Pearl Case Study



CASE NAME: Pearls and Trade


1. The Issue

The simplicity of the pearl makes it one of the most enduring of jewels. Yet, it would be erroneous to conclude that the process of making a pearl is similarly straight forward. In fact, part of the pearl’s mystic lies in the fortuitous way that truly exquisite pearls are way. Originally, pearls were solely a lone act of nature. Yet, man has slowly learned to some extent the secret in assisting nature in producing these jewels. However, nature’s hand is not completely eliminated; in fact only she alone determines the character of any potential pearl. This case study examines the present pearl trade, tracing it back to its historical roots and outlining some of the past and present distinguishing qualities and hazards particular to the industry.

2. Description

Do you ever wonder what exactly is the allure behind pearls? They appear to be an all-time classic. Why do people become so enchanted with these little round balls of oyster secretion? Why do people rave when the rich and famous are seen with strands of pearls; showering the wearer and the jewel with such accolades as “icons of classical fashion for the nineties”. Maybe it is the simple look of the pearl that is so alluring. Or, maybe it is the special lustrous character they exhibit when offset against the skin’s natural colors. One thing for sure is that the endearing fascination with pearls is alive and well. This essay examines some of the background of the pearl phenomenon and highlights some of the contemporary issues surrounding this treasured piece of jewelry.

The following information is available:

Ancient Stories surrounding the pearl

Throughout history, pearls have held a unique presence within the wealthy and powerful. For instance, the pearl was the favored gem of the wealthy during the Roman Empire. This gift from the sea had been brought back from the orient by the Roman conquests. Roman women wore pearls to bed so they could be reminded of their wealth immediately upon waking up.(1)

Before jewelers learned to cut gems, the pearl was of greater value than the diamond. In the Orient, pearls were ground into powders to cure anything from heart disease to epilepsy, with possible aphrodisiac uses as well.

Pearls were once considered an exclusive privilege for royalty. A law in 1612 drawn up by the Duke of Saxony prohibited the wearing of pearls by nobility, professors, doctors or their wives in an effort to further distinguish royal appearance. American Indians also used freshwater pearls from the Mississippi River as decorations and jewelry.

One of the largest saltwater pearls still in existence is the Hope Pearl, first acquired by Henry Philip hope in the 19th century. It is two inches long, and varies between 3 1/4 and 4 1/2 inches in circumference.(2) It is on display at the British Museum of Natural History.

How pearls are formed and their various types

There are essentially three types of pearls: natural, cultured and imitation. A natural pearl (often called an Oriental pearl) forms when an irritant, such as a piece of sand, works its way into a particular species of oyster, mussel, or clam. As a defense mechanism, the mollusk secretes a fluid to coat the irritant. Layer upon layer of this coating is deposited on the irritant until a lustrous pearl is formed.

A cultured pearl undergoes the same process. The only difference is that the irritant is a surgically implanted bead or piece of shell called Mother of Pearl. Often, these shells are ground oyster shells that are worth significant amounts of money in their own right as irritant-catalysts for quality pearls. The resulting core is, therefore, much larger than in a natural pearl. Yet, as long as there are enough layers of nacre (the secreted fluid covering the irritant) to result in a beautiful, gem-quality pearl, the size of the nucleus is of no consequence to beauty or durability.

Pearls can come from either salt or freshwater sources. Typically, saltwater pearls tend to be higher quality, although there are several types of freshwater pearls that are considered high in quality as well. Freshwater pearls tend to be very irregular in shape, with a puffed rice appearance the most prevalent. Nevertheless, it is each individual pearls merits that determines value more than the source of the pearl.

Regardless of the method used to acquire a pearl, the process usually takes several years. Mussels must reach a mature age, which can take up to 3 years, and then be implanted or naturally receive an irritant. Once the irritant is in place, it can take up to another 3 years for the pearl to reach its full size. Often, the irritant may be rejected, the pearl will be terrifically misshapen, or the oyster may simply die from disease or countless other complications. By the end of a 5 to 10 year cycle, only 50% of the oysters will have survived.(3) And of the pearls produced, only approximately 5% are of substantial quality for top jewelry makers.(4) From the outset, a pearl farmer can figure on spending over $100 for every oyster that is farmed, of which many will produce nothing or die.

Imitation pearls are a different story altogether. In most cases, a glass bead is dipped into a solution made from fish scales. This coating is thin and may eventually wear off. One can usually tell an imitation by biting on it. Fake pearls glide across your teeth, while the layers of nacre on real pearls feel gritty. The Island of Mallorca is known for its imitation pearl industry.

