Luxury goods makers behind iconic brands including Dior and Armani hired contractors that pay workers as little as $2 an hour to make handbags that they then sell for thousands of dollars apiece, according to European law enforcement officials.
Dior, the French multinational luxury fashion house chaired by mogul Bernard Arnault and his family, charges a supplier around $57 to manufacture a handbag that it sells in stores for around $2,780, according to The Wall Street Journal.
Armani, the Milan-based designer, paid $270 to a supplier to make handbags that were then sold on the retail market for just under $2,000, according to the Journal.
Italian authorities obtained the figures after police conducted a series of raids on workshops and makeshift factories that employed illegal immigrants and others “off the book,” the Journal reported.
Prosecutors in Milan accused the companies of hiring subcontractors that employ Chinese migrants and other foreign workers who are paid as little as between $2 and $3 an hour.
Milan court criticizes Dior, Armani for failing to adequately oversee their supply chains following investigation
“The Italian investigation highlights a distinctly modern issue in the luxury industry. While other sectors have moved manufacturing to China and other low-wage countries, many luxury brands kept production closer to home, believing it was crucial to their appeal. But despite being stamped with the “Made in Italy” label, prosecutors allege that some luxury goods are made by foreign workers, many of whom are Chinese, under conditions that fall far short of legal standards.
The workers often sleep in the workshops and are made to work from dusk until dawn, including on holidays and weekends, it was alleged.
Last month, Italian judges ordered a subsidiary of Dior, Armanti and Alviero Martini Spa, another luxury fashion maker known for map-print bags and other items, to be placed under court administration after ruling that their manufacturing units mistreated migrant workers.
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