New Zealand cracks down on sale of fake goods to tourists

Two New Zealand companies run by a father and son have been slapped with big fines after selling faked goods that cost little to produce to tourists for thousands of dollars.

Two New Zealand companies run by a father and son have been slapped with big fines after selling faked goods that cost little to produce to tourists for thousands of dollars.

Top Sky Holdings Limited was charged with 12 breaches of the Fair Trading Act, and was fined $NZ140,000 in the Auckland District Court for selling high-priced souvenirs under false claims.

The Rotorua retail outlet sold Peruvian alpaca rugs as made in New Zealand from local alpaca.

The rugs were priced between $NZ4000 and $NZ8000 each, when Peruvian alpaca rugs typically retail elsewhere for between $NZ1000 and $NZ1600.

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The company’s managing consultant, Haidong Chen, was charged with 28 breaches of the Fair Trading Act, and was fined $NZ24,500 for his conduct relating to both Top Sky and a second company, Kiwi Wool.

His father, Jinming Chen, also faced 18 charges and was fined $NZ10,500 in relation to Kiwi Wool. The company was charged with 18 breaches of the Fair Trading Act, and fined $NZ84,000.

The father and son made their admissions together, the Commerce Commission said.

Kiwi Wool makes and sells wool duvets to retail outlets and tour groups. These were labelled as being 100 per cent alpaca when in fact the alpaca wool content was only 20 per cent. Kiwi Wool also manufactured and sold duvets labelled as 100 per cent New Zealand merino lamb wool, when the wool content was not merino.

The cost of manufacture of the duvets was about $NZ70, but they were sold to tourists for between $NZ400 and $NZ1000.

Commerce Commission chairman Mark Berry said tourists were willing to pay significantly more for New Zealand premium wool products.

Selling items as New Zealand-made when they were not, was deliberately misleading buyers, he said.

The tourists from China, Korea and Taiwan were taken to several premises and paid significantly more for items such as alpaca rugs and merino or alpaca duvets than they were worth, as a result of misleading representations, the Commerce Commission said.

Tourists represented a valuable segment of New Zealand’s economy, Berry said.

“The Commission’s role is to protect the interest of consumers,” he said.

The charges brought by the Commerce Commission under the Fair Trading Act followed search warrants executed on 10 premises in Rotorua and one in Auckland in August 2011.

The multi-agency searches, aided by Tourism New Zealand, involved the Commerce Commission, police, customs, immigration, the Wildlife Enforcement Group.

In sentencing on Thursday, Judge Nevin Dawson said the defendants demonstrated a large degree of wilfulness and carelessness in the misrepresentations.

The defendants’ conduct undermined fair competition in the market and unfairly disadvantaged other traders, he said.

There are six further companies and five individuals facing charges as a result of the investigation who are still to be dealt with by the Rotorua courts.

Tourism is a key sector of the New Zealand economy with international tourists providing 18 per cent of the country’s export earnings in 2010.

China is listed as a target market with the number of Chinese visitors last year rising 38 per cent from 2011 to 208,000.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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