"The Hidden Impact on Australian Shoppers by General Pants and SurfStitch"

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There will be more to come on this story in Dateline’s two-part documentary investigation, The Cost of Doing Business, coming soon to SBS and SBS On Demand.

In 2022, his factory, Jinjian Shengyi Fashion Weaving, struck up a new partnership with SurfStitch, an online retailer selling beach, outdoor and action sports apparel.

At the time, SurfStitch was owned by Alquemie Group, a self-described “retail and consumer brands investment and growth platform”.

“I’ve always respected and loved working with Australian people and brands,” Tomy told SBS Dateline.

But since becoming a supplier for SurfStitch and Alquemie Group, Tomy says his business has been crippled by delayed and unpaid invoices, causing him to lose more than $100,000.

Tomy, who once employed 120 workers, says he has now been forced to reduce his workforce to less than 30 people.

He said working with Alquemie Group has been “disappointing and painful”.

Payment delays

According to Tomy, Alquemie Group started to delay payments for goods he produced for SurfStitch in August last year.

He says one payment was overdue for a year — far longer than the agreed payment terms of 120 days after shipment.

After alerting the company, Tomy says Alquemie initially agreed to repay him the money owed — $109,109.34 — on a payment plan, but he says no installations ever came through, despite repeated requests.

After months of back and forth, Tomy says it then refused to pay the outstanding amount, claiming there was “no validation process done on delivery” for its products.

Tomy denies there were any issues with the order but says he offered to settle for 95 per cent of the total amount owed to him as a compromise, in order to receive payment.

This figure was rejected, and Tomy was offered $57,700 by Alquemie Group — nearly half the original total value of the goods he had produced for the company.

Tomy says he rejected this offer, telling Alquemie via email his business was “not a charity” and needed to cover its workers’ wages and bank loans.

Overseas garment manufacturers take on huge upfront costs to kickstart the production process when selling to international retailers. They must buy all the raw materials required to make the retailer’s order, carrying this debt until the buyer pays for the goods.

If payments are delayed, or not received, it can impact their business’s cash flow and ability to continue operating.

After months of scattered communication with the owners of SurfStitch, Tomy says he never saw any of the money owed to him.

More Alquemie suppliers speak out

SurfStitch was bought by Alceon in 2018 and then later managed by Alquemie Group.

The group currently owns other popular brands, including General Pants Co. and Lego Certified Stores in Australia and New Zealand.

Dateline has spoken to two other Alquemie Group suppliers who have also complained of payment delays and mounting unpaid invoices.

One supplies General Pants Co., the youth apparel retailer with 50 stores across Australia and New Zealand. They asked not to be identified but described similar payment delays and difficulty chasing invoices.

They told Dateline this practice of delayed payments “is impacting livelihoods”.

A former supplier for SurfStitch, who also asked not to be identified, said: “They were bouncing me from person to person in their business. Just red-taping me.”

Documents filed with corporate watchdog ASIC further reveal General Pants Co. was the subject of a winding up order application by freight company Mainfreight Air & Ocean in July 2024 and that it was also the subject of three court actions for outstanding rent and costs in November.

A winding up action is a tool available to creditors who believe they are owed unpaid debts. A creditor or other party can apply to the court to have a company wound up, which then requires the company to take action — to pay the debt, negotiate a compromise, or apply to the court to have the action set aside.

Earlier this year, the global retail giant Nike Australia also took action against SurfStitch for unpaid debts.

On 20 May, Nike Australia, which produced apparel for SurfStitch, applied for the winding up of the company alleging that it owes $237,760.38, according to documents filed in the Victorian Supreme Court.

SurfStitch was also the subject of court action by the outdoor apparel company, Burton, and the beach accessories company, SunnyLife, for outstanding debts.

Mosaic Brands — a pattern of payment delays?

Alquemie Group is headed by Scott Evans and Richard Facioni.

Evans and Facioni were previously directors of Mosaic Brands, an Australian fashion giant and separate entity, that entered administration last year, owing between $361 million and $392 million to creditors in Australia and overseas.

In June, administrators for Mosaic Brands issued a preliminary finding that the company may have been operating while insolvent for four years before the company’s collapse, recommending further investigations.

Insolvency is when a company can no longer pay its debts, and it is illegal to trade under these circumstances, according to the Corporations Act.

The directors of Mosaic Brands are yet to comment, but in an earlier statement, they said they complied with their obligations at all times.

Suppliers for Mosaic Brands revealed to Dateline they also faced extensive payment delays and unpaid or missing invoices before the company’s collapse.

Annabell Michic, who manufactured goods for Mosaic Brands through her company Faith Fashion, told Dateline: “I would always not understand why these invoices were missing or unmatched.”

