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The China Challenge: What China’s Rise Means for Ethical Jewelry (Part Three)

Beijing skylineThis is the third blog in a three-part blog series on China and the jewelry trade. The first blog can be found here and the second one can be found here.

 

To return to our original question: what about our theory of consumer-driven change? In a world with a rising China, does it even make sense for Brilliant Earth to focus on educating our (mostly Western) customers, building demand for ethical jewelry, and trying to pressure the jewelry industry to adopt higher standards? And isn’t that a roundabout way of stopping China from partnering with dictators like Robert Mugabe?

 

We might at least find some comfort in the fact that our dilemma is not too different from the challenge China poses in other social justice arenas. High demand for African ivory in China, for instance, is decimating African elephant populations and funding African guerrilla groups like the Lord’s Resistance Army. An estimated 70 percent of illegal ivory goes to China. There’s also the challenge of improving labor and environmental conditions within China. Even if a company like Apple manages to root out labor abuses in its supply chain, sweatshop labor will continue in plenty of other Chinese factories. And even if no more coal-fired power plants are built in the United States, China still has plans to build 363 more of them (and India has plans to build more). Progress on so many issues depends on China’s cooperation.

 

A company like Brilliant Earth clearly can’t forget about China. We can’t assume that we can achieve all our goals if only Western businesses and institutions change their practices. And yet, it would be equally unwise to assume that China is poised to thwart all of our aspirations for creating an ethical jewelry supply chain.

 

Even if China continued to play by different rules in the jewelry trade, that wouldn’t make our social mission not worthwhile. By insisting on higher standards in our own jewelry, we’d still be able to serve our customers better by providing them with jewelry they can feel proud to wear. We’d still be able to generate money for our non-profit program and accomplish change in mining communities directly. We’d also still be in the fortunate position of operating in a country that has significant political and financial leverage. Although the Chinese and Indian markets are growing (we’ll get to that later), the United States remains the largest diamond jewelry market in the world, valued at $27 billion. Much of the concern regarding U.S. legislation on Congolese conflict minerals was that it was too effective at slowing the mineral trade in eastern Congo. Similarly, although the U.S. may not be able to stop Mugabe from exporting his diamonds, U.S. sanctions still reduce the price those diamonds command.

 

But more importantly, there’s no reason to assume that China will forever place a low priority on the responsible mining of precious metals and gems. If we succumbed to that pessimism, we’d be ignoring forces which could well shape China as much as China shapes the world.

 

The Global Forces Shaping China

 

It’s important to acknowledge one fundamental point. As much as we, at Brilliant Earth, aspire to have a positive impact in African countries, we need to bear in mind that the future of those countries won’t primarily be determined by the United States, or by a tug-of-war between the East and the West. Local citizens, leaders, and businesses will direct African development, and they’ll affect how China and the West approach Africa.

 

The good news is that plenty of people in Africa are leading the fight for responsible mining. In Angola, for instance, a journalist named Rafael Marques is standing up his country’s military dictatorship and its history of corruption and violence in the country’s diamond industry. And in Zimbabwe, Farai Maguwu has been fighting for justice in the Marange diamond fields.

 

Importantly, people in Africa are noticing, and responding to, some of the negative side effects of Chinese investment. At worst, their response is devolving into violence and xenophobia—which regrettably seems to be the case in Ghana, where a recent crackdown on illegal Chinese gold miners prompted more than 1,000 miners to return to China. On the other hand, concern about foreign exploitation can be channeled toward positive ends. Xi Jinping’s first foreign trip as China’s president was not his visit to the United States for talks with Obama, but a visit to Tanzania, South Africa, and the Republic of Congo. In March, giving a speech in Dar es Salaam, Xi promised scholarships, technology transfers, and $20 billion in infrastructure loans. African leaders have the power to extract a fairer deal from the Chinese—and China realizes this.

 

Looking beyond Africa, a variety of global forces will shape China’s approach in developing countries.  Various actors in the international community—governments, the press, human rights groups, businesses, the United Nations, and international bodies like the Kimberley Process (KP)—will continually nudge China to act more responsibly.

 

When we think about China’s upcoming year as KP Chair, we’re therefore mildly optimistic. The KP, to be sure, is a very flawed institution. (It defines “conflict diamonds” so narrowly—as diamonds that finance rebel soldiers in civil wars—that it acts indecisively when governments like Mugabe’s unleash violence in pursuit of diamond wealth.) But the KP already is so flawed that China can’t make it much weaker. If anything, assuming a position of responsibility may force China to at least pay lip service to concerns like violence and transparency.