How to determine a pearl’s worth

To an untrained eye, many pearls may look quite similar. There is, to the contrary, an intricate hierarchy to pearls and several factors exist that determine a pearls worth. Luster and size are generally considered the two main factors to look for. Luster for instance, depends on the fineness and evenness of the layers. The deeper the glow, the more perfect the shape and surface, the more valuable they are. Moreover, if you can see a reflection of your face clearly by gazing into the pearl, that’s a high quality luster. The foggier the reflection, the less valuable the pearl. Size on the other hand, has to do with the age of the oyster that created the pearl (the more mature oysters produce larger pearls) and the location in which the pearl was cultured. The South Sea waters of Australia tend to produce the larger pearls; probably because the water along the coast line is supplied with rich nutrients from the ocean floor. Also, the type of mussel common to the area seems to possess a predilection for producing comparatively large pearls.

Today, if you want real pearls, you will probably have to purchase the cultured variety. Natural pearls (those made without man’s assistance) have become so rare and expensive, that for the vast majority of people cultured is the only option. However, top quality natural and cultured pearls are identical to the naked eye in terms of appearance and quality. Only under an X-ray machine can a trained eye discern any difference. Cultured pearls tend to have a larger core or nucleus. But, in all other respects, they are identical.

Interestingly, the best cultured pearls are those that come from an oyster that dies after the pearl is removed. Oysters that do not die after the pearl has been extracted produce what are referred to as “Biwa” pearls. Generally but not always, Biwa pearls fetch a lower price than the impending death variety.

Pearls also come in many colors. The most popular colors are whites, creams, and pinks. Silver, black, and gold are also gaining increasing interest. In fact, a deep lustrous black pearl is one of the more rare finds in the pearling industry, usually only being found in the South Sea near Australia. Thus, they can be one of the more costly items.

Among cultured pearls, Akoya pearls from Japan are some of the most lustrous. A good quality necklace of 40 Akoya pearls measuring 7mm in diameter sells for about $1,500, while a super- high quality strand sells for about $4,500.(5) The South Sea pearls of Australia, Myanmar, and Indonesia are rarer and larger, with diameters of 10 to 20mm, and cost far more even though they tend to be less lustrous. A 16 inch strand of white South Sea pearls retail for $40,000 to $50,000.(6)

The world record for the highest price paid for a cultured pearl necklace was $2.3 million at Sotheby’s in 1992. The 17-inch strand had 23 pearls with diameters ranging from 16 to 20mm (about the diameter of a dime), with a bead-shaped platinum clasp with 60 round diamonds.(7)

Consumer ignorance surrounding the various qualities and types of pearls is quite pervasive. In fact, many of the industry’s leading pearl producers think that this ignorance is detrimental to their business. Despite the ubiquitous and enduring appeal of the pearl, there are several organizations such as the World Pearl organization, Cultured Pearl Association, Japan Pearl Promotion Society, and Australia’s Licensed Pearl Producers that fund pearl awareness and promotional programs geared toward informing consumers about the myriad variety of pearls and their appeal as jewelry pieces. Competition between different countries such as Japan, Australia, and China (the three major pearl suppliers) often results in advertisements explaining why a particular country’s pearls are superior because of quality, price, size, etc. These groups, representing the industry's producers and retailers, assert that if consumers are uninformed when purchasing jewelry, they might choose something other than pearls, or might purchase a pearl without being aware of the variety offered by the pearl industry. Such unfamiliarity my drive the price of some of the more exotic pearls down due to lack of market recognition; essentially cutting into sellers' potential profits.

Where pearls are found

Historically, the world's best pearls came from the Persian Gulf, especially around what is now Bahrain. The pearls of the Persian Gulf were natural created and collected by breath-hold divers. The secret to the special luster of Gulf pearls probably derived from the unique mixture of sweet and salt water around the island. Unfortunately, The natural pearl industry of the Persian Gulf ended abruptly in the early 1930's with the discovery of large deposits of oil.(8) Those who once dove for pearls sought prosperity in the economic boom ushered in by the oil industry. The water pollution resulting from spilled oil and indiscriminate over-fishing of oysters essentially ruined the once pristine pearl producing waters of the Gulf. Today, pearl diving is practiced only as a hobby. Still, Bahrain remains one of the foremost trading centers for high quality pearls. In fact, cultured pearls are banned from the Bahrain pearl market, in an effort to preserve the location's heritage.

