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LVMH\u2019s Italian subsidiary has been pulled into a probe involving worker exploitation practices.\u00a0<\/p>\n
The French luxury company\u2019s unit making Dior bags has allegedly been handing work to Chinese-owned firms that mistreat workers.\u00a0<\/p>\n
A Milan court looking into the matter said that the pattern of big fashion companies in Italy allegedly violating worker rules wasn\u2019t a one-off occurrence and was often done to increase profits.\u00a0<\/p>\n
The court has placed the unit, called Manufactures Dior SRL and\u00a0 fully owned by Christian Dior Italia SRL, under court administration on Monday, Reuters reported<\/a>.\u00a0<\/p>\n \u201cIt\u2019s not something sporadic that concerns single production lots, but a generalised and consolidated manufacturing method,\u201d the document viewed by the outlet said.<\/p>\n The investigation looked at four suppliers who were based near Milan and employed 32 people, of whom two were illegal immigrants while seven others lacked sufficient documentation.\u00a0<\/p>\n Local police inspected the suppliers\u2019 factories earlier in the year, and found that workers were subject to \u201chygiene and health conditions that are below the minimum required by an ethical approach,\u201d the court document said.<\/p>\n Of the egregious practices, the ruling found that employees slept at their workplace just to ensure they were \u201cavailable 24 hours a day.\u201d Safety devices on machines were also removed so operations could be faster, thus curbing production costs down to as little as \u20ac53 ($57) for a handbag that\u2019s otherwise sold at \u20ac2,600 ($2,794).<\/p>\n In the case of LVMH\u2019s Italian subsidiary, the company subcontracted with firms in the leather goods industry that were found to be based in the country but were Chinese-owned.\u00a0\u00a0<\/p>\n The probe isn\u2019t a good look for a high-profile brand like Dior, headed by Delphine Arnault, the daughter of LVMH CEO Bernard Arnault. In terms of legal action, the Milanese court\u2019s ruling doesn\u2019t mean a criminal probe on Dior directly but rather on its suppliers who\u2019ve been linked to such practices.\u00a0<\/p>\n Representatives at LVMH didn\u2019t immediately return Fortune<\/em>\u2019s request for comment.<\/p>\n For years, luxury companies\u2014and even non-high-end retailers\u2014have been linked to forced labor claims<\/a> in countries like China and India.\u00a0<\/p>\n The implication is that retailers turn to developing countries to reduce the cost of production, but often, that\u2019s tied to worker exploitation.\u00a0<\/p>\n In recent years the scrutiny over the clothing supply chain and its practices has increased.\u00a0<\/p>\n Italy lies at the center of such probes because it\u2019s home to thousands of small manufacturers that account for 50-55% of the global production of luxury clothing and leather goods, consulting firm Bain told Reuters<\/a>.\u00a0<\/p>\n Like Dior, Italian fashion giant Giorgio Armani, was investigated earlier this year after a Milan court ruled that the company underpaid people \u20ac2-3<\/a> to work roughly 10 hours a day for up to seven days a week at times. As a result, the company was placed under judicial administration.\u00a0\u00a0<\/p>\n In 2021, Uniqlo and Zara owner Inditex were part of<\/a> a French probe into forced labor practices linked to China\u2019s Uyghur community. Swedish H&M also allegedly engaged in similar activities in Myanmar<\/a>, making it the subject of an investigation and ultimately pushing it to wind up operations there.<\/p>\n<\/div>\nWhat do we know about the investigation?<\/h2>\n
Does this happen much in the luxury industry?<\/h2>\n