Kerry Li is doing something hardly anyone has attempted before. She has set up a small business called Fair East Trading to import crafts from China on a fair trade basis. As far as she knows, there are just two other ventures like hers, one producing crafts and the other sourcing tea from the country.

Miss Li grew up in Guangzhou in southern China. She worked in tourism in Hong Kong, then studied in Switzerland, coming to Oxford in 2001 to study for a masters degree in hotel and tourism management at Oxford Brookes University.

Then, because she had always wanted to run her own business, she attended a Business Link course on start ups.

Two other participants were planning to set up fair trade enterprises and this sparked off Miss Li's interest. The idea that she could help disadvantaged people in her home city was very appealing.

Though she had transferable skills, particularly in marketing, she had no retail experience, so began volunteering at fairtrade@stmichaels, Oxford's fair trade shop in Cornmarket. She is now assistant manager, which is a paid, part-time position.

At the same time she was researching the possibilities of the UK retail market. She decided to trade in fashion jewellery, because of its popularity and because it requires a far smaller initial investment than food or clothing.

Having taught herself to make jewellery, she returned to Guangzhou to pass on her skills to a group of unemployed women, most of whom had lost their jobs in State-run industries because of privatisation.

Some of their husbands were also unemployed. Miss Li recruited a local manager to supervise, and organise quality control.

Sometimes the women work together but they can also take work home and fit it around looking after their children. Between five and ten women are working at any one time.

The earrings and necklaces they make are sold at fairtrade@stmichaels and by Miss Li at market stalls. She helps the women with product development as they try out different styles and materials, including pearls, semi-precious stones, and glass.

One novel product came out of conversations with elderly customers who found it difficult to fasten the clasp of a necklace. The answer was a magnetic clasp.

"One customer bought a necklace for her mother, who is 90. She wears it all the time because it's extremely easy to put on."

As well as setting up this group, Miss Li sources other products, such as handbags, from established co-operatives. She recalled going to talk to one for the first time, and explaining the principles of fair trade. The members' reaction was telling: "They just couldn't believe it, because most international companies come into China and look for the lowest wholesale price, so they can make as much profit as possible."

In contrast, Miss Li was offering to pay a price that reflected the time and effort that went into the products, as well as assisting with design and quality control.

Her business belongs to the British Association for Fair Trade Shops (BAFTS). While the Fairtrade Mark is used to accredit specific products, including supermarket own brands, BAFTS is an accreditation for specialist importers and retailers whose whole raison d'être is fair trade.

Miss Li is acutely aware of what the low price of many Chinese-made products sold in the UK means in terms of pay and conditions for the people who make them.

"In some shops you see handbags selling for just £2. And if something is expensive, it may still be from a sweatshop.

"In China I have met people who take half a day to make something and hardly earn anything. It's very sad. And usually the consumer doesn't know, and can't find out."

One challenge is encouraging larger fair trade organisations interested in sourcing products from China, as well as countries with which they traditionally have trading relationships, such as India.

Talking to some of them, Miss Li has encountered a widespread perception that, because of China's recent economic boom, there is no longer any poverty in the country.

She said: "There are still a lot of very poor people in small cities and rural areas."

For businesses wishing to source products from China using ethical criteria, Miss Li can also work as an advisor and intermediary, using her local contacts and language skills.

The ethical business approach is booming. Fairtrade Foundation projections show that UK sales of Fairtrade certified products are likely to reach £400m by the end of 2007, up from £290m in 2006.