"To sell items as New Zealand made when they are not, or knowingly label and sell items as 100 per cent alpaca or merino wool when they are not, is deliberately misleading buyers," said Commerce Commission chairman Mark Berry.
Top Sky Holdings was fined $140,000 and managing consultant Haidong Chen fined $24,500.
Kiwi Wool was fined $84,000 and managing director Jinming Chen fined $10,500.
The company directors admitted they knew the representations made about the duvets were not true and manufacturing the duvets cost about $70 each.
At sentencing, Judge Dawson said the misrepresentations made by the defendants was "deliberate and systematic" and "undermined fair competition in the market".
The sentencing sent a clear message that exploitation of international visitors would not be tolerated, said Associate Tourism Minister Chris Tremain.
"New Zealand makes many high-quality products that international visitors like purchasing when on holiday here. We will continue to ensure that goods offered to visitors are high-quality, good value for money and are correctly labelled," he said.
Six other companies and five individuals are also facing charges as a result of the investigation.
