North Korea threatens criminal punishment for diverting factory goods to informal markets

The party committee of Songchon county, South Pyongan province, has ordered a complete halt to the flow of state-produced goods into informal markets, threatening officials and factory workers with expulsion, dismissal, and criminal prosecution if they divert even a single item for private sale.

A Daily NK source in South Pyongan province reported Thursday that the Songchon county party committee convened senior officials from its key departments on March 22, under the direction of the organizational department, and issued instructions demanding that goods produced at local state-run factories be prevented from entering the jangmadang, North Korea’s informal markets, which emerged in the 1990s and have since become the primary channel for daily commerce across the country.

“The core of the directive is to establish a state-centered distribution management system,” the source said.

Threats of expulsion and criminal punishment

The county party committee framed the order in stark terms, invoking the phrase “we must grip the reins tightly for the people to survive” to signal its determination to eliminate the diversion of state goods entirely.

The directive’s primary rule is that any factory official, worker, or anyone else handling state-produced goods who diverts even a single item for back-channel sale to jangmadang traders will face immediate legal action. The county party committee went further, issuing an explicit warning: anyone who violates party guidance by secretly diverting state production materials into the informal markets must be “prepared for immediate expulsion from the party, dismissal from their post, removal from their position, legal punishment, and banishment.”

A broader strategy to reassert state supply chains

The source said the directive reflects central government’s urgent push to restore a state-led distribution order, and that the underlying strategy goes well beyond Songchon county alone.

“The factories are not even running at full capacity, yet authorities are blaming the jangmadang for shortfalls and trying to stop internal leakage,” the source said. “Behind this is a grand strategy of control: use the output of the local industry factories to maintain the monopoly supply power of state-run stores, and line people back up under the state supply network.”

Songchon county holds particular symbolic weight in this context. Its local industry factory complex was the first project launched under Kim Jong Un’s “20×10 local development policy,” the centerpiece economic initiative announced in January 2024 that aims to build modern factory complexes in 20 counties per year over 10 years. Kim attended both the groundbreaking in February 2024 and the completion ceremony in December 2024 in person. Because Songchon serves as the standard-bearer for the policy, the management approach adopted there is widely expected to be rolled out nationwide.

The source confirmed that this is precisely the intention of the central government. “The plan is to expand this ‘distribution war’ that started in Songchon county to all of South Pyongan province and then to other provinces,” the source said.

Skepticism on the ground

North Korean people are watching the campaign with a mixture of concern and doubt. Many of those whose livelihoods depend on market trading are worried that the crackdown will push them into an impossible situation, particularly at a time when state-run stores lack the inventory to absorb demand.

“Whether people can be redirected from the jangmadang to state-run stores by cracking down on markets when there isn’t even enough stock to begin with,” some North Korean people were reportedly saying, “is anyone’s guess.”

The source noted that the organic market order built up over decades through the jangmadang has weakened state control, and that authorities are now trying to tighten their grip. But the gap between what people have come to rely on through the informal economy and what state stores can realistically supply remains the biggest obstacle to making that strategy work. Daily NK has reported a series of similar crackdowns across multiple provinces in recent weeks, with the Ninth Workers’ Party of Korea Congress in February 2026 having set the directive for state commerce to “completely overwhelm” the jangmadang.

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