Fur trade booms, fuelled by China – but bubble may be about to burst

Space is so short in the immense warehouses where Kopenhagen Fur, the world's largest fur auction house, runs its business, that boxes of mink skins now fill up rooms designed for inspecting furs or sorting them into different grades and colours.

"This is the biggest auction we have ever had ever, so all of the skins normally put into boxes in the basement are piled up here instead," explains press officer Nina Brønden Jakobsen.

The sight of more than 10m mink skins crammed into a facility the size of 14 football pitches is hard to forget. The more recently arrived skins, each dried stiff and just under half a metre long, are layered in metal-grilled trolleys that tower over your head, creating a wall of tiny faces, each with a barcode stapled between the eyes. The smell, intense and musky, lingers long after you leave.

Twenty years after five models, including Naomi Campbell, told the world "I'd rather go naked than wear fur" for a Peta (People for the Ethical Treatment of Animals) campaign, the industry is in the final stages of an unprecedented boom. Last season was a record for the auction house, with 21m skins sold for a total $2.4bn (£1.4bn) by the time the final auction ended in September.

An advert in the Economist's 28 March edition by the International Fur Federation caused protests from anti-fur activists. But its strapline – "the simple fact is: the global fur trade is valued at more than $40bn" – underlined starkly just how little their campaigning has done to curb the industry since Peta's campaign was launched in 1994.

The main reason why it failed is clear to see in Copenhagen. Up the stairs from the inspection rooms, in the auction house's dining hall, sit hundreds of Chinese buyers, eating soy-soaked eggs, dim sum, pigs' ears and other oriental favourites. "We've had to divide the cafe into different regions of China, because they don't want to sit with each other," Brønden Jakobsen explains. "We have had to hire Chinese chefs to help us with things. They make thousands of dim sum and pigs' ears and all kinds of different specialities."

Chinese business people now represent more than half of the 600-plus buyers at the auction, some of them low-level operatives in brightly coloured track suits, others multimillionaires clad in pricey designer clothing.

According to Torben Nielsen, Kopenhagen Fur's chief executive, the Chinese fur bubble has only this season started to burst.

"In a way it was a surprise that we didn't have the big drop last year, because to me it was obvious that the whole fur market was in the middle of a bubble, and that the bubble would either increase or explode," he says.

He ticks off a long list of new shopping centres that have opened in China over the past couple of years, all selling fur, ending with Harbin, a city on the Russian border, which opened three centres this year alone, adding 1,200 shops. "If every shop needs to sell 600 coats a year, and each coat needs 35 mink skins, that's something like 50% of the total Danish production right there," he says.

Mink skins reached a record average price of $102 (£61), or $3,500 for a fur coat in September. Since then, they have plummeted to $54 as it has dawned on the Chinese buyers that they will struggle to sell on their vast storehouses full of stock.

Yang Zhenyuan, a young man whose family factory in north-east China takes in a staggering 200,000 skins a year, argues that many Chinese buyers will soon exit the market. "There are a lot of people who just entered this in the last year, and they bought the skins at quite high prices," he says. "They didn't know that the market price was going to keep going down like this, so they're already leaving the business."

For HW Kim, a buyer from South Korea inspecting a lot of brown velvet mink, this can only be a good thing. "The price is good, but the Korea market isn't so good," he says. "So we buy." He checks each skin by pulling it hard from each end with a snap, running his fingers over the fur, and then shaking it.

For now, though, Chinese buyers are still here, and Kopenhagen Fur, with its 60% global market share, continues to reap the benefits. Emile Connor, a London-based fur trader, thinks this is a shame. Only a few decades ago the fur market was centred on Garlick Hill, next to Mansion House tube station in London, the site of Beaver House, the headquarters of the Hudson's Bay Company. "Right up until the 1970s, it was the biggest auction in the world," he says. "All of the benefit could have gone to the UK." But you don't have to spend long watching the quick-fire bidding in the auction room to see the important role the British still play.

"Most of the biggest brokers here are British, and most of them still keep their stock in the UK," says Connor, who bought the most expensive lot at the peak of the market in September. At peak the auctioneers were selling £3,000-worth of fur a second, their hammers clacking down to signify a sale almost continuously.

Frank Zilberkweit, a major British buyer who owns the British fur designer Hockley, is keen to stress how little long-term impact the UK and US anti-fur campaign has had internationally. "When the anti-fur campaign was at its peak, production fell to 22 million mink worldwide," he points out. "This year it's 80 million. You can talk to Peta, you can talk to these anti-fur campaigners, but the fact is that many of their models from the 1990s are now modelling fur."

Nielsen, Kopenhagen Fur's chief executive, agrees that Britain's anti-fur farming law and the UK "public morality" which deters most people from wearing fur is "not relevant at all" for the industry. Nonetheless, like every other spokesman for the trade, he launches almost automatically into an attack on the campaigners.

"In Great Britain you're quite uncritical and you swallow everything they come up with," he says. For him, being an anti-fur campaigner is one step from fascism. "If you want to treat animals like people, then you can go the other way and treat people like animals," he argues. "And that's what they did in Nazi Germany. The first animal rights law was passed through the German parliament in 1936."

One way Britain is relevant to the fur market, he concedes, is through its fashion industry. "If it's out of fashion in Europe, it will be out of fashion in China," he says. "The fashion is still created in Europe, and if you look at Europe there's a lot of fur around."

Fashion is one of the fur industry's greatest recent successes. The likes of Dolce & Gabbana, Alexander McQueen, Prada, Louis Vuitton, Fendi and Tom Ford are all including fur in their recent collections. Yang, with his black baseball jacket, designer glasses and silver fleur-de-lis earring, knows what is fashionable in Europe. But he argues that for now fur is a status symbol in China rather than a fashion item.

"Mink is a symbol of who you are, it's a symbol of status, and that's why a lot of middle-class people are buying fur. Everybody wants to look wealthy," he says. As for young, fashionable Chinese like himself, he personally can't see them embracing it. "The young people, they aren't our target group," he says. "The Chinese are more and more well-educated today, so the awareness of animal rights and human rights is getting bigger. The way they kill minks in China is very cruel. That's why a lot of the new generation don't wear fur."