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From Montblanc to Dior: Supply chain, labour, legislation and the new battle to protect the most valuable label in Italy.
Sustainability
28 July, 2025
Table of contents
For decades, the term “Made in Italy” has stood as a global spotlight of prestige, elegance, and rich quality, featuring the visuals of fine tailoring, impeccable designs, and traditional craftsmanship. Especially in the luxury and fashion industry, it has shown the hallmark of artisanal quality and authenticity. However, the recent court actions and investigative outcomes have revealed the negative realities of it. Behind the lush boutiques of Milan and Rome, the cracks have begun to show. Brands have come under scrutiny after misusing the label by masking incomplete domestic production, cracked supply chains, and exploitative labour.
In 2024, major Italian prosecutors noted suppliers of global brands like Dior under judicial administration. The offense is the suppliers producing products under sweatshop conditions while still sticking to the label “Made in Italy.” This has exposed the gap between ethical compliance and branding, showing how the rules and regulations have been misused and bent over, which made the public distrustful.
The label “Made in Italy” has always been more than a marketing phrase. It is a legal designation guarded by Italian and European Union regulations. According to Law No. 135’s Article 16 (25 September 2009) which was later converted into a permanent law as Law 166/2009, Article 16 (20 November 2009) passed by the Italian Government, the true “Made in Italy” has been defined as the products whose design, production, and packaging are exclusively done on Italian territory. It also set the administrative and criminal penalties with fines of €10,000-€250,000 and a potential to seize the goods for false origin claims. It was meant to preserve the country’s craftsmanship, ensure public trust, and uphold economic integrity.
However, the fashion industry in Italy operates through an intricate and vast web of small, family-owned artisan workshops. These disorganised and fragmental production processes have made it difficult to enforce consistent ethical and quality standards. Even though these workshops act as the backbone of the luxury identity of Italy, their dispersed system across regions and lack of oversight have developed loopholes that are exploited by unethical subcontractors. According to regional CNA Federmoda data, 304 artisan firms in Tuscany shut their doors from January to June 2024, reducing 2,96% compared to 2023, heavily impacting leather and fashion goods, due to structural crisis, supply chain difficulties, decreased consumer demands, aging workforce, undercaptilisation and struggle without major brand contracts.
In response to these mounting concerns, the Italian government introduced new legal reforms. The notable law reform is Law No.206, enacted on 27 December 2023 and coming into force on 11 January 2024, aimed to protect the integrity of a Made in Italy
brand. The law showcased the National Seal for certified products, mandated blockchain-powered traceability systems, and allocated substantial funds to assist local manufacturing. The National Made in Italy Fund received €700 million in 2023 and an additional €300 million in 2024 to promote local production and digitisation.
On a continental level, the compliance pressure has also increased. Regulations such as the EU Deforestation Regulation (applicable by December 2024), the EU Conflict Minerals Law (effective since January 2021), and the EU Battery Sourcing Law (active from July 2025) demanded ethical sourcing, sustainability, and strict traceability. While these are well-intentioned, these mandates have overwhelmed small Italian vendors, many of whom lack the infrastructure to meet new traceability and ESG standards.
In June 2024, an Italian court placed Dior’s subsidiary, Manufactures Dior SRL, into judicial administration after finding a false-chain system involving subcontractors like AZ Operations. These factories have employed undocumented migrant workers under abusive conditions - some slept at the workplace, worked 24-hour shifts, and laboured 14+ hours a day. The court also revealed Dior charging as little as €53 per handbag (which is retailed at €2,600), through unsafe practices like removing machine protections to accelerate production. But, in February 2025, the Milan court terminated the special administration, recognising the brand’s implementation of robust supplier control, eliminating connections with risky subcontractors, pledging €2 million to anti-exploitation initiatives, and adopting strict monitoring and vetting systems.
Giorgio Armani Operations was placed under judicial scrutiny in April 2024 after its supplier pool, especially Manifatture Lombardia in Milan, subcontracted to shadow factories. While Armani had pre-existing supplier compliance measures, investigators have stated that there is a severe lack of oversight of second-tier suppliers.
In early 2023, workers employed at Z Production, a Chinese contractor in Tuscany, staged protests outside the Geneva flagship of Montblanc, notifying 12-14 hour work per day without contracts or statutory protections. Montblanc terminated the contract after the brand’s code of conduct was audited to expose Z Production’s failure to even meet minimum standards. The court filings revealed 78-hour workweeks at an average wage of €3/hour, with beatings and no basic resting breaks.
Beyond ethics and regulations, there are environmental risks that pose a growing threat to Italy’s fashion ecosystem. The 2024 floods in Prato destroyed important manufacturing machinery, underscoring the vulnerability of the sector. Climate change is also becoming a crucial threat that combines collateral damage and mounting compliance fatigue among small vendors.
In May 2025, employees at Ancora factory of Max Mara did a week-long strike, demanding respect, dignity, holiday and salary acknowledgement as well as basic labour rights after enduring strict bathroom monitoring, verbal abuse and rate per piece pay on the production process.
Loro Piana was positioned under judicial administration by a Milan court In July 2025. Investigations revealed that the company had outsourced production through two intermediaries to Chinese-owned workshops in Italy that employed undocumented migrant workers under exploitative conditions. Employees were reported to work up to 90 hours per week, earn as little as €4 per hour, and sleep in unsafe, overcrowded facilities within the production sites. Court documents cited a “culpable lack of oversight” by Loro Piana, concluding that the brand had prioritised profit over ethical accountability by failing to monitor its subcontractors.
