LVMH-owned cashmere brand Loro Piana has been placed under judicial administration due to alleged worker exploitation at its subcontractors.
A Milan court has ordered Loro Piana to undergo court monitoring for one year. The company subcontracted its production to Chinese-owned workshops in Italy, the court found, where employees worked for longer than the standard eight hours and were paid less than minimum wage.
“The production of such apparel had been carried out in a context of labour exploitation,” the court said.
Loro Piana had given production contracts to companies with no manufacturing capacity, the ruling said, who then subcontracted manufacturing to Chinese-owned workshops in Milan.
In these workshops, migrant workers were often made to work up to 90 hours a week, according to the court. Workers were paid just EU€4 an hour.
The contracting and subcontracting firms involved are now under a criminal investigation. Loro Piana said that a supplier had subcontracted production without informing the company, and that it had already ended its relationship with the supplier.
The case began after Italian police shut down a workshop in the suburbs of Milan for alleged worker exploitation in May, with one Chinese national being arrested for labour law violations.
Valentino’s handbags unit was also placed under administration in May due to similar allegations of employee exploitation in its supply chain.
LVMH’s (EPA: MC) share price closed at EU€479.55, down from its previous close of €487.70. Its market capitalisation is €240.6 billion.
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