A series of raids in Italy in 2024 has exposed the contrast between the glamorous world of Milan’s catwalks and some of the realities of luxury-goods production. An investigation by Milan prosecutors into working conditions at local factories found workshops making handbags and other leather goods for Dior and Armani used exploited foreign labor to produce the high-end products at a fraction of their retail price.

Dior paid a supplier €53 apiece, roughly $57, to assemble a handbag that it sells in stores for €2,600, or about $2,780, according to documents examined as part of the probe….Some of the raided workshops, all of which were in Italy, were also making products for other fashion brands, prosecutors said. 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. As a result of the Italian investigation, judges in June 2024 placed Manufactures Dior SRL—a unit of Dior—under so-called court administration after ruling that its supply chain included Chinese-owned firms in Italy that mistreated migrant workers.

Excerpts from Nick Kostov, Raids Find Luxury Handbags Being Made by Exploited Workers in Italy, WSJ, July 2, 2024