Dior, Shocking Handbag Production Costs Revealed During Prosecutor Investigation into Labor Exploitation

Labor Exploitation Allegations Emerge at Dior Handbag Manufacturer
3.8 Million KRW Dior Handbag Costs Only 80,000 KRW to Produce

It has been revealed that the cost price of a luxury brand Christian Dior handbag, which sells for millions of won in stores, was only about 80,000 won.

On the 11th (local time), according to major foreign media and Italian local press, the Milan prosecutor's office is investigating the supply chains of about 12 fashion brands. This action was taken after a division of Louis Vuitton Mo?t Hennessy (LVMH) was subjected to a court investigation in Italy on charges of worker exploitation. The Milan court appointed a 'judicial administrator' to oversee the Dior handbag manufacturer on the same day.

[Photo by Yonhap News]

According to a copy of the court ruling obtained by major foreign media, workers at four subcontractors producing Dior bags suffered from long working hours, including overnight shifts and holiday work. Some employees slept at the workplace to keep the factory running 24 hours, and safety devices on machines were removed to increase work speed. It was also revealed that some employees did not have formal employment contracts with the company. Illegal immigrants from countries such as China and the Philippines were also confirmed to be employed.

The Milan prosecutor's office has investigated companies lowering manufacturing costs in this manner over the past 10 years. According to recent investigations, small-scale manufacturers received only 53 euros (about 78,500 won) to produce one Dior handbag. Dior sold this product in stores for 2,600 euros (about 3.8 million won).

The court held Dior's business division responsible for neither verifying the working conditions or technical capabilities of the suppliers exposed this time nor conducting regular audits. Earlier, Italian judicial authorities took similar measures against Giorgio Armani's suppliers in April.

Meanwhile, according to consulting firm Bain, it is estimated that thousands of small manufacturers in Italy supply products labeled ‘Made in Italy’ to major brands, accounting for 50-55% of luxury goods worldwide.