as far as I am aware they are made with mulberry paper then "fluffed" up with a stick with nails on the end,
some vague instructions here:-http://www.uniquescraps.com/tear-bears-info.htmlhttp://www.mulberrymom.com/tetobein.html
these instructions are the best ones though http://www.craftbits.com/viewProject.do?projectID=1146
very cheap to make, not my taste at all but did you see how much they are going for on ebay? seriously, now THATS a mark up.