Fashion: Valentino subsidiary placed in receivership for turning a blind eye to worker exploitation by subcontractors

An Italian court has placed one of the manufacturers of the fashion brand Valentino in administration for a year after uncovering abuses involving workers in its supply chain. This case follows a series of revelations that have tarnished the image of Italian and French luxury brands. Valentino Bags Lab is the fourth fashion company since 2023 to be targeted by the same Milan court for similar labor issues: an Italian unit working for Dior (LVMH), and Armani and the Italian handbag company Alviero Martini have also been placed in administration.

The court is expected to appoint an external administrator to verify that the company meets all of the judges' requirements, namely the implementation of effective tools to monitor its supply chain. Valentino said in a statement that it would cooperate with the authorities to better understand the reasons for these measures.

The company said it has stepped up supplier controls in recent years. These controls include "audits conducted by certified third parties covering the entire production process." led the company to get rid of producers who did not meet its standards.

The measures will be lifted sooner if the unit brings its practices into compliance with legal requirements, as was the case for the three companies previously targeted by the court.

Valentino is majority-owned by the Qatari investment fund Mayhoola. French fashion group Kering acquired a 30% stake in the Italian brand in 2023, with an option to purchase the entire stake in 2028.

In their decision, the Milan judges wrote that, although the previous cases had been widely publicized, "Valentino Bags Lab has continued to operate with suppliers who exploit workers and use labor in violation of safety regulations, without in any way strengthening its control systems."

Prosecutors in the case said the rule violations among Italian fashion companies were “a widespread and consolidated manufacturing method.” Italy is home to thousands of small manufacturers that account for 50 to 55 percent of global luxury goods production, according to calculations by consulting firm Bain. “After Armani and Dior, now comes Valentino… these things tarnish the prestige of ‘Made in Italy,’” said Flavio Sciuccati, senior partner at The European House – Ambrosetti Group. In recent years, investigations by Italian magistrates have highlighted widespread worker exploitation in the fashion and luxury supply chain.

In the case against Valentino Bags Lab, police officers from Milan's labor protection unit inspected seven Chinese-owned workshops around the financial capital between March and December 2024, including one of the companies implicated in the Dior case last year. They identified 67 workers, nine of whom had no employment contract. Three of them were illegal immigrants. The workers were forced to sleep on the job in order to have a "24-hour workforce," according to the court's ruling.

Electricity consumption mapped by the investigators showed "continuous production cycles day and night, including during holidays." In addition, safety devices had been removed from the machines to allow them to operate more quickly.

One of the Chinese subcontractors, Bags Milano Srl, has been working exclusively for Valentino Bags Lab since 2018, producing approximately 4,000 bags per month for between 35 and 75 euros ($39-84) each. These same bags retail for between 1,900 and 2,200 euros, according to two judicial sources.

The judges said the owner of Bags Milano had subcontracted the production of some of the Valentino bags to other Chinese-owned workshops.

According to the judgment, the owner stated that Valentino Bags Lab had not formally authorized this subcontracting, but that it was aware of it and had "turned a blind eye" due to the amount of work involved.

The owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for exploiting workers and employing illegal workers. Valentino Bags Lab itself is not under any criminal investigation. The Milan court proposed a scheme in June 2024 under which luxury companies would have to tighten controls on suppliers to ensure they comply with labor laws.