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100% New Zealand made?

May 10, 2018

Contacts

Partners Richard Watts

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Country of origin claims are under the spotlight thanks to fashion label World’s confusing approach to labelling its clothing.

Partner, and sales and marketing law specialist, Richard Watts, says that these claims have been a hot topic in recent years and that anyone making such a claim should carefully consider how they are representing their products.

“Consumers and businesses are often prepared to pay a premium for goods from a certain country in the expectation that those goods will be superior,” says Watts.

“A consumer cannot be reasonably expected to verify a country of origin claim, so it’s up to those making the claim to ensure they have met the standard.”

In New Zealand a country of origin claim must be accurate and capable of being substantiated, otherwise the businesses making the claim risk being in breach of the Fair Trading Act.

Watts says that in previous prosecutions brought by the Commerce Commission over misleading or false country of origin claims, product composition and production were examined by the court.

“Before saying something is made in NZ a company needs to consider what proportion of their product is produced, manufactured or processed here,” Watts says.

“If any part of the product is sourced, produced or prepared overseas, they need to consider whether their country of origin claim would then be misleading to a ‘reasonable person’ about the product's characteristics or manufacturing history.

Watts says it is unrealistic to expect a reasonable person to mentally deconstruct the manufacturing process and consider whether products made of imported components are ‘made in New Zealand’.

“Where did a clothing item change from the original material to the garment, or is the product substantially manufactured in New Zealand? These are the types of questions that businesses need to consider,” Watts says.

“This assessment needs to be made through the lens of the consumer, not the manufacturer. Terms such as assembled, packaged or made from imported components should be used in line with Commerce Commission advice.”   

If a company’s claim isn’t true, then consumers are being cheated on the premium they pay. This can erode consumer confidence in a country of origin claim, and those responsible businesses who are living up to the claim will also suffer as a result.

“For these reasons, regulators in New Zealand and Australia have been particularly interested in businesses who are making false or misleading country of origin claims,” says Watts.

In light of the complaints against World already received by the Commerce Commission, Watts says an investigation under the Fair Trading Act would be in line with the Commission’s previous approach.

“This would once again signal to businesses that they must be able to substantiate their claims.”