Two of Italy’s biggest luxury brands paid subcontractors only a fraction of the cost of making handbags that sell for thousands of dollars, a thorough investigation has revealed.
Milan prosecutors have investigated third-party suppliers used by LVMH’s Dior in recent months, who say the companies exploited workers to make the bags, paying them a fraction of the retail price.
Dior paid contractors $57 to make the bags and sold them for about $2,780, Reuters reported, citing investigation documents by the authorities.
This does not include the cost of raw materials such as leather.
Dior’s departments did not take “adequate measures to check the actual working conditions and technical capabilities of contractors,” prosecutors’ documents said, Reuters reported.
During the investigation, which took place in March and April, authorities found evidence that workers were sleeping in the facility and making bags around the clock, Reuters reported. They also obtained electricity consumption data that showed the facility was operating at night and on holidays. The subcontractors were Chinese companies, prosecutors said. Many of the workers were from China, including two who were in the country illegally and seven who worked without necessary documentation, prosecutors said. The investigation found that safety devices had been removed from gluing and brushing machines to allow them to run faster. LVMH did not respond to an email request for comment from Business Insider outside of normal business hours. Court documents show Dior has submitted a memo highlighting improvements to its supply chain, The Wall Street Journal reported on July 2. The investigation also extends to contractors for Giorgio Armani, who has been accused of poorly supervising suppliers. Reuters cited documents showing that Armani paid contractors $99 per bag, which sold for more than $1,900 in stores.
In response to a BI request for comment, a spokesperson for the Armani Group said it was working with authorities.
“The company has always had controls and prevention measures in place to minimize the risk of fraud in its supply chain,” the statement read.
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Luxury brand Dior pays bag manufacturer only $9,200 for $450,000 bag, Italian authorities investigate exploitative manufacturer [paradise★]
>>1 Dior buys leather and other things and makes bags with it, and the labor cost is 9200 yen per bag! What’s wrong with selling it for 450,000 yen? Even Toyota sells cars for millions of yen, built by employees who are paid just 1000 yen an hour.
>>2 You may know about the brand, but the people who buy and own the brand don’t know about your knowledge. They don’t even care. Is that okay for you to make this claim here? Well, you yourself have no intention of defending the brand.
Designer t-shirts cost tens of thousands of yen. I wonder how much they cost. For a long time now, this kind of thing has been a symbol of stupidity, like Louis Vuitton’s Hikakin.
Luxury branded products are just a tool to satisfy the desire for recognition, and quality and functionality are not important, so people are spending 10 times as much on products that would normally cost around 30,000 yen just to show off how great they are.
I knew it was like this. It’s a way to differentiate from the poor. It just makes you feel good to own it. There are very few Japanese people who can pull it off. White skin and style are important.
It’s strange that there are people who think that a bag that costs 10,000 yen is a status symbol. I often brag that I have 100 of them, but the Japanese-made bags that ordinary businessmen use are of higher quality lol. After all, even if you paid 1 million yen for a bag, it’s still a bag that could be made for 10,000 yen.
If you sold the same thing for 30,000 yen, it wouldn’t sell. You can think of the luxury experience of buying something at a luxury store for a high price as a selling point.
>>41 I don’t know if it’s appropriate to compare it to leather, but a free article in the Nikkei said that a dress made by a certain French brand using 10,000 yen per meter of silk from Fukushima Prefecture cost about 1 million yen, so the raw material cost is 1%.
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