How Much Does It Really Cost to Make a $2,800 Dior Bag? The Shocking Truth Revealed

In a sweeping investigation by Italian prosecutors in Milan, it was revealed that luxury fashion brands Dior and Armani pay a fraction of their retail prices to produce their high-end handbags. This investigation exposed the exploitation of workers by subcontractors and shed light on the true production costs of these luxury items.

The Cost Breakdown

Recent reports, including a detailed account by Reuters, have unveiled that Dior, a subsidiary of LVMH, paid a supplier only $57 to produce a handbag that retails for about $2,780. It's crucial to note that this cost does not include raw materials like leather, which add to the total production expenses.

The Investigation Details

The investigation, conducted in March and April, discovered several disturbing practices. Workers were found sleeping at the facility to ensure around-the-clock production. Investigators used electricity-consumption data to confirm that work continued during nights and holidays. These findings indicate severe exploitation of workers by third-party suppliers.

Labor Exploitation and Safety Violations

The subcontractors, primarily Chinese-owned firms, employed workers predominantly from China. Among them, 2 were living in Italy illegally, and 7 were working without the necessary documentation. Safety measures were also compromised; safety devices on gluing and brushing machines were removed to increase production speed, endangering workers' well-being.

Dior and Armani's Response

Despite these alarming findings, the relevant unit of Dior failed to implement "appropriate measures to check the actual working conditions or the technical capabilities of the contracting companies," according to prosecution documents. LVMH, Dior's parent company, did not immediately respond to requests for comments.

Court documents revealed that Dior submitted a memo highlighting its efforts to improve its supply chain. However, the effectiveness of these measures remains to be seen.

Giorgio Armani was also implicated in the investigation. Documents showed that Armani paid subcontractors $99 per bag for products that sold for over $1,900 in stores. This raises questions about the brand's oversight of its suppliers and their working conditions.

Conclusion

The revelations from this investigation have sparked a broader discussion about the ethical practices of luxury brands and their responsibility towards workers in their supply chains. As consumers, it is essential to be aware of these practices and advocate for greater transparency and ethical standards in the fashion industry.