Giorgio Armani bags produced by exploited Chinese workers near Milan: Italian police

Exploited Chinese workers employed by unauthorized subcontractors in Italy to produce handbags and accessories for Giorgio Armani fashion house committed a series of supply chain irregularities that the in-house production company failed to properly monitor, Italian police said on Friday.

The fashion house denies wrongdoing by GA Operations, which makes clothing, accessories and home décor for the Giorgio Armani Group brand.

“The company has always implemented control and preventive measures to minimize abuse in its supply chain,” the Armani statement said. “GA Operations will cooperate with the competent authorities with the utmost transparency to clarify its position on this matter.”

According to police, GA Operations hired a subcontractor who in turn hired unauthorized Chinese subcontractors who secretly hired workers, some of whom were living illegally in Italy. They allegedly ignored health and safety regulations as well as regulations on working hours, breaks and rest days.

Police say this is part of a system of “caporalato”, the illegal brokering and exploitation of workers most often associated with the agricultural sector. Four Chinese factory owners face separate criminal investigations for their roles.

Meanwhile, GA Operations is not under investigation but has been placed under judicial management for a year as part of a process to ensure it operates legally, Gendarmerie Lt. Col. Loris Baldassarre express.

Charts released by police show the fashion house sold a handbag for about 1,800 euros ($1,950) and paid a Chinese subcontractor 93 euros ($100). Police said the authorized subcontractor, acting as an intermediary but with no real production capacity, paid 250 euros for the same bag and made a profit of 157 euros per bag.

“This system allows Chinese factories to maximize profits on the products they actually produce, reducing labor costs through the use of off-the-books and illegal workers,” police said in a statement.

A video released by the gendarmerie showed leather goods being made in a workshop and two beds covered with blankets in an adjacent office. The second-floor dormitory is reached via a gated staircase and contains a set of bunk beds and another bed strewn with clothes and blankets.

The dirty bathroom was stacked with cooking utensils, next to a broken sink and a pot of water that appeared to contain eels. There was a gas stove in the makeshift kitchen, and the wall next to it was splattered with food. The sink was covered with dirty dishes and uneaten food. There was cardboard taped to the windows.

Baldassarre said the discovery was part of a wider investigation into the fashion supply chain in Milan and Bergamo province, which placed bag and accessories maker Alviero Martini Spa under judicial administration in January.

In the latest case, police investigated four illegally run factories with unhealthy working conditions and a range of safety breaches, including illegal dormitories with “sanitary and hygienic conditions falling below ethical minimums”.

The factories were ordered to close, and four Chinese owners facing separate criminal investigations were fined and administrative penalties totaling 145,000 euros (nearly $157,000).