This year’s Tear Fund Ethical Fashion Report, released in conjunction with World Baptist Aid Australia’s well-established Behind the Barcode project, caused a major stir. Over 100 companies were featured in the report, including 18 specifically Kiwi-owned companies, and while Icebreaker and Kathmandu received A+, some well-known high end brands didn’t do well at all. Karen Walker scraped across the ethical line with a C, while Ruby received a D and most shockingly, Trelise Cooper received an F, largely a result of non-participation*.
Dame Denise L’Estrange-Corbet, one of New Zealand’s most outspoken fashionistas, was red hot in her response. The co-founder of ethical clothing brand World hit out at her fellow Dame on a RadioLive interview:
“Trelise Cooper came out and said she was deeply serious about social responsibility. Well if she was, then she wouldn’t be manufacturing in a third world country,” she said in April.
Then in May, alternative news site The Spinoff revealed that some of World’s clothing was manufactured in Bangladesh and Hong Kong, and had been for seven years. The Commerce Commission received nine related complaints and their investigation is ongoing.
World was unavailable for comment on this matter, but in a subsequent NewstalkZB interview, L’Estrange-Corbet said the company had been forced to move its manufacturing overseas due to a lack of facilities locally, and that the factory had been checked for its ethics. She insisted the majority of her clothes were made in New Zealand and that she had discontinued some lines because Kiwi manufacturers were no longer available.
Crucially, she stated that the swing-tag on World clothing reading ‘Fabrique en Nouvelle-Zelande’ – the company’s strap line – was not misleading for the consumer as the original tags stating the country of origin remain in place.
As much as I am a crusader for ethical clothing and business transparency, I do have a modicum of sympathy for World. With 99 percent of their clothing manufactured in NZ, previously 100 percent, the brand catchphrase ‘Fabrique en Nouvelle-Zelande’ makes sense. But is it legal? And are other retailers falling foul of this issue?
Here is our handy guide as to what it means to be a retailer who sells locally manufactured products, what the benefits are for your business, and how you can stay within the law.
Why ‘made in New Zealand’?
New Zealand’s famous ingenuity comes from the fact that back in the day, we pretty much had to make everything ourselves. That was the price you paid for living a safe distance from the rest of the world. However, globalisation and the internet have opened up international markets, both direct to consumer and to the retailer. Even manufacturers have more choice over where they source their raw materials, and it could be more cost effective to buy from overseas.
When Phil Bramley started Private Collection, a ‘made in New Zealand’ knitwear company in 1982, he didn’t do it for ethical reasons.
“Duties on imports were higher back then, and New Zealand had a strong knitwear manufacturing industry. It wasn’t a conscious decision to buck the trend.”
Private Collection manufactures for corporates, and designs its own two labels Visage and the well-known Standard Issue.
Bramley says they started as a more generalist manufacturer, but in the late 80’s the stock market crash lead to a lot of factories closing down and importers opening up.
“We started to see price reductions, and a lot of manufacturers moved their operations to China. My passion was making good knitwear, and I had a loyal bunch of staff. I didn’t see China as an option, but I started to see a niche opening in the market we could fill.”
Bramley says that customers expect a garment made overseas to be 25 percent to 30 percent cheaper to buy than a garment made locally – and customers demand a higher quality product from local manufacturers, a product they hope to still be wearing in five or even 10 years’ time. The premium you can place on a locally made product is often the driver for manufacturers and retailers to use that as an advertising claim.
“Some consumers are happy to pay a higher price for goods which they believe are made in New Zealand, and for some this represents an important ethical decision,” says Commerce Commissioner Anna Rawlings. “Country of origin claims are important for local manufacturers that want to protect the value placed on a genuinely New Zealand made product.”
If the phrase ‘made in New Zealand’ is abused, then consumer trust will be lost. Look at China, where the consumer is so suspicious many people use a personal shopper or ‘daigou’ to purchase product that’s supposedly more trustworthy from overseas. Clearly, authentic labelling is important, but with cotton coming from India and coffee from Colombia, how can you be sure your made in New Zealand claim is accurate and legal?
“Whether a product is ‘made in New Zealand’ depends on a number of factors, including the nature of the product and what consumers understand about it. For example, if it’s a clothing garment, where was it changed from fabric into a garment? If it’s food, then where was it grown?” says Rawlings.
If you are selling a product, such as coffee, that was sourced from another country but turned into a useable product in New Zealand, you may wish to describe it by saying ‘roasted’ in New Zealand, rather than ‘made’. If you are making T-shirts in Hokitika from material processed in Ho Chi Minh City, it might be prudent to state that – after all, no one wants to mislead their consumer. And if you do, you are likely to fall foul of the law.
