Loro Piana under court scrutiny over alleged labor exploitation: The dark side of luxury fashion

Following Gucci, Armani, Dior and other big names, luxury brand Loro Piana - part of luxury conglomerate LVMH - has become the next name in the Italian fashion industry to be supervised by the court for its involvement in labor abuses in the supply chain.

Loro Piana is the latest name in a series of scandals that have tarnished the image of Italian luxury brands - Photo: REUTERS

According to the 26-page ruling, the Italian court ordered Loro Piana to be monitored for one year as part of an investigation that began in 2023 into exploitative practices in the supply chain for luxury brands in Italy.

Loro Piana confirmed that the cause was a supplier who arbitrarily transferred production to a third party without prior notice, which is both a legal and contractual violation. The brand stated that it immediately terminated its cooperation with the supplier upon discovering the incident.

The investigation was launched in May after a Chinese worker reported being beaten by his employer, resulting in injuries requiring 45 days of treatment, while demanding 10,000 euros in unpaid wages.

Exposing the dark side of the luxury industry

Police then raided several Chinese-run factories around Milan, discovering serious violations of working conditions, illegal dormitories and unsanitary living conditions.

In one case, they discovered a factory producing cashmere coats branded Loro Piana, where 10 Chinese workers – including five illegal immigrants – were forced to work up to 90 hours a week, with no days off, for just 4 euros an hour.

These workers also have to sleep in makeshift rooms, illegally built right on the factory premises.

Previously, other famous brands such as Valentino, Dior (the second largest brand under LVMH), Armani and Italian handbag brand Alviero Martini were also under court supervision for similar allegations related to labor exploitation - Photo: Prestige Online

The Milan court determined that Loro Piana outsourced production to two intermediary companies – essentially “shells” with no production capacity – and that these two companies further outsourced work to Chinese-owned garment factories in Italy.

The owners of the intermediary companies and subcontracting factories are currently under investigation for labor exploitation and “off-the-books” employment. Meanwhile, despite judicial scrutiny, Loro Piana has not faced any criminal charges.

Loro Piana stressed that it is "continuously reviewing and will continue to tighten its inspection and monitoring processes" to ensure its supply chain complies with ethical standards.

The Milan court concluded that Loro Piana deliberately created loopholes in supply chain oversight, primarily in pursuit of higher profits.

Italy now produces 50-55% of global luxury goods, according to estimates by Bain & Company. With the Italian fashion industry's reputation severely damaged, major brands signed a pact with the government in May to combat labour exploitation - Photo: RTE

Cheap processing, luxury labeling to make huge profits

Prosecutors say violations of labor and safety laws in the Italian fashion industry are common.

The court emphasized that completely entrusting industrial production processes to processing units not only helps to cut labor costs, but also reduces the criminal and administrative liability of enterprises for working conditions.

Here's how brands maximize profits by pushing the "dirtiest" part of the value chain out of direct control - Photo: Grazia Singapore

Based on the investigation results, Loro Piana orders about 6,000 - 7,000 coats per year through an intermediary company, at a price of only 118 euros per coat (when the order is over 100 products) and 128 euros if the order is under 100 pieces.

Meanwhile, the official prices on Loro Piana's website for men's cashmere coats range from just over 3,000 euros to over 5,000 euros each.

Loro Piana explained that the reported cost figures "do not fully reflect the prices they pay to suppliers", as they also have to take into account factors such as raw materials, fabrics, etc.

However, the huge gap between the manufacturing price and the selling price still represents a huge profit margin – much of it generated on the back of cheap labor and working conditions that violate human rights .

Loro Piana joined the luxury empire LVMH in 2013 when the group bought 80% of the shares, retaining 20% for the founding family. This is a brand favored by the upper class.

Notably, in June, Frederic Arnault - son of LVMH chairman and CEO Bernard Arnault - was appointed CEO of Loro Piana, in the context that this brand is under a lot of pressure regarding transparency and supply chain ethics.

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Source: https://tuoitre.vn/loro-piana-bi-toa-giam-sat-vi-cao-buoc-boc-lot-lao-dong-goc-toi-cua-thoi-trang-xa-xi-20250715235543808.htm