An increasing number of convenience stores, similar to those in South Korea, have been appearing in North Korea, especially in the border areas with China, a U.S.-based media report said Tuesday.

Citing a Chinese source who frequently visits the North for trade, Radio Free Asia (RFA) said the number of 24-hour convenience stores have steadily increased in the border cities of Musan and Hoeryong, North Hamgyong Province.

The Chinese source said that the convenience stores are small scale businesses that can be started with 20,000 Chinese yuan ($3,000).

Devoid of consumer high street banks, North Korea has seen a recent rise in underground financing and investment, much of which supports state-managed projects, a South Korean report said on Thursday.

The system grew out of the famine of the 1990s, when North Korea's official economy all but collapsed and paved the way for an informal network of private market traders, smugglers and investors to meet a desperate demand for food and goods.

The rise of these guerrilla bankers was fueled by the regime's inability to fund state projects after the crisis, said the report, released by South Korea's state-run Export-Import Bank of Korea (KEXIM).

"The evolution of private financing is expected to stimulate both the market economy and economic reforms," the report said.

Private financing has "evolved into a market with its own supply and demand structure, and since the 2010s has developed a remittance system too," according to KEXIM.

A now moneyed class of these early investors are known as "donju", a Korean word meaning "masters of money".

It is they who are behind this underground banking phenomenon, the report said.

Some of the richest people in the North Korean underground economy are money-lenders who change cash at a black market exchange rate roughly 80 times higher than the state's officially-publicized exchange rate of around 100 won to the dollar.

That unofficial exchange rate of around 8,000 won to the dollar is now widely used to price goods and services across North Korea and more accurately reflects the market value of the won.

With their experience of trading in hard currency, some of those money-lenders now manage the surplus capital owned by the "donju", the report said.

Much of this underground money funds North Korean public-private partnerships, whereby state enterprises raise money from underground private North Korean investors to fund construction and other projects in the official economy.

The report said it is this demand from the state economy on these unofficial venture capitalists which has helped fuel the boom in underground banking.

The North Korean government has recently allowed the possession and sale of real estate for citizens, to a limited extent. 

​A New Focus correspondent inside North Korea reported through telephone: “Until now, the North Korean government had deemed the private purchase of land or real property as illegal. However, there has been an obvious increase recently in the number of construction companies building apartment blocks and so forth. It appears that the state has realised the limitations of the current legislation and are taking countermeasures. These include new rules relating to the boundaries of newly-constructed buildings, or where land can be bought, and the penalties, mainly confiscation, for exceeding those boundaries.”

The Asian Infrastructure Investment Bank (AIIB) is almost certain not to invest in North Korea-related projects for the time being, it has been confirmed.

Speaking at a press conference on June 25 for the bank’s annual conference in Beijing, the Chinese-led, multilateral development bank’s president Jin Liqun fielded a question on its plans to invest in or support projects in non-member states like North Korea.

“In terms of projects for non-member states, they can receive investment once they become member states,” he replied.

While something of a generality, his remarks would suggest no route for North Korea to receive AIIB assistance as a non-member. The bank currently limits membership application eligibility to International Bank for Reconstruction and Development (IBRD) and Asian Development Bank (ADB) members. While it is taking new applications through September, the prospects of North Korea joining as a non-member of both are likely.

​Jin also showed a subtle change in position toward North Korea. As recently as his Sept. 2015 South Korea visit as AIIB president-designate, Jin voiced a positive stance on the matter.

“North Korea is a country that the Investment Bank very much wants to help, and we hope it can join as a member of a multilateral development organization,” he said at the time.

Many say that people’s livelihoods have become a lot more stable under the Kim Jong Un regime. Would you agree?
The market prices may have stabilized but people’s everyday lives have not. For people in the city, if they trade at the market every day, they’ll make enough profit to buy some rice, and on good days, they’ll even make enough to save some on the side. But when rice and other farm produce prices are stable, it makes life more difficult for people in the farming communities. This is because people on collective farms can only sell grain in order to buy other daily necessities. So if rice prices stay at the current 5,000 KPW level, they will need to sell dozens of kilograms of rice just to generate enough profit to buy a single piece of clothing.

What brought you to China?
I used to make money by selling food like mock meat with rice [rice stuffed into a wrap made with imitation meat] in front of the train station. I would be on the run from the police on the train all day. When the train comes in, I would run over to passengers and sell the food. My face would get so tanned from being in the sun, and I would be drained. That, I could endure, but when I would get all my food confiscated, that was really tough. My husband works at a state factory and doesn’t receive rations or a monthly salary properly, so he is not very helpful. No matter how much I sold, it would earn us just enough to eat cornmeal mixed in with rice. One day, I just thought the idea of living like this to die one day was so pathetic. 

What are your future goals? 
The more time I spend here, the more my goals change. I had decided that I would just try to earn enough seed money to start a business, but having made that money already, I want to make more. I guess this is what people mean when they say that even the ocean cannot fill a person’s greed. Right now, my main goal is to help my parents and siblings. I especially want to buy my siblings a house so they have some stability.

Since I need to go back at some point, I’m trying to learn some kind of trade instead of just making money. At the moment, I’m paying tuition at a Chinese private academy to learn how to give people foot massages. I think diligently learning such advanced skills from other countries is an investment for the future.