The largest stock of natural pearls probably resides in India. Ironically, much of India’s stock of natural pearls came originally from Bahrain. Unlike Bahrain, which has essentially lost its pearl resource, traditional pearl fishing is still practiced on a small scale in India.(9)

The art of culturing pearls was invented in Japan in 1893 by a man named Kokichi Mikimoto. He discovered that by introducing a tiny bead of mother-of-pearl (the white substance on the inside of a mussel’s shell) into an oyster, that oyster would began to cover the irritant with nacre (the secreted substance that makes up a pearl).(10) To this day, the Japanese are considered the foremost experts in seeding oysters and the Mikimoto family continues to be one of the largest pearl producing empires.

Interestingly, one of the first places to begin farming cultured pearls outside of Japan was near the Gulf of California in Mexico. Unfortunately, Mexican pearls disappeared from the international markets when overfishing of natural pearl oyster banks took its toll and the Mexican government had to impose a No- Fishing law in the late 1940's. Mexico is today attempting to return to the pearl market with cultured half-pearls (meaning they are only pearl slices or hemispheres, not round).

Pearls predominately come from Japan, Australia, Indonesia, Myanmar, China, India, Philippines, and Tahiti. Japan however, controls roughly 80% of the world pearl market, with Australia and China coming in second and third, respectively.(11) The South Sea waters around Australia, Indonesia, and Myanmar are renowned for their large, white pearls, while Japan’s pearls are highly valued for their lustrous character. Freshwater pearls constitute the bulk of China’s pearl efforts. And as mentioned earlier, India is recognized as one of the last producers and handlers of naturally occurring pearls. Interestingly, although Australia’s pearls derive from the same sea as those from Indonesia and Myanmar, Australia consistently advertises their pearls as distinctly superior to other South Sea pearls, emphasizing the importance of the country of origin, not simply the body of water from which they came. The picture to the left shows locations in Australia where pearls are prevalent.

Dangers of pearl fishing

The practice of pearl fishing has traditional been and continues to be a dangerous occupation. During the 19th century in Bahrain, many pearl divers would find themselves victims of the same sea that provided their very livelihood. Fisherman sailed out to sea during the summer. Equipped with knifes and bandages to protect themselves from the jagged reefs, they dove countless times a day looking for and harvesting oysters.(12) When they ran out of breath, they would be pulled to the surface by a rope. A singer would keep up the spirits of the crew and would receive an equal share of the pearls. If fisherman were not cut to ribbons by the reef, they were sometimes taken upon by sharks or giant jelly fish that secrete a nasty, often fatal venom.

Sometimes, violent storms would erupt seemingly spontaneously and sink the fishing dhow (wooden boat) and drown all aboard. This occurred frequently in the South Sea near Australia. Pearling was established in the 1860’s in Australia in an area called Broome. Today, it remains one of the most lucrative pearling spots not only in Australia, but in the world, amounting to a $200 million industry.(13) By 1900 more than 400 pearl boats, called luggers, worked the natural oyster beds off Broome. Initially, the oysters were harvested for their large shells which bore Mother-of -pearl (the whitish covering on the inside of the shell). Pearling was only a sideline. But by 1920, Japanese fisherman had come to the area and turned pearling into an extremely lucrative business. However, the job was considered so dangerous that it was said one could only have five years: two to learn the trade, and three to make money. If one was still alive after that, their luck had probably ran out. And a pearler needed lots of luck. Constantly, they risked their lives to sharks, fever, lung infections and the bends.

Unlike the breathhold divers of Bahrain, the Japanese pearl divers had air pumped into their diving helmets from the surface. Therefore, they could stay down at 50 to 130 feet for extended periods of time. When a diver works in deep water for extended periods (more than an hour), nitrogen in the compressed air being breathed is absorbed into the bloodstream, then travels to tissues in joints, the nervous system, and other areas. If the divers ascends too rapidly, this nitrogen begins to form tiny bubbles in the bloodstream, similar to a rapidly opened soda water. The result can be extreme pain, tissue damage, paralysis, even death. In fact, from 1900 up until World War II, which put a temporary halt to the pearl industry, scores of Japanese divers were killed or crippled.(14) The bends can be prevented however. By ascending to the surface slowly, in stages, the nitrogen can exit the bloodstream without bubbling.

