Carol Chyau and Marie So met as business students at the Harvard Kennedy School. They shared a desire to explore social enterprise and free trade in China and started turning yak fibre into warm, soft, wooly and wonderful clothes and accessories in 2006. To coincide with World Fair Trade Day on 8 May, we spoke to Chyau about their company, Shokay.

What does ‘fair trade’ mean to you?

To be honest I think it’s difficult to define ‘fair trade’ because the questions of what is a fair price and what are fair practices can be very ambiguous. So for us in the way it translates to our business, ‘fair trade’ is about trying to empower local communities.

What was it about yaks which made you think it would be a sustainable business?

A big part of it was that yaks were an abundant local resource; we weren’t introducing something new to communities. Tibetan herders already had an average of 30 yaks per family, but hadn’t worked out a way to convert that resource into sustainable cash flow.

What kind of feedback do you get from the herders and knitters involved with Shokay?

They’re very enthusiastic, Marie was just in Qinghai last week and we met our quota of the yak wool we could buy within two hours of being there. We only wish we had more market demand so that we could spread the benefits further. But at the same time it’s important we are careful about what we promise. We can’t promise things and then not deliverbecause it’s about trust, and if we break promises to the local community they won’t be as enthusiastic about working with us.

Do you think people in China are aware of fair trade and social entrepreneurship?

The average person knows very little. But China is a place where people absorb new information and new resources very quickly; we’ve seen that in the way the country has embraced capitalism. When we first started out there was very little discussion but over the past three or four years we’ve seen a lot more related discussion of sustainability, organic foods and fair trade in the mainstream media here.

How do you see the future for expansion of fair trade in China?

From the consumer point of view, they may support the concept but they also have to like the product. Even the next five years it will probably only be the more middle and upper classes in coastal cities who embrace the idea of free trade and social enterprise before it spreads to the rest of the population.

What are some of the challenges you encountered starting up a fair trade business in China?

I think the tax structure isn’t particularly friendly to starting fair trade businesses here. We have to figure out ways where transactions occur in local villagers and then are documented for the government, which isn’t always straight-forward. The government involvement is much greater here in China. It’s all the little regulations. I’m not saying that China is against fair trade, but this is still a developing country and the business laws and tax laws are still developing and you need to work out how to navigate that.

What can be done to foster further social entrepreneurship in China?

I think for now it’s still education, still a lot of people don’t know about social enterprise or fair trade. So it’s about building the ecosystem for that here.

Are people willing to pay the social premium of buying fair trade products?

When you buy a luxury brand you are paying a premium for that – when you buy a pair of Manolo Blahniks, you’re paying for the cache, the lifestyle and the brand. For fair trade to be successful it’s about building a brand that represents social responsibility, but also building a product which stands on its own, and that people want to buy.

Shokay Flagship Store, No. 9, Lane 274, Taikang Lu. Tel: 5466 0907. Web: www.shokay.com

For more information on World Fair Trade Day, visit www.wftday.org