“Any ‘made in New Zealand’ claims businesses make about their products must be accurate, able to be substantiated and must not mislead consumers about the country of origin,” says Rawlings. “The Fair Trading Act (FTA) prohibits businesses from making false or misleading claims about the country of origin of their products. Symbols such as kiwis or the New Zealand flag can also convey a misleading impression about the origin of the product if, in fact, it is not manufactured or produced in New Zealand.”
Tony Dellow, a partner at legal firm Buddle Findlay and leader of the consumer law team, says his team works with many businesses who come to them for advice on where they stand with ‘Made in New Zealand’ claims, both before they print the packaging, and sometimes once they’re already in a spot of bother.
“It really does depend on what the product is,” says Dellow, who notes there is no clear-cut legal definition of what a made-in-New-Zealand product is. “For example, with food products, people really do care about the source of the raw materials. You’d expect the majority of them to have been sourced from New Zealand. On the other hand, we act for a furniture retailer, and the issue is not so much where the materials came from but where the workmanship was done.”
Dellow says that sometimes they can make a call based on their legal experience, and end up disagreeing with the Commerce Commission because the opinion of someone who works there differs.
“There’s a touchstone, and that is [the question] what’s important to the consumer? Buying locally is becoming more important to people and businesses want to be able to make that representation because they believe it may make [the product] more attractive – but they don’t want to break the rules.”
He has three pieces of advice. First, make yourself familiar with the Commerce Commission’s fact sheets. Second, look at the product and consider objectively to what extent it has been made in New Zealand. Finally, state on your label that, for example, a product is made in New Zealand from imported materials. If you can’t decide, then seek advice from a lawyer.
Eyes on supply
A major issue for many businesses hoping to use the locally-made claim is that not all parts or materials are available from local producers. For example, Bramley’s Private Collection knitwear might be made in New Zealand from Kiwi wool, but the wool was turned into yarn overseas.
“We have to import yarn from Europe, there’s no one in New Zealand doing it,” he says. “Often New Zealand merino goes all the way over there, gets spun and dyed, and comes back here.”
The major factor in the decision around where a product was produced is substantial transformation. Were the major steps in the processing of the product taken in New Zealand?
Here is an example from the Commerce Commission:
A health supplement company was marketing a product as 100 percent made in New Zealand. Although the ingredients were turned into tablets in Christchurch, eight of the 12 listed ingredients were imported from overseas, including the two active ingredients. The active ingredients were turned into powder overseas, and were literally just being poured into capsules in Christchurch. The court found that the ‘substantial transformation’ of the product occurred overseas, that the manufacturing steps taken in Christchurch were insignificant and, therefore, that the claim of being made in New Zealand was misleading.
For many consumers, the main driver behind buying a locally made product is the assumption that the retailer and manufacturer will have good authority over the supply chain.
“There is an assumption that a garment made in New Zealand is ethical by default – this isn’t true. The final stage manufacturing might be happening in New Zealand where exploitation is unlikely. But we don’t grow cotton or manufacture fabric, so these companies have to source those products from overseas. You need to have eyes on the whole length of your supply chain,” says Claire Hart, advocacy and education manager for Tear Fund.
She says many companies are disappointed with their Ethical Fashion Report grade the first time because although they’ve taken vital steps toward being more ethical they often don’t have eyes on their whole supply chain.
“Fast fashion is very problematic,” Hart says. “The short lead times for product put pressure on factories, who subcontract and that reduces the oversight the end company has over who is producing their clothes.”
The importance of ethics
Carolyn Enting, editor of Good magazine and former fashion editor of Mindfood, says ethics is ingrained in modern consumer behavior.
“I work in an office filled with Millennials who check the [Tear Fund Ethical Fashion Report] before making purchases and who will not buy from anyone who scores a C or less,” she says. “Customers are now also asking more questions.”
“About 70 percent of our customers are driven by the quality of our products, the rest by the ethics and sustainability, but I reckon in a few years that will be 50/50,” says Private Collection’s Bramley, who notes his products are more sustainable and actually cheaper than many imports, because you get more wears per dollar spend. “There will always be a contingent of people who don’t care [about ethics], who just want cheaper, but I believe people are getting sick of ‘fast fashion’.”
Does that mean retailers should drop their internationally manufactured brands and switch to products grown on home turf?
