverage brand recognition and earnings from their core businesses into new sectors,” said Andray Abrahamian, a research fellow at the CSIS Pacific Forum.
“I’m keeping an eye out to see if some of these companies end up running banks and putting them at the heart of multiple businesses the way Japanese Keiretsu do – I wouldn’t be surprised to see that happening, given how limited and often informal financing can be in North Korea.”
The emergence of the increased prominence of Air Koryo branding in North Korea comes in the face of rising international pressure on the airline, which has risen significantly in the last 18 months.
In late 2016 both the U.S. and South Korea unilaterally sanctioned the airline, while there have been increasing calls for the UN to follow suit due to its ties to the Korean People’s Army (KPA) Air Force.
Edited by Oliver Hotham
All images: NK News