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China Reportedly Advises Shein Against Shifting Supply Chain

FILE PHOTO: A shopper poses with bags of promotional merchandise as she visits fashion retailer Shein's Christmas bus tour, in Manchester, Britain, December 13, 2024. REUTERS/Temilade Adelaja/File Photo
FILE PHOTO: A shopper poses with bags of promotional merchandise as she visits fashion retailer Shein's Christmas bus tour, in Manchester, Britain, December 13, 2024. REUTERS/Temilade Adelaja/File Photo
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China Reportedly Advises Shein Against Shifting Supply Chain

FILE PHOTO: A shopper poses with bags of promotional merchandise as she visits fashion retailer Shein's Christmas bus tour, in Manchester, Britain, December 13, 2024. REUTERS/Temilade Adelaja/File Photo
FILE PHOTO: A shopper poses with bags of promotional merchandise as she visits fashion retailer Shein's Christmas bus tour, in Manchester, Britain, December 13, 2024. REUTERS/Temilade Adelaja/File Photo

Fast-fashion retailer Shein is facing opposition from the Chinese government over its plans to shift some production out of the country, Bloomberg News reported on Tuesday, citing people familiar with the matter.
China's Ministry of Commerce has reached out to Shein and other companies, advising them against diversifying supply chains by sourcing from other countries, one person familiar with the matter told Bloomberg News.
Bloomberg News said it wasn't immediately clear which other firms were contacted by the commerce ministry.
The requests came in the run-up to US President Donald Trump's announcement on reciprocal tariffs that have sent firms scrambling for alternative ways to avoid additional import levies, the person told Bloomberg News.
Shein did not immediately respond to a Reuters request for comment on the report.
Trump's harsher-than-expected tariffs have roiled markets globally, wiping trillions of dollars in value across assets, and elicited strong rebuke from China and additional tariffs of 34% on all US goods.

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Fashion

Valentino Unit Put Under Court Administration in Italy over Labor Exploitation

Designer Valentino shoes are seen on display at the Nordstrom flagship store during a media preview in New York, US, October 21, 2019. REUTERS/Shannon Stapleton/File Photo
Designer Valentino shoes are seen on display at the Nordstrom flagship store during a media preview in New York, US, October 21, 2019. REUTERS/Shannon Stapleton/File Photo
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Valentino Unit Put Under Court Administration in Italy over Labor Exploitation

Designer Valentino shoes are seen on display at the Nordstrom flagship store during a media preview in New York, US, October 21, 2019. REUTERS/Shannon Stapleton/File Photo
Designer Valentino shoes are seen on display at the Nordstrom flagship store during a media preview in New York, US, October 21, 2019. REUTERS/Shannon Stapleton/File Photo

An Italian court on Thursday placed under judicial administration a company owned by fashion group Valentino for subcontracting its production to Chinese-owned firms that allegedly exploited workers.

The court in Milan ordered a one-year administration for Valentino Bags Lab Srl, which makes Valentino-branded handbags and travel articles, according to the 30-page ruling seen by Reuters.

The administration will be lifted earlier if the company brings its practices into line with legal requirements.

The court said Valentino Bags Lab "culpably failed" to adequately oversee its suppliers in order to pursue higher profits.

Neither Valentino nor Valentino Bags Lab could be immediately reached for comment.

French fashion group Kering bought a 30% stake of the Italian brand in 2023 from Qatari investment fund Mayhoola, with an option to purchase the whole of its share capital by 2028.

Valentino Bags Lab is the fourth fashion company to be targeted by the same Milan court over similar labor issues since December 2023, following an Italian unit of French luxury giant LVMH's Dior, Italy's Armani, and Alviero Martini, an Italian handbag company.

The Milan court lifted the judicial administration it placed on these three companies before the end of the one-year deadline imposed on them.

The judges wrote in their ruling that despite the previous cases being widely reported "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".

The prosecutors in the case said the violation of rules among fashion companies in Italy was "a generalized and consolidated manufacturing method".

Italy is home to thousands of small manufacturers that cover 50%-55% of global luxury goods production, consultancy Bain has calculated.

DAY-NIGHT PRODUCTION

In the latest case, Carabinieri police from the Milan labor protection unit inspected seven Chinese-owned workshops around Italy's financial capital from March to December 2024, including one of the firms involved in the Dior case last year.

They identified 67 workers, of whom nine were completely off the books. Three of these were irregular immigrants.

Workers were made to sleep in the workplace in order to have "manpower available 24 hours a day," according to the ruling.

It said data mapping electricity consumption showed "seamless day-night production cycles, including during the holidays". In addition, safety devices had been removed from the machinery to allow them to operate faster, it said.

One of the contractors, Bags Milano Srl, has had Valentino Bags Lab as its sole purchaser since 2018, commissioning around 4,000 bags per month, with production costs ranging from 35-75 euros ($39.20-$84) per bag, judicial sources said.

These bags were then sold to customers at prices ranging from 1,900 to 2,200 euros, according to two judicial sources.

The judges said the owner of Bags Milano subcontracted the production of some of the Valentino bags to other Chinese-owned workshops.

The owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for exploiting workers and employing people off the books. Valentino Bags Lab itself faces no criminal probe.

Investigations by Italian magistrates have over the last years exposed alleged exploitation of workers in the fashion and luxury supply chain.

Milan's court proposed in June 2024 a scheme under which luxury firms should strengthen checks on suppliers to ensure they respect labor laws.