Luxury fashion giants Dior and Armani are under investigation for potentially misleading consumers about their supply chain practices. The probe follows allegations of labor exploitation at their subcontracted Chinese suppliers, in Italy.
Luxury Brands Under Scrutiny
Luxury fashion brands Dior and Armani are facing an investigation over allegations of misleading consumers. The probe comes after Italian courts found that the brands’ suppliers had exploited factory workers. Both brands have been under scrutiny for several months, with the latest revelations coming to light on July 17.
Unethical Labor Practices
According to the prosecutors in Milan, Armani and Dior subcontracted the production of their handbags to Chinese companies operating in Italy. These companies reportedly violated numerous regulations on ethical labor practices. For instance, it was found that Chinese-owned suppliers feeding a Dior subsidiary removed safety devices from machines to increase their speed and forced workers to live and sleep in the factories.
Exploitation and Markup
Armani faced similar allegations in April when it was discovered that the company had subcontracted to Chinese suppliers with factories in Italy. These factories paid workers €2-3 ($2.16-3.25) an hour for 10-hour workdays and forced them to work seven days a week. The handbags produced in these facilities were sold to Armani subcontractors for €93 each, then to Armani for €250, and finally to consumers for €1,800.
Investigation by Italy’s Competition Authority
The working conditions in these factories and the significant markup on the handbags are now the focus of a new investigation by Italy’s Competition Authority (ICA). The ICA is probing whether Armani and Dior deceived consumers with messaging that emphasized the craftsmanship and excellence of their workmanship.
Brands Respond
In response to the allegations, Dior has stated that it has ceased taking orders from the suppliers named in the investigation. The brand alleges that these suppliers had hidden their labor practices from the company despite regular audits. On the other hand, Armani has claimed that the allegations have no merit and that they are cooperating with the authorities.
