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The dark side of luxury – Modern day slaves and bags 2600 euros

The dark side of luxury – Modern day slaves and bags 2600 euros

The dark reality behind the lights on the catwalks and the glitter in luxury stores has been revealed by raids by Italian authorities on local factories and workshops where Dior and Armani bags are made. Milanese prosecutors' investigation into working conditions at these factories has shown that the brands are using foreign workers to produce their luxury products at a fraction of their retail price.

Specifically, Dior paid its supplier 53 euros a piece to produce a bag that retails for 2,600 euros, according to documents part of the investigation, published by the Wall Street Journal.

Armani bags are sold to a supplier for 93 euros, then resold to Armani for 250 euros, and finally sold in stores for 1,800 euros. This production cost does not include the cost of leather or other raw materials, while companies simultaneously pay the cost of designing, distributing and marketing their products.

The companies do not face criminal prosecution, but the court criticized them for not properly supervising their production chain. Some of the suppliers may face justice for exploiting workers. These revelations come at a time when manufacturing issues are a constant concern for the luxury industry.

While other industries have moved production to China and other low-cost countries, luxury goods companies have kept it close to home, reasoning that this is part of the appeal of their products. But despite the "Made in Italy" label, some luxury goods are produced by foreign workers, many of them Chinese, under conditions that do not meet legal standards, according to prosecutors' statements.

The research comes at a time when many homebuyers are cutting back on luxury goods due to tougher economic conditions and rising prices.

Companies can set their retail prices high, in part because buyers believe their products are made by specially trained craftsmen in workshops. In fact, while brands do product design and development in-house, they outsource manufacturing.

Much of this process takes place in Italy, home to thousands of small artisans who produce 50-55% of the world's luxury clothing and leather goods. A challenge for brands is that these suppliers often outsource the work, who in turn sometimes outsource it.

*The article was published by Scan and reposted by