 

Potential for Change from Within China

 

China isn’t just an importer of precious metals and gems. It’s also a producer. Although China doesn’t produce many diamonds, it actually passed South Africa as the world’s largest gold producer in 2007. This fact suggests another reason why it would be a mistake to expect that ethical jewelry supply chains will never be a priority for China: the Chinese people themselves may join the fight for higher labor and environmental standards.

 

The Chinese people know full well how dangerous—and how bad for the environment—gold mining can be. Accidents happen with alarming frequency at Chinese gold mines.  Earlier this year, a massive landslide at a gold mine in Tibet buried 83 mine workers. Across all types of mining in China, more than 2,000 people die in accidents each year. A miner in China is 100 times more likely to die in an accident as one in the United States. In addition, Chinese gold mines are major polluters. The Zijian gold and copper mine in the Fujian province of China, for example, has poisoned the nearby Ting River so much that people touching the river get blisters and cattle drinking the water have died.

 

Observers of China say that a new environmental consciousness is taking hold. The combined effect of ghastly pollution and new social media platforms is propelling a nascent environmental movement. Although China isn’t a democracy, its government can’t forever ignore pleas for stricter regulation. It’s reasonable to expect that, at least at gold mines in China, labor and environmental standards will slowly improve—which would be a major step forward for the effort to build an ethical jewelry supply chain.

 

The Chinese people, likewise, could become a powerful force exerting pressure on mining companies operating in Africa. The big wildcard here is jewelry consumers in China, where the market for luxury jewelry is exploding. According to a Bain study, between 2005 and 2011 the value of the diamond jewelry market in China jumped from $1.8 billion to $9.2 billion. China is now the second biggest diamond consumer in the world, after the United States. (India’s luxury jewelry market is rapidly expanding too; the same Bain study found that India is now the third largest consumer of diamond jewelry, with a market valued at $8.5 billion.)

 

Certainly, if most of these new luxury jewelry consumers don’t care or never learn to care about ethical sourcing, our task will be harder. For every new customer we educate here in the United States, there could be many, many more customers in China and India entering the luxury jewelry market who are quite willing to buy Zimbabwean diamonds. Overall, consumers around the world could be becoming less concerned about buying ethical jewelry, even as consumers in the United States and Europe make ethical sourcing a priority.

 

In the long term, however, we don’t envision a world in which Western jewelry consumers care about ethical sourcing while Eastern consumers don’t. One reason is that Chinese consumers may appreciate, even more than Americans, how irresponsible mining can harm workers and devastate the environment. It is easy to imagine how an increased environmental consciousness in China, formed as a response to China’s own problems with dirty air and water, could become a factor in the market for high-end luxury goods, like jewelry.

 

Another factor could be important, too, in helping ethical jewelry catch on in China—and that’s that ideas about diamond jewelry have a history of migrating from West to East. Demand for diamond jewelry has surged in China and India partly due to rising incomes, but also due to pent-up demand for Western lifestyles and consumption habits. The practice of giving a diamond engagement or wedding ring is actually a relatively new, but fast growing, phenomenon in China, imported from the West. Jewelry retailers in China have also had success in promoting Western holidays like Christmas and Valentine’s Day—the days when Americans most often give diamond jewelry as a gift.

 

It is possible that one day, the main story-line in jewelry will be the spread of Eastern jewelry tastes westward. But for now, there is no reason to believe that concern about ethical sourcing can’t move east. Major Western jewelry retailers like Tiffany’s and Cartier’s are setting up shop in Chinese cities. If these retailers were to raise their standards in the United States, they’d presumably do so in China as well, as might Chinese jewelers. In fact, China’s largest jewelry retailer, Chow Tai Fook, is now a certified member of a jewelry industry organization called the Responsible Jewellery Council (RJC). Although the RJC’s standards are disappointingly weak, Chow Tai Fook’s membership hints that ethical sourcing—or the appearance of meeting high ethical standards—is good business in China too.

 

This observation, ultimately, not only reaffirms the importance of our social mission, but also makes it more pressing and vital. Because if we can help build a consumer movement closer to home dedicated to ending violence and reducing labor and environmental abuses in the jewelry trade, that movement can spread to other corners of the world—and take away the market for blood diamonds and dirty gold everywhere.  Quite possibly, China doesn’t disprove our theory about consumer-driven change. Maybe our theory just needs to be expanded to encompass China.

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