Shirley always wanted to run a clothing factory. She says this Australian fashion giant killed her dream
The Cost Of Doing Business: Part 1 Shirley Lu had always adored fashion and dreamed of one day running her own factory in Shenzen, China. When she had the chance to work with Australian retail giant Mosaic Brands, she was thrilled. Mosaic owned 10 labels including Rivers, Katies, Noni B and Millers after a period of expansion between 2014 and 2018. By 2019, the company had 1,400 stores, employed 7,000 people and worked with hundreds of suppliers in Australia and overseas.
"I thought Mosaic was a very famous company in Australia," she told Dateline.
However in September 2023, her first invoice went unpaid. "I saw my shoes for sale on Rivers' official website but when my payment was due, no one got back to me … From September through October, I contacted them every single day by phone and email. But no one answered me." By March 2024, she says she received US$40,000 (around $62,000) after being put on a payment plan by Mosaic, but it wasn't enough to cover her expenses.
"They took my goods but refused to pay. I was so miserable and broken, because I had to pay for the workers' wages."
Fashion supplier Shirley Lu was initially excited to work with an Australian company the size of Mosaic Brands. Source: SBS Shirley borrowed money from her sister to cover some of her costs, but her sister was later diagnosed with breast cancer and needed the money back. "I told them, I need this money for my loved ones to survive … but they didn't reply."
"We all felt that our world had come crashing down."
Mosaic Brands in financial trouble The company had been reporting mostly modest profits to the ASX and in 2022, CEO Scott Evans took home a salary package of over $2 million.
Noni B stores across Australia have closed down after the label's owner Mosaic Brands went into administration in October 2024. Insolvent trading is when a company is unable to pay existing debts while taking on new ones. It is illegal in Australia because of the harm it can inflict on unsuspecting businesses. However, Mosaic was using a legal protection called 'safe harbour', which enables a company to keep trading while its directors take steps to rescue the business. In recent years, the retail climate in Australia has been hit by a perfect storm of COVID-19, cost of living pressures and the rise of online shopping. This year alone, 800 Australian retailers have gone bust. According to the report to creditors, Mosaic used safe harbour protection on and off for a period of four and half years.
While in safe harbour, a publicly-listed company doesn't have to disclose their insolvency to shareholders or suppliers.
'A kind of blackmail' Harry Wang also says he didn't know that Mosaic Brands was in financial trouble.
He first began making shoes for Rivers from his factory in Xiamen, China, back in 2012. He says when Mosaic acquired the Australian brand in 2018, things changed. But he says it wasn't until 2022 that he stopped getting paid on time for the goods he supplied.
Harry Wang says Mosaic Brands now owes him US$6.2 million (around $9.5 million). Source: SBS Harry says he felt pressured to continue to supply goods or he would face loss of sales claims or non-payment for the goods he had already supplied. "We have no choice. We'd be pushed to deliver the goods. Otherwise, we really don't have any payment … So we have to keep on supplying them," he told Dateline. "That's a trick for all the suppliers … a kind of blackmail." Harry says he was also issued with US$4.5 million (around $6.9 million) worth of loss of sales claims due to reported delivery delays or faulty goods from 2022 to 2024. Harry settled these claims at the time with Mosaic, but alleges they were excessive. He says Mosaic Brands now owes him US$6.2 million (around $9.5 million): US$4.2 million (around $6.5 million) in unpaid invoices accrued between 2022 and 2024, and US$2 million (around $3 million) in stock that he's already made, including 80,000 pairs of shoes stocked in his warehouse that may never be delivered. Harry's office staff has been reduced from 15 to four, while one of the factories he works with is in 'a state of shutdown'. Harry says the stress has placed a huge strain on his marriage and family life. "This is a very, very big lesson for all the Chinese suppliers … Don't trust anybody. That's the lesson we got," he says. "All of our wealth, after all our hard work, was suddenly wiped out by them.
"I'm so sad."
This is a very, very big lesson for all the Chinese suppliers … Don't trust anybody. Harry Wang Mosaic 'deeply disappointed and upset' When Mosaic entered administration in October 2024, its 10 labels and then-650 stores closed for good. Among the company's losses, Mosaic owed an estimated $US50 million (around $77 million) to suppliers in China, according to the Mosaic Brand creditor list from 8 November. Suppliers in China, Bangladesh and Australia are coming together to demand answers and call for a public inquiry into the actions of Mosaic Brands. Former Mosaic Brands CEO Scott Evans declined Dateline's request for an interview and did not provide any detailed answers to questions we put to him. Through his lawyers, he said: "Given the current circumstances of the company it is difficult ... to provide substantive comments."
"Based on some of the questions and propositions that have been put to me, there seems to be material misinformation about the company, which I believe will be clarified in the fullness of time."
Scott Evans when he was CEO of Noni B in 2014. Source: AAP / Dean Lewins He added that during his 10 years as CEO he "had the privilege of working alongside literally thousands of hardworking team members ...and suppliers". And that he was "deeply disappointed and upset to see Mosaic Brands enter administration".
No adverse findings have been laid against any Mosaic Brands directors.
'More likely to get bitten by a shark' As the Mosaic Brands administration process unfolds, Professor Jason Harris, an insolvency expert at The University of Sydney Law School, warns that suppliers are unlikely to get any money back. Nor is the Australian Securities and Investments Commission (ASIC) likely to take action, he adds. "You're more likely to get bitten by a shark on George St in Sydney than you are to be prosecuted for insolvent training," he told Dateline. "The problem we have in Australia is there are so few cases where ASIC is taking action, or where liquidators have the funding to take action, that the bad guys out there know they're likely to get away with it. "More than 90 per cent of companies that go into liquidation give nothing to unsecured creditors.
"There's all the laws we need to address this poor behaviour. What we don't have is effective enforcement of those laws."
Harris adds that Mosaic Brands' use of safe harbour could be the first real test case for this law. While there is no time limit or expiry on the use of safe harbour, it relies on company directors and their advisers knowing when a business can't be saved. Harris says while it's hard to comment on Mosaic's specific situation without being across all the information, four years "stretches credulity". "If you're still having the same problems four and a half years later, then clearly it's not working...
"Where were the gatekeepers?"
A release issued on behalf of the Mosaic Brands board of directors last year, in response to previous reports the company had been using safe harbour protections, said its directors take their duties seriously, and did seek advice on the applicability and compliance with the safe harbour provisions.
ASIC did not respond to Dateline's specific questions, but says it continues to monitor the administration of Mosaic Brands.
Ongoing struggles Meanwhile, Dateline has spoken to 50 suppliers across Australia, China, Bangladesh and India who all say the way Mosaic Brands conducted business was unethical. In Shenzen, Shirley is still struggling to rebuild her life. To pay back her sister and cover her costs, she mortgaged her home. But she says Mosaic still owes her US$60,000 (around $92,000). Her dreams of growing her business and one day owning her own factory are now shattered. "I had delivered the products on time, on quality, to Mosaic," she says. "But I never imagined that they would cheat with my goods and not pay me."
* Some of the debts referenced by suppliers in this story are disputed, with creditors' debts to be finalised as part of the administration process.
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