Even today, pearling is considered a dangerous occupation. The same natural risks still apply and there is also the ever-present boom and bust factor as well. Pearling is more akin to alchemy than science. Their is no foolproof method to ensure that an oyster will produce a quality pearl. So, some years may provide a bounty of pearls, while other years are extremely slim. Such factors such as weather are extremely important. If water becomes too cold, oysters may die or fail to grow. The same is true if the water becomes too warm. For the South Sea pearls, it appears to be the warm waters combined with the swell of nutrient rich water from the bottom of the ocean that provides the oysters with the ideal mixture to produce some of the world’s finest pearls.

3. Related Cases

Canada Cod Fishing Restrictions case
UK -Spain Cod Fishing Dispute case
Tuna - Dolphin, 2nd Case case
Tuna - Dolphin Case case
Salmon - Herring Dispute case

Keyword Clusters

(1) Trade Product = Pearls (2) Bio-geography = Ocean (3) Environmental Problems= Species Loss Sea 4. Draft Author: Carl Hilker 11/21/96


5. Discourse and status: DISagreement and COMplete 6. Forum and Scope: Many and Multilateral 7. Decision Breadth: Many (Japan, Australia, China, and India) 8. Legal Standing: TREATY


9. Geographic Locations A. Geographic Domain: World B. Geographic Site: ASIA C. Geographic Impact: MANY 10. Sub-National Factors: NO 11. Type of Habitat: Ocean 12. Type of Measure: Quota and Licensing 13. Direct Vs. Indirect Impacts: INDirect 14. Relation of Measure to Environmental Impact A. Directly Related: YES PEARL B. Indirectly Related: NO C. Not Related: NO D. Process Related: YES Species Sea Loss 15. Trade Product Identification: PEARLS

16. Economic Data

The value of Western Australia's pearl oyster industry is about $200 million, making up the second most valuable fishing industry in the State. There are sixteen licensed companies operating in the region, which is based mainly on the collection of oysters from the wild and then transporting them to special farming facilities where they are implanted with irritants and cared for until pearls are properly developed. Oyster farming as a means to provide pearl producing oysters is practiced to a limited extent in Australia and Japan. Assuming there is no sudden decrease in oyster populations, the industry has a promising future as the surge in the purchase of pearls continues and the varieties from which to choose expand. The chart below illustrates the historical trend of pearl culturing in Broome Australia, one of the country's richest pearl preserves. (In the chart "MOP" stands for Mother of Pearl) The dollar figure for the Japanese pearl industry was unavailable, but they provide for roughly 80-85% of the world pearl market. However, many pearl producing countries export their pearls to Japan, where they are sold to retailers around the world or sold to consumers in Japan. Thus, only around half the pearls sold in the japanese market actually came from Japan. In fact, Australia is embarking on a worldwide effort to distinguish its pearls from those of Japan in order to gain more consumer recognition.

17. Impact of Measure on Trade Competitiveness: Medium 18. Industry Sector: Textile/Apparel 19. Exporter and Importer: Japan and Many


20. Environmental Problem Type: Species Loss Sea

Environmental considerations for the pearl industry

There are several key environmental factors that significantly impact the quality and vitality of the pearl industry. One of the foremost concerns is the loss of wild oysters and their nesting beds. Although pearl-producing oysters are cosseted to almost a ridiculous extent (constantly being scrubbed to prevent infection, suspended in special bodies of water to ensure proper nutrients, and X-rayed in order the examine the maturing pearl), these stocks are usually replaced by naturally growing oysters found in the oyster beds of select regions of the world.(15) Cultured pearl producers therefore resort to extracting oysters from their natural breading grounds and whisk them away to their laboratories where they are utilized as pearl producers. Concomitantly, the aquaculture industry for these pearl-producing oysters is extremely limited and not enough to sustain the massive amounts of mussels utilized by the cultured pearl enterprises. Japan again, is the industry leader in this aquaculture sector.

Notwithstanding the special treatment bequeathed this select oysters, many die in the effort to produce a pearl; falling victim to infection, being killed in the process of seed implantation, or simply perishing from old age.(16) Due to over-exploitation, and in some cases habitat loss, these naturally existing oysters and their Seabeds are becoming more rare. Many countries have passed laws to protect these resources, but similar to other regulations protecting water resources, they are frequently difficult to enforce.

