[Italy] Armani company in receivership after labour exploitation probe

An Italian court has placed a company owned by Italian fashion group Armani under judicial administration following accusations that it was indirectly subcontracting production to Chinese companies that exploited workers, Yahoo reports.

Judges in Milan ordered a one-year receivership for Giorgio Armani Operations - an industrial arm of the Armani Group - according to a 31-page ruling seen by Reuters on April 5.

The company will reportedly continue operations during this period, under a court-appointed administrator.

The ruling stated that Giorgio Armani Operations had outsourced production of its bags, belts and leather goods to two firms which in turn subcontracted the work to four Chinese companies with workshops based on the outskirts of Milan.

According to investigators, the companies paid workers €2-3 ($2.16-3.25) per hour for working days averaging 10 hours - in some cases seven days a week - to make bags sold to Armani's subcontractors for €93, re-sold to Armani for €250 and put on the market for around €1,800.

In a statement, Armani Group said it had "always had control and prevention measures in place to minimise abuses in the supply chain," and added that it would work with the authorities to clarify its position.

For years the Milan public prosecutors' office has reportedly been investigating outsourcing of production by large groups in fashion and other sectors to subcontractors who allegedly exploit workers.

Fashion company Alviero Martini had its bags made in Chinese workshops, it was also placed under judicial supervision recently.

Italy houses thousands of small manufacturers responsible for more than 50-55 per cent of the global production of luxury clothing and leather goods - according to calculations from consultancy Bain - compared with 20-25 per cent for the rest of Europe.

The Armani subcontracting reportedly began in 2017 and continued until at least February 2024, when police last raided the workshops, Milan judges stated, noting that labour code breaches were an example of unfair business practices.

"The investigations uncovered irregular practices so deeply rooted and established, that they can be considered part of a wider business growth strategy," the judges wrote.

Source: Yahoo

(Quotes via original reporting)

An Italian court has placed a company owned by Italian fashion group Armani under judicial administration following accusations that it was indirectly subcontracting production to Chinese companies that exploited workers, Yahoo reports.

Judges in Milan ordered a one-year receivership for Giorgio Armani Operations - an industrial arm of the Armani Group - according to a 31-page ruling seen by Reuters on April 5.

The company will reportedly continue operations during this period, under a court-appointed administrator.

The ruling stated that Giorgio Armani Operations had outsourced production of its bags, belts and leather goods to two firms which in turn subcontracted the work to four Chinese companies with workshops based on the outskirts of Milan.

According to investigators, the companies paid workers €2-3 ($2.16-3.25) per hour for working days averaging 10 hours - in some cases seven days a week - to make bags sold to Armani's subcontractors for €93, re-sold to Armani for €250 and put on the market for around €1,800.

In a statement, Armani Group said it had "always had control and prevention measures in place to minimise abuses in the supply chain," and added that it would work with the authorities to clarify its position.

For years the Milan public prosecutors' office has reportedly been investigating outsourcing of production by large groups in fashion and other sectors to subcontractors who allegedly exploit workers.

Fashion company Alviero Martini had its bags made in Chinese workshops, it was also placed under judicial supervision recently.

Italy houses thousands of small manufacturers responsible for more than 50-55 per cent of the global production of luxury clothing and leather goods - according to calculations from consultancy Bain - compared with 20-25 per cent for the rest of Europe.

The Armani subcontracting reportedly began in 2017 and continued until at least February 2024, when police last raided the workshops, Milan judges stated, noting that labour code breaches were an example of unfair business practices.

"The investigations uncovered irregular practices so deeply rooted and established, that they can be considered part of a wider business growth strategy," the judges wrote.

Source: Yahoo

(Quotes via original reporting)