“They couldn’t find the invoice, the invoices weren’t matching … We used our own forwarder, they couldn’t find [the invoice]. We used their forwarder, they still couldn’t find it,” said Mihic, referring to the use of freight forwarders who facilitate the movement of goods and, in turn, trigger when a payment should fall due.

The complaints from the suppliers of Mosaic Brands are separate to the new claims against Alquemie Group. But in both cases suppliers allege a pattern of delayed payments which they say is causing harm to businesses down the retailers’ various supply chains, both in Australia and overseas.

“They kept making excuses”

SurfStitch supplier Tomy Zheng said of Alquemie Group: “They kept making various excuses to delay the payments that were rightfully owed to us.”

Whilst trying to chase down the SurfStitch debt with Alquemie Group, the parent company of SurfStitch at the time, Tomy was told the online retailer had been sold.

He says that before receiving notice of the sale, Alquemie Group was “still assuring us that payments would be made as scheduled”.

Following the sale, Alquemie Group claimed it was “trying to contact the owners of the company to respond” about the issue of the outstanding money but Tomy says he was never contacted by the new owners, Best Markets Pty Ltd.

As far as Dateline is aware, Alquemie Group has not been investigated or faced any legal action in relation to any of these claims.

Tomy, who once employed 120 workers, says he has now been forced to reduce his workforce to less than 30 people. Source: SBS

Australian retailers have faced challenging circumstances in recent years as cost-of-living pressures have made customers more conservative with spending and driven many retail businesses into administration or receivership.

An Alquemie Group spokesperson said these challenges had “required a rapid, and at times an extremely challenging strategic readjustment, in the last 18 months for many retailers and retail groups, including ourselves”.

In a response to our questions regarding delayed payments to suppliers, an Alquemie Group spokesperson said, “a very small number of suppliers have seen the current environment as an opportunity to pursue long-standing commercial disputes through the media with claims that are untested, unsubstantiated or simply untrue. We do not comment on individual commercial relationships but Alquemie has strong and long-standing partnerships with over 400 local and global suppliers and external partners”.

A quiet sale

It was reported in 2023, Alquemie Group posted a $2 million loss, down from a $3.2 million profit the year earlier, amid redundancies and a failed rebranding of SurfStitch.

In May this year, while suppliers like Tomy were chasing payment for delayed and unpaid invoices, SurfStitch was quietly sold to Best Markets Pty Ltd and placed into voluntary administration days later.

Customers were not informed of the sale on the brand’s Instagram page and users were instead told the website is “under maintenance”.

In a statement provided to an Australian business news site, an Alquemie Group spokesperson said SurfStitch was among “smaller portfolio brands” that were offloaded to focus on the growth of core brands.

Women’s clothing label Ginger & Smart — another Alquemie Group brand — was also sold to Best Markets Pty Ltd and put into voluntary administration at the same time as SurfStitch. A notice on the Ginger & Smart website says it’s “currently undergoing maintenance”.

On the day SurfStitch was sold, documents were lodged with ASIC notifying of a change in the company’s directors — with retail specialist Andrew Shub appointed in the place of Richard Facioni and financial leader Felicity Veivers.

This same day, documents were also lodged with ASIC notifying of a change in the company directors of Alquemie Retail Operations — with Andrew Shub replacing Richard Facioni and Scott Evans, the former chair and CEO of Mosaic Brands respectively.

Last month, as part of the voluntary administration process, it was revealed creditors of SurfStitch are owed $15 million. One creditor, Omnia Brands Pty Ltd, is reportedly owed $8,163, 260. The director and secretary of this company is also Richard Facioni, according to company documents lodged on ASIC.

A spokesperson for Alquemie Group confirmed to SBS Dateline that they have invested millions into the business, SurfStitch, Ginger & Smart and General Pants and Co. and they remain a major creditor in SurfStitch’s subsequent administration.

They also stated “Alquemie Group’s approach of strategically focusing on larger scale brands is showing positive progress with several new stores opening in the coming six months. Again those store openings would not be possible without the support and partnership of landlords, suppliers and most importantly of all — our customers”.

Still grateful

SurfStitch supplier Tomy Zheng says that, despite his issues with the retailer and its former parent company Alquemie Group, he is grateful for his Australian clients and friends who have been “actively helping and supporting” him after losing so much money.

“Some of them even introduced new clients to help me get through this difficult time, and I truly appreciate that,” he said.

He also still hopes he will eventually get the payments, despite all the difficulties so far.

“It’s really painful – we are still struggling and suffering, like being pricked by needles day after day.”