Another environmental consideration that closely parallels the afore mentioned problem, revolves around the use of mussel shells for the tiny seed-irritants that are commonly inserted into oysters to produce pearls. This is an especially important concern in the US for states such as Kentucky, Tennessee, Ohio, and Pennsylvania. “Mussel rustlers” as they are called, are responsible for pillaging riverbeds for their stocks of mussels.(17) Many of the 25 species of mussels found in these areas are extremely valuable in the international cultured pearl trade, which mills the shells into beads and implants them in oysters. Poachers can obtain from $7 to $10 a pound for mussel shells.(18) One mussel shell can produce around $5,000 worth of cultured pearls. In response, several southern states have passed laws against mussel collecting or have imposed quotas on the amount of shells one may collect in a given period of time. In October 1995, two men in Ohio were charged with illegally taking 1,180 mussels from the Grand River.(19) Under Ohio law, mussels are protected. The booty had a commercial value of about $2,500.

Of course, as alluded to earlier, environmental degradation also takes it toll on mussel habitat. The pollution of the Persian Gulf waters is a prime example of pollution ruining the pristine waters of the area. In other areas such as Indonesia and the freshwater rivers of the US and China, pollution has tainted the water, affecting the natural oyster beds by stunting the reproduction rates of mussels or eliminating them all together.

Possibly stemming from man’s impact on the environment, there exists another ramification for the oyster trade. Especially in Japan and Australia, water characteristics are regarded as highly important for the proper growth of oysters and their ability to produce pearls. There appears to be a certain temperature and mixture of water that is favorable to oyster growth and the concomitant production of quality pearls.(20) Some experts who study the oceans suggest there is evidence to believe that in certain areas, sea temperature is being altered and less nutrients are being circulated about. If this is indeed the case, it could produce an environment less conducive to the natural cultivation of mussels.(21) Thus, compounding many of the existing concerns over sustaining the presence of mussels and their myriad uses.

21. Species Information

Several species of mussel and oyster are of noted concern. Mussel populations found in the streams of the Mid-west United States are in danger of being over-used. Similarly, mussel and oyster species have been under considerable pressure in places like Australia and Indonesia. In Australia, recent quotas and licensing laws on the collection of wide oysters and on pearl farming have relieved some of the pressure on species and habitat.

22. Impact and Effect: High and Scale

23. Urgency and Lifetime: Medium and several years

Severe reduction in populations in certain areas around the world, namely South Sea and several rivers in the United States.

24. Substitutes

As described above, imitation pearls (made from fish scales) have been around for many years. They are much less expensive than real pearls, but do not last as long and do not have the same lustrous character and texture.


25. Culture: YES

Japan has a long history of fishing, thus partially explaining why they have had such a long-standing interest in Pearls and their cultivation. Although fishing is still a big business in Japan and has employed large populations of Japanese, Pearling has traditional and continues to be a very select occupation (often residing only within family operations). Much is the same in Australia. In Australia however, it was again the Japanese who were the first to began to make a steady business from pearl diving.

26. Human Rights: NO 27. Trans-boundary Issues: YES
28. Relevant Literature

Interesting Web Sites

P earls of Guaymas
Ohio's Freshwater Oysters
Ted Database at The American University
Western Australia's Fisheries
Australia's fishing and pearl industry

Bibliography and additional resources

"The Black Pearl Connection," in Connoisseur, April 1991, v221n951, p. 120-127.

"The Pearl of Beaches," in Conde Nast Traveler, Jan 1996, v31n1, p. 70-79.

"Pearls from the Southland," by Pamela Selbert, in Lapidary Journal, July 1995, p. 44-50.

"Mussels and the Mississippi," by Jacqueline Sletto, in Animals, Nov 1989, p. 25-27.

"Oysterlust: Islanders, Entrepreneurs, and Colonial Policy Over Tuamotu Lagoons," by Moshe Rapaport, in Journal of Pacific History, Jun 1995, p. 39-52.


1. Dievert's Jewellers Homepage

2. Ibid

3. Financial Times. June 3, 1995

4. Ibid

5. The Reuter Business Report. December 6, 1995

6. Ibid

7. Ibid

8. The Rocky Mountain News. June 4, 1995

9. The Dallas Morning News. June 25, 1995

10. The Daily Telegraph plc. June 5, 1995

11. Jewelers Circular Keystone. December, 1994

12. The Rocky Mountain News. June 4, 1995

13. Fisheries Depart. of Western Australia

14. "Australia's Magnificent Pearls," National Geographic. December, 1991

15. The Daily Telegraph plc. June 5, 1995

16. "Australia's Magnificent Pearls," National Geographic. December 1991, pg. 122

17. Pittsburgh Post-Gazette. January 29, 1996

18. Ibid

19. The Columbus Dispatch. October 13, 1995

20. Ibid, pg. 123

21. Financial Times. June 3, 1995