"Because the fabric is beaded fully, to make it in New Zealand would require hand cutting, removing the beading at the seams and re-beading after construction which [would have been] labour intensive for our small workroom," Findlay said.
She said it would not have been able to produce the beaded design in New Zealand.
"It was never our intention to mislead anyone and we humbly apologise for our error," Findlay said. "Our garments have always been labelled correctly and we have changed any incorrect wording on our site."
Findlay said the company's manufacturer in India was child labour-free and met ethical industry standards.
Two per cent of its clothing collection was manufactured in India and China last season.
"Last summer 2017/18 the percentage handcrafted offshore in India, beaded garments, and China, embroidered caps and canvas bags, was 2 per cent of the season's production," she said. "The current Zambesi winter collection now instore is 100 per cent all made in New Zealand."
The Commerce Commission said it had not received any complaints about Zambesi on this issue.
Simon Lendrum, managing director of advertising agency JWT, said the made-in-New Zealand marketing tagline was not ambiguous and should not be used to leverage sales if the claim was not 100 per cent correct.
"If something is stated to be NZ-made then that is the consumer expectation without qualification," Lendrum said.
"Made is about manufacturing and therefore it needs to be manufactured locally."
Claiming there were not enough local resources to produce 100 per cent NZ-made apparel did not justify using the phrase if a brand was not, he said.
"If there are resource limitations that make it impossible for something to be made in New Zealand then it can't be a competitive claim," he said.
"Being true to what you stand for 90 per cent of the time isn't enough."
Using an alternative marketing tagline such as "Designed in New Zealand" could be just as compelling for consumers, Lendrum said.
"For fashion designers I would have thought that the power of local brand and local presence and being a New Zealand designer is first and foremost in consumers' minds. The manufacturing process behind that comes secondarily, I think," he said.
"In NZ Fashion Week, we look to the designers and we champion our local stories from a design perspective not from a manufacturing perspective, so arguably in that particular world, designed in New Zealand is just as compelling."