Reasons for the current state of clothing manufacturing industry in New Zealand:

When clothing manufacturing in New Zealand was at it's height in the early 1980's an organization named the Industry Development Commission analyzed the industry and concluded that there was an abundance of factories making too small amount of various garments. This led to the commissioners encouraging these businesses to collaborate and combine in order to make a more efficient, successful industry. Unfortunately this did not work as planned and in fact clothing manufacturing companies in New Zealand struggled to maintain their previous successes once combined. In fact a common trend found is that many New Zealand owned clothing producers shifted their operations offshore due to lower labor costs. 

Although this was a contributor to the demise of the clothing manufacturing industry in New Zealand, it was not as detrimental as the license drop. 1992 brought the removal of clothing importing licenses. This meant that any nation could export clothing to New Zealand. Tariffs slowly declined and eventually by 2009 the tariff was at 10% and had then completely ceased by 2010.

Once tariffs had declined and importing was made possible and accessible New Zealand became a large and popular market to export clothing to. In just one year (1989-1999) importing clothing amounted from $129 million to $600 million. You can find these and more facts and statistics here. Not only did importing clothing rise, but prices dropped, making buying clothing cheaper. However it was commented that the quality of the garments reflected the price.

Mass-marketed clothing manufacturing in New Zealand took a significant strike when New Zealand's largest clothing manufacturers Pacific Brands and Lane Walker Rudkin discontinued due to lack of market.

Consequently clothing producers in New Zealand focused on Niché markets who use the term "Made in New Zealand as a selling point. Brands such as Untouched World and Icebreaker use New Zealand fabrics such as fine merino knitwear. In fact Icebreaker goes as far as giving each garment their own tag explaining where the sheep that grew the wool, was once located in New Zealand. High fashion bands such as Miss Crabb have a limited production yet are proud to be New Zealand made.