Police raids found Dior was using exploitative suppliers to produce luxury bags | Hacker News Reader

Police raids found Dior was using exploitative suppliers to produce luxury bags

businessinsider.com

58 pointsdiggan68 comments

[Yes, if I'm a famous-name artist, and can get $10,000 for a pencil-on-paper sketch that cost me $5 and 10 minute to produce, that's fine. But...]

Reading the article... BusinessInsider's headline has little to do with the prosecutor's government's stated concerns:

> In probes through March and April, investigators found evidence that workers were sleeping in the facility so bags could be produced around the clock, Reuters reported. They also tracked electricity-consumption data, which showed work was being carried out during nights and holidays, the report said.

> The subcontractors were Chinese-owned firms, prosecutors said. They said most of the workers were from China, with two living in the country illegally and another seven working without required documentation.

> The probe also said safety devices on gluing and brushing machines were removed so workers could operate them faster.

> The prosecution said violating labor rules was a common industry practice that luxury giants relied on for higher profits.

> "It's not something sporadic that concerns single production lots, but a generalized and consolidated manufacturing method," court documents about the decision to place Dior under administration said, according to Reuters.

> "The main problem is obviously people being mistreated: applying labor laws, so health and safety, hours, pay," Fabio Roia, the president of the Milan Court, told Reuters earlier this year. "But there is also another huge problem: the unfair competition that pushes law-abiding firms off the market."

Normally, I'd assumed that "famous brands used sub-contractors to do the dirty work" ==> "famous brand gets off with a slapped wrist". But the third subtitle:

> Judges placed Dior and Armani units under judicial administration for one year.

So hopefully not, this time?

I think the price matters insofar as they clearly have the revenue to produce quality goods safely. But they'd rather inflict human misery on people to save 0.4% of the retail cost.

> they clearly have the revenue to produce quality goods safely

The headline figure does “not include raw materials such as leather,” nor core costs like distribution, R&D, retail and marketing.

(That a “luxury” brand can be made by abused workers is a separate farce.)

I find it funny rich people buying a cheaply made Chinese product and thinking it is a status symbol and that their bag is superior.

There's not enough actually rich people around to explain the revenue these brands make. It's not rich people for the most part, just people who want to appear rich.

These brands exist to separate the 100k-200k household income demographic from their disposable income, and maybe some other demographics from money they didn't really have in the first place.

Most people who have money and manage to hold on to it have more sense than buying an overpriced low-quality bag that telegraphs they're a sucker.

You obviously havnt heard of ex-Malaysian Prime Minister's wife bag collection. There are rich or super rich people with habits like a drug addicts buying up these branded goods. Is basically like YTers getting patreon patrons. They dont need millions of followers. They just need 1000 hardcore fans that pay them monthly.

I'd figure that the "status" it symbolizes is some combination of:

- Juvenile any-excuse-to-say-I'm-betterism

- Convenient stupidity

- Willful ignorance

- Gloating that they're in the 0.1%, and need not care what is done to the bottom 99% in the name of catering to their petty wishes

(But I'll admit that, if enough of their social circle has such "luxuries", then they're stuck in a "I am in Rome, so ..." situation.)

Globalism is the greatest thing to ever happen to the slave trade. It pretty much put the “problem” away from people’s eyes.

Now no one sees the insane conditions and “salary” that is being paid. No need to own anybody, just pay them $10 a day at some foreign country. Works out cheaper as well.

This is how almost all "Made in Italy" clothing products are produced.

Local Italian governments made SEZs where garment manufacturing would occur but with no oversight from labor inspectors.

You'd have a bunch of small shops do piece work that was outsourced by the brands, and these small shops were largely Wu dialect speakers due to the mass migration from Zhejiang back in the 90s.

It's been reported on for decades but no one cared [0][1][2].

Italy has a massive shadow economy powered by laborers trafficked from China (garments), India (dairy), Sri Lanka (garments), etc.

