LVMH's Dior unit under judicial control in Italy amid labor exploitation scandal

Image Credits: UnsplashImage Credits: Unsplash
  • A Milan court has placed LVMH's Dior unit under judicial administration due to severe labor exploitation practices.
  • The investigation revealed that subcontractors employed undocumented workers and forced them to work in unsafe conditions.
  • This case highlights the broader issue of unethical labor practices in the luxury fashion industry and the need for greater transparency and oversight.

A Milan court has placed an Italian subsidiary of LVMH, which manufactures Dior-branded handbags, under judicial administration. This decision follows a thorough investigation that uncovered severe labor exploitation practices among the company's subcontractors.

The Milan court's ruling came after a detailed probe into the working conditions at Manufactures Dior Srl, the Italian production arm of Christian Dior. The investigation revealed that the company had subcontracted work to Chinese-owned firms that mistreated workers. According to the court documents, these subcontractors employed undocumented and illegal workers, failed to adhere to health and safety regulations, and forced workers to live and work in substandard conditions.

The court's decision to place the Dior unit under judicial administration for one year aims to rectify these issues. During this period, the company will continue to operate but under strict oversight to ensure compliance with labor laws and ethical standards.

Unethical Labor Practices Unveiled

The investigation highlighted several alarming practices. Workers were found to be living and working in conditions that fell far below the minimum ethical standards. The court documents detailed how workers were made to sleep in the workplace to ensure "manpower available 24 hours a day." Additionally, safety devices were removed from machinery to speed up production, further endangering workers' lives.

One particularly shocking revelation was the cost-cutting measures employed by the subcontractors. For instance, they charged Dior as little as 53 euros to supply a handbag, which the fashion house then retailed for 2,600 euros. This stark disparity underscores the exploitation and unethical practices prevalent in the supply chain.

Broader Implications for the Luxury Fashion Industry

This case is not an isolated incident. It marks the third such decision by the Milan court this year, following similar actions against other high-profile fashion brands like Giorgio Armani. The increased scrutiny on luxury goods companies' supply chains reflects a growing demand from consumers and investors for ethical practices and transparency.

Italy, a hub for luxury clothing and leather goods manufacturing, has seen its industry impacted by these revelations. Consultancy Bain estimates that Italian manufacturers account for 50-55% of global luxury goods production. The exposure of such unethical practices threatens to tarnish the reputation of this vital sector.

LVMH's Response and Future Actions

LVMH, the parent company of Dior, has yet to comment on the court's decision. However, the ruling sends a clear message to the luxury fashion industry about the importance of ethical labor practices. Companies must take proactive measures to ensure their supply chains are free from exploitation and adhere to labor laws.

The court's decision also highlights the need for luxury brands to internalize production and reduce reliance on subcontractors. This approach can help mitigate reputation risks and ensure better oversight of working conditions.

The Milan court's decision to place LVMH's Dior unit under judicial administration underscores the urgent need for ethical labor practices in the luxury fashion industry. As consumer and investor scrutiny intensifies, companies must prioritize transparency and compliance with labor laws to maintain their reputation and ensure the well-being of their workers.


Luxury World
Image Credits: Unsplash
LuxuryAugust 2, 2025 at 1:00:00 AM

How luxury lost its edge—and the moves that could win customers back

Luxury used to command reverence. It was slow, scarce, and wrapped in ritual. Today, it’s everywhere—scrollable, hashtagged, and often indistinguishable from its knockoff...

Retail United States
Image Credits: Unsplash
RetailJuly 30, 2025 at 12:00:00 PM

Trump’s tariffs likely to drive up food prices for U.S. consumers, analysts warn

President Donald Trump’s proposed blanket tariffs, set to take effect August 1, are reviving concerns about inflation—but with a more everyday twist. The...

Retail Singapore
Image Credits: Unsplash
RetailJuly 29, 2025 at 2:30:00 PM

At what point did landlords become the gatekeepers of our communal future?

While Gulf states pour billions into revitalizing retail districts with climate-controlled markets and community-first zoning, Singapore’s street-level food culture faces a quieter erosion....

Retail World
Image Credits: Unsplash
RetailJuly 25, 2025 at 1:30:00 PM

McDonald’s isn’t the cheap option anymore. Can it be again?

McDonald’s didn’t just build a fast-food empire on burgers and fries—it built it on the idea of predictable value. For decades, the Golden...

Retail World
Image Credits: Unsplash
RetailJuly 24, 2025 at 1:00:00 AM

Why inflation changes what—and how—people buy

Inflation doesn’t just raise prices. It rewires consumer logic, alters trust in value delivery, and exposes the fragility—or durability—of business models. While UK...

Retail United States
Image Credits: Unsplash
RetailJuly 13, 2025 at 11:00:00 PM

The real reason dollar stores are so cheap

In the sprawling landscape of global retail, dollar stores have come to symbolize accessibility, thrift, and convenience. But behind their irresistible prices lies...

Retail World
Image Credits: Unsplash
RetailJuly 11, 2025 at 6:30:00 PM

Starbucks barista cup writing policy backfires as forced personalization

A cheerful “Yum!” scribbled in marker. A “You got this!” on your flat white. What’s not to like? In isolation, these messages feel...

Retail Singapore
Image Credits: Unsplash
RetailJuly 7, 2025 at 12:30:00 PM

Singapore retail sales growth driven by vehicle demand

Singapore’s retail sales rose by 1.4% year-on-year in May 2025, continuing a fragile recovery trend in domestic consumption. While this marks the second...

Retail World
Image Credits: Unsplash
RetailJune 27, 2025 at 2:00:00 PM

Starbucks turns to local partners as beverage wars escalate

For decades, Starbucks enjoyed uncontested dominance as Asia’s symbol of modern café culture. From Shanghai to Jakarta, its green-and-white logo became shorthand for...

Retail World
Image Credits: Unsplash
RetailJune 27, 2025 at 1:30:00 PM

Nike slows sales slide in Q1 as turnaround strategy gains early traction

Nike says its sales decline is slowing. On paper, that sounds like progress. But for any operator or product strategist who’s scaled systems...

Retail Singapore
Image Credits: Unsplash
RetailJune 23, 2025 at 7:30:00 PM

Is language becoming a barrier between foreign businesses and locals in Singapore?

When a customer recently walked into a popular bubble tea shop in central Singapore, they were met with blank stares. Their order, spoken...

Retail World
Image Credits: Unsplash
RetailJune 23, 2025 at 6:00:00 PM

How customers shape the gig economy’s success

It begins with a tap. A ride requested. A meal ordered. A freelance job accepted. For the customer, it feels transactional—fast, precise, frictionless....

Load More