Media Releases

Nangong sentenced after selling fake alpaca duvets to tourist shops

23 May 2016

Duvet and rug business Nangong Limited and its owner, Yun Qiang Hou, were convicted and fined a total of more than $109,000 in Auckland District Court after pleading guilty to 14 charges of making false claims that their duvets contained alpaca wool and were made in New Zealand.

Nangong was fined $91,000 of the total penalty and Mr Hou was fined $18,200.

The Auckland based business imports and supplies ‘alpaca’ duvets (along with possum and wool duvets and rugs) to three main Auckland retailers that cater primarily to the Asian tourist market.

Nangong and Mr Hou admitted to falsely claiming that its duvets contained alpaca wool when they were made from 100% sheep wool. They also misrepresented that the duvets were New Zealand made, when they were actually made in China.

The claims were made on packaging and labelling, on invoices and in a conversation with a Commission investigator. Labelling included images of alpacas, a silver fern and the Woolmark logo along with wording such as “Made in New Zealand”, “New Zealand alpaca”, “Pure Wool Alpaca” and “Premium alpaca duvet”.

Nangong was able to reduce costs and increase profits by using sheep wool instead of alpaca wool.

Commissioner Anna Rawlings says that Nangong’s unlawful actions impacted on the retailers, the end customers who bought their products and other competing businesses.

“Retailers and consumers paid a premium because they thought the duvets were New Zealand made, and contained genuine alpaca fibre.  These two factors meant consumers were paying up to $700 for a duvet that was worth around $240.”

“This type of offending also harms competitors in the same market who are selling genuine alpaca wool products which are New Zealand made.”

Ms Rawlings adds that country of origin claims are of ongoing concern to the Commission and it is committed to protecting consumers who are influenced by these types of claims when purchasing goods.

In another Commission country of origin case this month, the High Court found that New Zealand Nutritionals (2004) Limited (NZ Nutritionals) made misleading “New Zealand made” claims about two dietary supplements. Both products were labelled as “100% New Zealand made” when all the active ingredients, including the goats’ milk powder itself, were imported from overseas.

Ms Rawlings said New Zealand made products are often sold at a premium because of their reputation for quality, and offending of this type undermines that.

“The law is clear that products have to be truthfully labelled, and businesses must be able to substantiate any claims they make about the quality, origin and composition of their products,” she said.

Two other companies have been charged by the Commission over false or misleading claims about the origin and composition of their cashmere and alpaca products. These two cases remain before the court.

Background

The Commission has previously prosecuted eight companies and seven individuals for selling imported alpaca rugs as “Made in New Zealand”, and claiming duvets were predominantly alpaca or merino wool when they were not. They were convicted and fines reached a total of more than $ 1 million. Read more in our media release.