"Clothes Made by Chinese Workers Paid 4 Euros an Hour Sold for 3,000 Euros as Luxury Goods"

Italian Luxury Brand Loro Piana Faces Judicial Sanctions
Exploitation of Chinese Workers Through "Multi-layered Subcontracting"
"Profiting by Intentionally Failing to Supervise Illegal Activities"

Loro Piana, the Italian subsidiary of the world's largest luxury group LVMH, has been found to have exploited labor and paid low wages to Chinese subcontractor workers. According to Yonhap News on July 14 (local time), citing the Italian daily Corriere della Sera, the Milan court designated Loro Piana as subject to judicial administration for one year on that day.

Italian brand Loro Piana. Photo by AFP News Agency

According to Yonhap News, Loro Piana outsourced garment production to a clothing supplier, which in turn subcontracted the work to a Chinese company near Milan. The secondary subcontractor reportedly employed Asian workers who were staying in Italy illegally, making them work at night and on holidays. Italian authorities, using electricity consumption data, discovered that the workers had worked far beyond the legal working hours. In addition, poor working conditions were uncovered, including illegal dormitories, unsanitary work environments, and the use of machines without safety devices.

Suspicions against Loro Piana began in May when the Carabinieri police of the Milan Labor Protection Agency arrested a Chinese factory owner and shut down his factory located northwest of Milan. One worker reported being assaulted by the employer, sustaining injuries that required 45 days of treatment, and there were also claims of unpaid wages amounting to 10,000 euros (about 16 million won).

The Carabinieri police found that Loro Piana cashmere jackets were being produced at the site, and that 10 Chinese workers, including 5 undocumented immigrants, were forced to work up to 90 hours per week, seven days a week. It was also revealed that they were paid 4 euros (about 6,500 won) per hour and slept in illegally installed rooms inside the factory. The factory reportedly produced about 6,000 to 7,000 Loro Piana jackets annually, and for orders of more than 100 pieces, they received 118 euros (about 190,000 won) per jacket, while for orders of less than 100 pieces, they received 128 euros (about 126,000 won) per jacket. The retail price of Loro Piana men's cashmere jackets ranges from 3,000 euros (about 4.84 million won) to 5,000 euros (about 8.06 million won).

The Milan court stated that "Loro Piana benefited by intentionally failing to supervise the illegal activities of its subcontractors." As a result, Loro Piana will be under court supervision for the next year. However, if the company changes its practices to comply with legal requirements, the administrative procedures may end early. In a statement, Loro Piana said, "The supplier entered into a subcontract without notifying us, violating legal and contractual obligations," and added, "Upon learning of this in May, we terminated the contract with the supplier."

This is not the first time luxury brands in Italy have been caught using multi-layered subcontracting to cut production costs and maximize profits. According to the media, since 2023, Valentino, Dior, Armani, and Alviero Martini have all been placed under court administration. Last year, it was reported that the production cost of a Dior bag sold for 2,600 euros (about 3.84 million won at the time) was only 53 euros (about 80,000 won), causing public shock. The subcontractor contracted with Dior also hired undocumented Chinese workers and operated the factory 24 hours a day, without holidays.