30 years ago it would have been Albanians, Yugoslavians, Romanians, or Poles but they'd rather go to Germany which has been developed much longer than Italy (Italy's HDI in the early-mid 1990s was comparable to Mexico, China, Thailand, and Serbia's HDI today)

[0] - https://inthesetimes.com/article/working-for-fashion-chinese...

[1] - https://www.reuters.com/article/us-italy-sweatshop-insight/i...

[2] - https://www.newyorker.com/magazine/2018/04/16/the-chinese-wo...

Idk I been to a dairy farm in central Italy, the margins aren’t that great for the farmer. He was mostly self employed working literal 10+ hour days. The supermarkets get most of the cut.

He explained getting a worker trained and then paying them wasn’t feasible.

You can't justify leaving migrant workers to literally die due to workplace accidents and not taking them to get medical care [0][1]

This has been an issue for decades in Italy.

While Italy might be in Europe, it's rule of law and lack of support for those at the bottom rung of society is comparable to (not much) poorer Eastern European peers like Czechia.

[0] - https://www.bbc.com/news/world-europe-49687248

[1] - https://www.meltingpot.org/2024/06/a-latina-satnam-singh-e-s...

I’m saying there was workers beside the farmer in the dairy farm I visited

Yes. But being a small farm does not absolve you from following very basic employee safety laws that are mandated within the EU.

The Dairy you went to might be better run, but the experiences tend to trend closer to the negative experiences I've mentioned.

And this is something that has been reported on for over a decade [0][1][2][3][4], yet nothing has changed.

[0] - https://theecologist.org/2013/jan/04/migrant-workers-face-se...

[1] - https://www.foodmanufacture.co.uk/Article/2015/12/09/Food-in...

[2] - https://www.ilo.org/it/media/94341/download

[3] - https://newlinesmag.com/reportage/on-tuscanys-farms-women-mi...

[4] - https://www.cgil.it/speciali/2024/la-precarieta-ha-troppe-fa...

> Normally, I'd assumed that "famous brands used sub-contractors to do the dirty work" ==> "famous brand gets off with a slapped wrist".

Typically licensees work very hard to gain the licensing to manufacture for a brand. And the licensor has requirements like regular inspections for work conditions, that the licensee typically pays for, because they don't want publicity like this to damage their brand.

Without knowing the details I could guess that Dior wouldn't have wanted whichever factory they hired to shirk their guidelines. But, Eastern and Western norms for work conditions are very much different and getting Easterners to follow Western guidelines is quite difficult no matter how much you're willing to pay. In many cases factories put on a show for the inspector. Once he/she returns to their home country, the factory returns to its regular operating conditions, which are usually just normal work conditions for their country.

How is this any kind of problem? They trade on the brand, obviously.

That's just capitalism. buy low sell high. how is that something prosecutable?

acording to EU law companies have to check their suppliers for violations against a list of human right standards.

Strictly speaking it's a directive, which the member states have to implement as law. And from what I can tell it only goes in effect in 2027. Of course, no one is stopping Italy from implementing it early.

They're being prosecuted for labor law violations; having their fat margins revealed is just a side effect of the investigation.

Something else that should be prosecutable is having a headline that so misleads the reader from that actual content that people are able to make comments like yours in online forums

The headline isn't. The illegal mistreatment of workers detailed in the article is.

Ah! That might have been a better title. As it is, it's clickbait.

Always be cautious if the url is business insider

See the comment above, the price revelation is a side effect of an investigation into labor law violations.

In the meantime, in a rational market, a product commanding a 50x markup would quickly have its price driven down by competitors, which is more evidence that our markets are dishearteningly irrational. Profit represents market inefficiency.

What's the markup on software?

Clearly fashion and branding are immune to that calculus. Else we'd be buying designer clothes by the pound.

In other news, it cost around $4 to mine each carat of Canadian diamond worth $100.