Many of us know that the soul of the luxury industry in Italy lies in the production hubs, each known for its specific artistic specialisation. Biella, Piedmont is globally renown for its cashmere and fine wool milling. Florence and its surrounding places like Scandicci have been known for the leather tanning workshops and leather goods production. Naples and Arzano holds the bespoke ateliers such as Sartoria Tofani and Casare Attolini that creates handmade suits, trousers and jackets. Como in Lombardy produces around 80% of Europe’s silk fabric and 95% of Italy’s silk. The main aspect of this excellence’s achievement is the highly fragmented and locally-driven production system. Without brand accountability and stringent regulation, unethical subcontracting has become a frequent occurrence.
In efforts to regain control and establish an organised process, several leading brands are choosing vertical integration.
In April 2023, Prada announced a plan to invest €60 million in its knitwear production hub in Torgiano, Umbria, doubling the size of the space and increasing the workforce by more than 400 employees by the end of 2023. It also launched Prada Academy to train the next generation of artisans.
In June 2023, Ermenegildo Zegna Holditalia S.p.A. and Prada SPA acquired a 15 % minority stake each in Luigi Fedeli e Figlio S.r.l., a highly respected knitwear manufacturer in Monza founded in 1934. The partnership aimed at enhancing quality, preserving artisanal excellence, and reinforcing supply chain traceability.
Kiton owns five factories across Italy - Arzano for main tailoring and small leather goods; Caserta, Fidenza, Marcianise, and Biella to produce jeans, sportswear, knitwear, and weaving fabrics - maintaining a complete vertical integration. In 2000, the brand unveiled the School of Advanced Tailoring to train new artisanal generations to ensure in-house skill development and safeguarding heritage standards.
Fendi launched the “Hand in Hand” initiative in 2020 with the iconic Baguette bag, bringing together 20 ateliers from each Italian region tasked to reinterpret the design using their own traditional techniques. The limited edition of 20 Baguettes was stamped internally with the artisan's name, location, and the “Fendi Hand in Hand” gold logo. Through partnerships with local schools and training programs as well as showcasing in local and global exhibitions, Fendi celebrated and preserved the traditions of Italian craft.
In September 2023, OTB SpA, owner of Marni, Diesel and Maison Martin Margiela, launched M.A.D.E. (“Made in Italy, Made Perfectly”) docuseries that showcased 13 artisan suppliers in Italy, celebrating their manual workmanship, cultural skills, pursuit for excellence and dedication. The group also continued C.A.S.H. (Credito Agevolato - Suppliers’ Help) program that was activated in 2013, extending over €600 million in low-interest credit to over 54 Italian suppliers to ease their cash flow constraints in production systems. It also reaffirmed supplier-first approach by citing cooperation with more than 1.159 suppliers, 70% within Italy, demonstrating a deeply-integrated supply chain with domestic partners.
In May 2023, Cartier opened a new factory in Turin, showcasing new investments in local craftsmanship. The renewed former industrial site is now employing 450 workers including 120 new hires with many hired from the local community. The abandoned building was refurbished with architectural imprints and a high attention to the working environment.
Bulgari launched the expansion of its jewellery manufacturing unit in Valenza, Piedmont, which is recognised as the largest single-site jewellery production space in the world in April 2025. Since its establishment in 2017 with approximately 370 employees, the location has grown into a capacity of 1.100 with plans to touch 1.600 by 2029. There is also a plan to add a 1.000 m² training school co-organised with Tarì Design School. The expansion, including two new buildings linked by a bridge, displays the vertical integration of the brand, artisanal skill development and sustainable highlight.
In late May 2025, Milan hosted SAMAB, the Fashion Technologies Event, which swiftly became a symbol of Italy’s drive to restore apparel and textile production. Around 3.000 professionals and 70 exhibitors showcased cutting-edge machinery, green technologies, artificial intelligence, sustainable materials, digital traceability platforms, and automation solutions. The whole event shows how government initiatives and brands are working collaboratively to reinvigorate the manufacturing base of Italy.
Italian government’s Transition 5.0 Plan, launched through Decree‑Law No. 19 of 2 March 2024, follows on the previous Industria 4.0 program and allocated around €12,7 billion (which includes additional funding from the National Recovery and Resilience Plan, and the RepowerEU scheme) to offer tax benefits and funding for businesses in green and ethical production models and digital transformation.
These efforts are indicating a shift towards a more transparent and resilient supply chain, based on technological innovation and local talent.
In May 2025, in collaboration with legal authorities and trade associations such as Confindustria Moda, Camera Nazionale della Moda Italiana), key brands such as OTB SpA, Ermenegildo Zegna Holditalia S.p.A. and Prada SPA, as well as labour unions and stakeholders, signed a Memorandum of Understanding to eradicate unethical labour practices across fashion supply chains. Though the agreement is voluntary, it establishes a critical framework of accountability.
The supplier can enter the compliance data-based tax obligations, labour law adherence, and social security contributions into a centralised digital platform, starting with a pilot implementation in Lombardy. The regional government will issue a renewable “transparency certificate” every six months to suppliers.
Cover Image Courtesy: Bloomberg.