Workers at an Italian factory found to have been exploited in the production of accessories for Giorgio Armani have highlighted the complexity of fashion supply chains. Even in a highly regulated continent like Europe, it is possible to circumvent the systems that ensure the safety and protection of workers, Fashion United reported.
Fashion supply chains are fragmented and involve multiple actors in the production process, including raw material suppliers, manufacturers, subcontractors, logistics service providers and retailers. Although Giorgio Armani was probably unaware of the working conditions of subcontractors who were outsourced to an unauthorized Chinese subcontractor, it is clear that the difference in production between luxury and fast fashion is minimal. In addition, luxury brands cannot exempt themselves from exploitation. With each structure operating independently, tracking the entire supply chain and monitoring labor conditions, environmental practices and product quality at each stage is a challenge for the brand whose products are manufactured.
Italian police revealed the cost margins for the Armani accessories, which were found to cost €93 to make and the middleman sold them to Armani for €250 and then retailed them for €1,800. While luxury brands often justify their high prices by touting factors such as craftsmanship, exclusivity and brand heritage, it is now apparent that these markups are often excessive and opaque. A markup of 1,838.71% between the original price and the retail price is remarkably high, but it is in line with the pricing strategies of most luxury brands.
The only way to keep production costs low was for the Chinese factory making the products to use low labor costs by resorting to off-the-shelf and illegal workers. The workers probably received 2 to 3 euros per hour, which is well below the ethical minimum wage in Italy./BGNES
