Made in Italy: High Prices, but Rock-Bottom Production Costs

Made in Italy: High Prices, but Rock-Bottom Production Costs

If you think Italian luxury clothes are hand sewn by skilled workers, you are right. If you think their craftsmanship is well compensated, think again.

This New York Times investigation paints a bleak description of the working conditions of Italians working for MaxMara, Fendi, Gucci, and Louis Vuitton. Most luxury brands outsource a major portion of their manufacturing. Several factors including intense competition from abroad result in the exploitation of labor, and the multi-tiered supply chain hinders transparency.


Video Spotlight: Made in Bulgaria: Luxury Fashion Brands Move East


This post is based on the New York Times article, Inside Italy’s Shadow Economy, by E. Paton and M. Lazazzera, September 20, 2018, and the Reuters video, Made in Bulgaria: Luxury Fashion Brands Move East, by T. Tsolova and M. Kahn, June 7, 2018. Image source: Shutterstock / Nenad Aksic

Discussion Questions:

1. What are the reasons for the “sweatshop wages” given to the Italian seamstresses making the luxury garments at home?

Guidance: Reasons include high unemployment in the region, intensive competition from Asian and Eastern European labor, contractors’ questionable ethics, luxury brands claiming ignorance about a well- known problem, “cut-throat” negotiating practices in procurement, and no government-set Continue reading

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China Wants Only the Cleanest Trash

China Wants Only the Cleanest Trash

September 14, 2018

The Chinese government recently banned imports of low-grade recyclables.

For decades, Western countries sent their paper waste and plastic trash to China where they were sorted manually before being processed and re-used in manufacturing. To overcome the severe shortage of recyclables caused by the ban, Chinese manufacturers are now setting up processing facilities in the US and sending the recyclable materials to China.

Some existing US recycling programs have struggled to meet the purity standards imposed by the Chinese government.


Video Spotlight: Plastic China (scroll down to the trailer)


This post is based on the Bloomberg article, China Wants Only the Cleanest Trash, by M. Sasso, August 22, 2018. Image sources: frameangel/123RF and Ralph125/Getty Images.

Discussion Questions

1. According to the article, why has the Chinese government banned imports of “dirty” trash?

Guidance: Trash sent to China contained contaminants which can be hazardous (e.g. lead and mercury) and also hinder the recycling process. Other reasons include China’s anti-pollution crackdown and the 2017 release of the documentary “Plastic China,” which featured Chinese children sorting trash in piles of garbage imported from other countries. The documentary put pressure on China to stop such practices and therefore Continue reading

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Volkswagen: From Near-Fatal Crash to No.1

Volkswagen: From Near-Fatal Crash to No.1

Once maligned for cheating on its emission tests, Volkswagen has reemerged as the largest car seller in the world.

Boosted by strong, global sales, the company has recovered financially and is poised to become a major player in the electric vehicle (EV) market. A mix of lucky breaks, deals with the unions, and a strategic focus supported by substantial investments has enabled Volkswagen to manage a current crisis while keeping the company oriented toward a bright future.

This post is based on the Bloomberg article, How Volkswagen Walked Away From a Near-Fatal Crash, by M. Campbell, C. Rauwald, and C. Reiter, March 28, 2018. Image source: flippo/123RF.

Discussion Questions:

1. What are the reasons for Volkswagen’s lingering reputation problem?

Guidance: Discuss Volkswagen’s breach of ethics which eroded consumers’ trust. Also mention the bad PR surrounding the issue: former CEO’s awkward response as well as new CEO’s lavish lifestyle and characterization of the fraud as a “technical problem.” The press reports on ongoing lawsuits, investigations, and site inspections also contribute to keeping the scandal alive in consumers’ minds.

2. As Volkswagen is trying to reinvent itself, it is adhering to a core strategy while expanding its scope. How? Continue reading

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