Why British brands are beating a path to Italy

Rachel Shields finds top labels turning away from the sweatshops of China

As the birthplace of the design titans Versace, Gucci and Armani, Italy is one of the most fashionable countries in the world. Now, thanks to premium British brands such as Aquascutum, Paul Smith and Pringle, the country looks set to appear on the fashion map in a far less glamorous guise: as the hub of Europe's rag trade.

Prompted by growing concern over sweatshops and exploitation of child labour, ethical consumers in the West are finding that "Made in China" labels chafe on their consciences. Keen to avoid these negative connotations – but equally concerned about low production costs – British clothing labels are coming over all continental and moving their manufacturing to Italy. With costs there a third lower than in the UK, thanks in part to the absence of a national minimum wage, British manufacturers are struggling to compete.

Following the announcement this week that the knitwear company Pringle is expected to close a factory in the Scottish Borders, industry insiders revealed that the brand is likely to move production to Italy. "If you are at the premium end of the market, Italy is an obvious choice," said Marino Donati, assistant editor of the fashion industry magazine Drapers.

With a long tradition of textile mills and high-quality yarns and fabrics, Italy seems like a shrewd bet for British luxury clothing companies that wish to maintain the sense of heritage and history their brands are based on, without actually staying in Britain.

"A 'Made in Italy' label is going to give a standard of quality and authenticity that isn't automatically attached to a 'Made in China' label," said Mr Donati. This is particularly important in the Asian market, in which the little white "Made in Italy" tag can be as much of a status symbol as the British designer brand name.

The quintessentially British brand Aquascutum trades on the fact that its garments are "crafted in England", yet has shifted the production of all but its "core products" abroad. Last year it announced that the Italian firm Antichi Pellettieri would produce its neckwear, scarves, bags and shoes for 2008. Similarly, only 5 per cent of clothes carrying the "British" label Paul Smith are actually made in Britain, with 42 per cent of production going to Italian manufacturers.

Much of the appeal of producing clothes in Italy lies lies in shoppers' confidence that the garments they are buying will not have been produced in sweatshops by underpaid or underage workers. Consumer confidence, though, may be misplaced. A documentary broadcast by the Italian television company RAI Tre last year revealed that Chinese immigrants were producing clothes for major fashion houses in conditions that breached basic labour laws.

It is estimated that 10 per cent of the population of the Tuscan city of Prato, the country's textile capital, are Chinese immigrants, many there illegally.