A Milan court has placed Valentino Bags Lab Srl under judicial administration for subcontracting production of its bags to workshops accused of exploiting workers and manufacturing Valentino-branded handbags for as little as €35 to €75 each. According to a newly issued decision from the Italian court, Valentino Bags Lab “culpably failed” to supervise its suppliers, enabling a business model that prioritized profit over compliance with labor laws. The Valentino-linked company now has a year to align its practices with Italian labor law – though the administration period may be lifted earlier if proper reforms are implemented sooner.
In the Valentino Bags Lab case, Carabinieri police inspected seven Chinese-owned workshops around Milan between March and December 2024. The probe focused on 67 workers, including nine who were working in an off-the-books capacity and three who were undocumented immigrants. Workers reportedly slept in the workshops to enable round-the-clock production, as first reported by Reuters, while safety devices were allegedly stripped from machinery to maximize speed. Electricity usage data revealed uninterrupted production cycles – day and night, including holidays – underscoring what prosecutors allege is a deliberate business model built on labor exploitation.
The court found that one contractor, Bags Milano Srl, has relied exclusively on Valentino Bags Lab as its sole client since 2018, producing approximately 4,000 Valentino bags per month at a cost of €35 to €75 each. Those same bags were then sold at retail prices between €1,900 and €2,200. Judicial sources allege that Bags Milano further subcontracted work to additional Chinese-owned workshops under equally troubling conditions.
While neither Valentino nor Valentino Bags Lab are facing criminal investigation, owners of both the direct and indirect suppliers at issue are under investigation for labor exploitation and employment of undocumented workers.
A Broken System
The court’s ruling reflects its mounting intolerance toward what prosecutors have called a “generalized and consolidated manufacturing method” within the luxury sector: the outsourcing of production to underregulated, often Chinese-owned workshops operating on the margins of labor law. At the same time, the judicial intervention marks the latest in a growing wave of legal interventions targeting labor violations in the Italian luxury supply chain – a crackdown that is fast becoming one of the defining regulatory movements in European fashion.
Similar cases have been waged against Italian operations of LVMH-owned Christian Dior, Armani, and Alviero Martini subsidiaries since December 2023. While all three previously sanctioned companies saw their judicial administrations lifted early after corrective actions, the judges in the Valentino Bags Lab case emphasized that prior enforcement had been widely publicized – and yet, the company continued to engage noncompliant suppliers, according to the court.
Despite the reputational risks and increased regulatory scrutiny, the court said Valentino Bags Lab “kept operating with suppliers who exploit workers and use labor in violation of safety regulations, without in any way increasing its control systems.”
Against that background, the manufacturing system at the heart of Italy’s luxury sector – which accounts for more than half of global high-end goods production, according to Bain & Company – is under increasing strain. “The issue of subcontractor compensation is central” to the case at hand and others like it, says Ornella Auzino, whose Naples-based company develops and manufactures leather goods. But the issue is also “deeply tied to the lack of transparency in contracts: There are no real supply chain contracts in this industry, only unilateral protocols that each brand decides to implement as they see fit.” The result? “Everyone sets their own cost-per-minute and rates, and there is very little monitoring of whether the legal minimums required to keep a business alive are being met. Everything is then delegated to large companies and audits, so when something goes wrong, it is either the audit that failed or the main supplier that made a mistake.”
“It is all too convenient [for big brands],” she asserts. And the system is “far too broken.”
THE BOTTOM LINE: The ruling against Valentino Bags Lab underscores a growing judicial resolve to confront the deep-seated opacity and labor abuses that continue to prop up luxury manufacturing. As legal scrutiny intensifies and media attention comes with it, the luxury goods industry is facing a critical inflection point: In order to preserve their competitive edge (and the value of – and pricing power behind – labels like “Made in Italy”), companies will need to make demonstrable structural reforms in order to depend on marketing messaging that centers on high-quality offerings and corresponding craftsmanship.
For a sector that trades on the promise of exclusivity and excellence, aligning production practices with the values it purports to embody may no longer be optional – but legally imperative.
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