Italy Calls Out Dior For Unethical Supply Chain And Warns Other Luxury Brands About Abuses

Christian Dior

“This and similar cases could further undermine the credibility of the luxury fashion industry as a whole. All of the luxury fashion brands could fall under suspicion of collectively engaging in unethical and unsustainable business practices. This could be a very hard and hardly fixable blow, since it would mean questioning not only the tangible, intrinsic value of the products, but also their intangible value that includes their credibility and integrity,” said Professor Alessandro Balossini Volpe, ISTUD.

A Milan court just placed LVMH’s Christian Dior brand under judicial administration for a year after an investigation found two of its Chinese-owned subcontractors based outside Milan had exploited their workers. This followed a similar judgment in April against Giorgio Armani for “culpably failing” to oversee its suppliers, according to Reuters.

While Dior was not held criminally at fault, it found that Dior was negligent by failing to take “appropriate measures to check actual working conditions or technical capabilities of contracting companies.”

The court’s investigation also alleged that such unethical manufacturing practices are systemic throughout Italy, where thousands of small foreign-owned manufacturers supply luxury brands with goods that can claim the prized “Made in Italy” label but are produced at “Made in China” prices.

“It is not something sporadic that concerns single product lots, but a generalized and consolidated manufacturing method,” the filing stated, as luxury fashion brands seek to generate higher profits.

Reuters also reported that the supply chains of some dozen other fashion brands are under investigation as Italian law requires companies outsourcing production to carry out adequate oversight of their suppliers.

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“For affluent consumers, luxury is a privilege, not a right, and as they look at the challenges they and the world at large face this coming year, they are signaling a willingness to trade off excess spending on luxury. Many plan to batten down the hatches and ride out any potential economic storm, as they did in the Great Recession of 2008 and 2009,” said Chandler Mount, Affluent Consumer Research Co.

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Over the last three years, the luxury market has experienced a whirlwind of change. After rising 7 percent in 2019 before the pandemic, it suffered a steep decline in 2020, only to bounce back with spectacular growth through 2021 and 2022.

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