There is no crisis where markets don't supply handbags for less than $2k.

Similarly, Markets are not a monolith so this doesn't prove anything about markets in general. Economics is a broad science which works to establish a model of commerce, with varying degrees of accuracy and utility.

Profits are not an inherently bad thing or dirty word. It just means that surplus value was created by a transaction, and workers can profit too

Profit as intended means producer surplus. Economic theory predicts producer surplus reaching 0, while consumer surplus getting maximized. That is what competition does. It does tell everything about markets. This does not happen because of IP doctrines, which distorts competition. And advertising, which causes information asymmetries.

Highschool theory might predict that for the price of butter, but everything after that is more complicated.

I feel like you are setting up strawmen positions for economic theory, using more economics to refute them, and then claiming economics is bunk.

True. People aren't paying $2,780 for the bag. They're paying for the brand name, and they get what they paid for. Seller and buyer are both happy.

The bad PR around this may ruin the brand value though, making the bags worth less retroactively.

Notably, the price tag does not even include the raw material. Which makes it an even weirder headline. But then it’s BI, which is not exactly known for quality or reporting.

Gomorrah (Gomorra), book by Roberto Saviano explains fashion brands business like this in detail (among others). Highly recommend, though sometimes quite depressing read.

This is one of the reasons I don't understand seemingly hysterical reactions to the existence of counterfeit goods (when they're being sold at prices that no one in their right mind would believe are for originals).

I've read more than a few articles intimating that counterfeit goods fund terrorism.

Funny how the originals fund human trafficking and breaches of safety laws and human rights violations and the illegal employment of child workers.

Sigh. Repeating patterns everywhere.

From Wikipedia: “Bernard Jean Étienne Arnault (born 5 March 1949) is a French businessman, investor and art collector. He is the founder, chairman and CEO of LVMH, the world's largest luxury goods company. Arnault is the third richest person in the world, with an estimated net worth of US$194 billion as of July 2024, according to Forbes.”

A few months ago something similar also happened to the fashion brand Alviero Martini who was found to be inert in regard to checking the supply chain of their products and whose subcontractors paid the laborers per piece (which is illegal in italy and it was a ridiculously low amount of money)

here is what i could find in english https://www.lcalex.it/en/il-caso-alviero-martini-indica-come... although most articles dwelve deeper in italian, such as https://www.osservatoriodiritti.it/2024/03/13/alviero-martin...

Worth to note that Alviero Martini most famous products, the ones with printed maps design, aren't even made in leather but in synthetic leather, yet when you google them you find the page header as "borse in pelle da donna" (women leather bags) when most of them are synthetics and just a few of them are in part or in most part leather. I just realized this and it adds another layer of scummyness lol

> when most of them are synthetics

in some circles, this is a feature not a bug. just use phrases like Vegan Friendly in the marketing and now your trendy

Yeah, definitely. I use eco leather too as well as real leather, just let's not pretend it is higher quality than real leather

Callous example of a Veblen good, and many more like it.

I'm surprised they even cost that much to produce. Is this surprise to anyone? Even the people paying retail prices have known for some decades how this works.

It's no less disgusting that they put human beings through what they do in order to squeeze every last penny out, and as a society we should stigmatise high price brands.

I'm surprised it's this high. I though manufacturing of those costs at most $20. It would probably cost this much if they made it in volume.

Exactly 57$ is already quite costly in comparison. 57$ in production would retail for at least 300$. And you can’t sell a bag cheap if your brand is demanding very high prices.

> The costs do not include raw materials such as leather.

Or they wouldn't cost this little if the workers weren't exploited.

How can people look into the costs and think: "it's fine, these people don't deserve compensation for their work. You know who worked hard, the shareholders. Yes, the $2000 profit should go to them."

Since pretty much everybody does that the problem is not with action of any single company. And the problem won't be fixed by actions of any single company. Let alone voluntary action.

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