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Italian authorities have uncovered stark realities behind the glitz of fashion catwalks and luxury boutiques during recent raids on local factories and workshops involved in the production of Dior and Armani handbags, according to a report by Money Review.
Milanese prosecutors' investigation into working conditions revealed that these renowned brands exploit foreign workers to manufacture their high-end products at minimal costs compared to their retail prices.
Documents from the investigation, cited by the Wall Street Journal, indicate that Dior pays a mere 53 euros per bag to suppliers, which retail for approximately 2,600 euros. Similarly, Armani purchases bags from suppliers for 93 euros, resells them for 250 euros, and then sells them in stores for around 1,800 euros.
These production costs exclude expenses for materials like leather, as well as costs associated with design, distribution, and marketing.
"Why is production so inexpensive? Brands need to reflect on that," remarked Fabio Roia, president of Milan's judiciary overseeing the investigations.
While the companies themselves are not facing prosecution, the court has criticized them for inadequate oversight of their supply chains. Suppliers implicated may face charges related to labor exploitation and undeclared work.
The revelations come amidst growing concerns over production practices in the luxury sector. Despite maintaining a "Made in Italy" label, many luxury goods are manufactured by foreign workers, often Chinese, under conditions that fail to meet legal standards, prosecutors noted.
The investigation coincides with a period of economic strain and rising prices, prompting some consumers to curtail spending on luxury items.
Luxury brands justify premium pricing by promoting artisanal craftsmanship, though much of the actual production is outsourced. While the design and development remain in-house, manufacturing is often subcontracted to smaller Italian workshops, where significant portions of the world's luxury clothing and leather goods are made.
One challenge highlighted is the practice of subcontractors further outsourcing work, complicating oversight and accountability.
Alviero Martini, renowned for map-themed bags, recently expressed surprise after discovering that at least two of its 40 suppliers had illicitly subcontracted production without its knowledge.
Investigators found workers at these subcontractors often operating machinery with safety features disabled, working long hours beyond legal limits, including weekends and holidays, and residing within factory premises.