“I think most retailers would find it difficult to survive on New Zealand-only brands,” says Bramley. “There isn’t a big enough selection at the moment, so few people are manufacturing here. They may also benefit from a mix of price points on the shop floor.”
Enting agrees, noting that made in New Zealand options aren’t always cost effective.
“Certainly early adopters like Starfish made such a strong commitment to sustainability and ‘Made in New Zealand’ that the cost ultimately put them out of business,” she says. “But those hard costs are coming down, and there is now higher awareness and demand for ethical and sustainable fashion. If you want to future proof your business, being ethical is a necessity.”
“Imported” doesn’t have to be a dirty word. Many products manufactured overseas can and do have high ethical credentials. Supporting those businesses is a global game-changer.
“The fashion industry employs around 60 million people globally in production, 40 million in the Asia Pacific region alone,” says Tear Fund’s Hart. “The industry provides jobs to huge number of people, and creates trillions of dollars of export revenue for low income countries. Millions of people have been able to move from a subsistence life into factory work and can provide a better life for their family.”
Hart says that ethical fabricators in emerging economies should be encouraged, and that the retailer has the power to demand certain standards have been met.
“We have to remember the potential the fashion industry has to bring good into people’s lives.”
Earlier this year I spoke to the chief executive of New Zealand-based sustainable uniform and branded apparel company Little Yellow Bird, Samamtha Jones. She has worked with her chosen plants in India to make sure they meet a high standard. She says large companies need to be more proactive in demanding similar.
“It’s not hard for big companies to switch to more ethical manufacturing. Companies can use a ladder system where they go to the most ethical factory first, encouraging manufacturers to take positive steps,” says Jones, who is keen to point out this needn’t drastically affect price point.
“There was a report recently that said you would only have to charge customers an extra 50c per unit to pay workers in Bangladesh a minimum wage. Most consumers in New Zealand wouldn’t notice an extra 50c.”
Hart says that through working with Tear Fund and Behind the Barcode, many companies have raised their score in the ethical fashion report, and raised the standards of living and working for many people in the developing world.
“A number of companies that we assess in New Zealand work hard to improve. Hallenstein Glasson, for example – when they were first assessed they got a low grade and a lot of flak,” says Hart. “After three years they’ve turned ethical fashion into something they value as a company and we’ve seen that progress through the increase in their grade.”
Authentic labelling and ethics as part of your brand pillar are genuinely good for businesses, whether the product is New Zealand made or not.
“Retailers who do their best to start making changes will be respected by their staff as well as customers,” says Good’s Enting. “Staff will be proud to share initiatives and it will strengthen consumer confidence.”
Locally owned versus New Zealand established
What does it mean to have a locally owned business? For many, it is the hallmark of quality, fairness and trust, just like saying ‘made in New Zealand.’
“Consumers want to feel like they are supporting their local communities, they want products that are sourced and made locally and ethically, they want to reduce their impact on the environment, and they want something unique,” said Sue Barrett, chief executive of sales advisory firm Barrett in a 2015 interview with Smart Company. She notes that some big businesses have cottoned on to this trend, and are trying to use it to their own advantage.
“Companies such as Starbucks are ‘un-branding’ some of their stores, to make them appear more like locally run businesses,” she says. “Other larger companies try to show a commitment to the local community by ‘giving back’ in some way.”
In New Zealand, especially in the café scene, we’ve seen a raft of big businesses swoop in and buy locally established enterprise, then quietly capitalise on that good name. Christchurch institution Hummingbird Coffee, for example, is owned by international corporate Jacobs Dowe Egberts, while Wellington’s L’affare and Auckland’s Atomic are a subsidiary of Japanese liquor giant Suntory. But you won’t find that information easily, and their websites talk only of their local roots. Does this betray consumer trust?
“We have noticed the rise in international ownership has had a huge impact on the quality of the beans supplied to cafes,” says the general manager of Vivace Espresso Christchurch, Paul Baker. He notes that in an effort to meet their obligations to shareholders, in some cases lesser quality beans are being used to cut costs and improve the balance sheet. Customers of businesses that appear locally owned may be less likely the question the quality and ethics of the product’s source.
“As a wholesaler, we believe retailers need to present the most authentic version of themselves and supply a quality product to their customers to maintain and attract new customers,” says Baker. “More and more people care about where the products they are consuming come from so if you market as being locally owned, people feel confident spending their money on ethical and sustainable business practices.”
Remember that being a ‘locally owned’ business adds a premium in the mind of the consumer, so you have a commitment to live up to that promise. Think carefully about what you are trying to achieve before pushing the local mantra and make sure you can meet your obligations to your clientele.