Label switcher admits digging company into hole

A company director who ordered his staff to cut off 'Made in China labels' on Commonwealth Games uniforms and replace them with 'Made in New Zealand' labels, denied he intended misleading anyone during an appearance in a New Zealand court late last month.
Auckland-based company Sports Resources was fined $NZ23,750 ($A21,189) in Auckland District Court for two charges of breaching the country's Fair Trading Act. The company, believed to be the sole local teamwear supplier to Adidas, had been sub-contracted through the multinational company to make the Commonwealth Games uniforms for the New Zealand OlymThe company, which also has offices in Sydney, Osaka and Malaysia, had earlier pleaded guilty to making the uniforms in China, then cutting off the labels and stitching on Made in New Zealand labels in their place.
One of the company's three co-directors - Anthony Botica - was convicted and discharged on similar charges.
According to a report in Fairfax newspapers, the sentencing judge Elizabeth Aitken said it was important consumer confidence on branding and labelling was upheld. Judge Aitken said the decision to change the labels came after a misinterpretation of the original contract between the company, the NZOC and Adidas. The court heard Botica gave Adidas an e-mail quote of $NZ250,000 ($A223,172) for the uniforms, screen-printing and embroidery costs. Botica had intended that the cost of screen printing and embroidery would be on top of the $250,000. However both Adidas and the NZOC assumed it was the total cost.
The court heard that in following months Botica realised the estimate had been misinterpreted and the company was left to shoulder the extra costs with the result Botica decided to have the goods made in China to reduce costs.
Eight of the 12 Commonwealth Games garments - including polar fleeces and singlets - had been affected.
The judge said NZOC had made the decision to insist on New Zealand-made products to make sure the garments were ready on time.
Middletons senior associate Lisa Egan said there were laws in Australia designed to prevent companies from engaging in the type of conduct in which Botica was engaged.
Egan said under the Trade Practices Act 1974, it was unlawful to make a false representation concerning the place of origin of goods. An Australian company called GIA Pty Ltd was prosecuted under this section of the Trade Practices Act in 2002 in a case quite similar to the recent New Zealand case. In that case, GIA manufactured knitted garments, which it sold by wholesale and to a limited extent by retail and mail order from its premises in Tasmania. GIA had the garments manufactured in China. It removed the made in China labels from the garments and represented that the garments had been made in Tasmania. GIA was found to have breached the Trade Practices Act and was penalised with a $50,000 fine and a separate fine of $4,000 for the director.
Egan said the consequences for breaching these provisions were quite severe, and it was important for importers to ensure that their products were appropriately labelled.
Adidas could not be contacted at the time of press.