Adidas has initiated an investigation into allegations of extensive bribery in China following a whistleblower complaint that accused senior staff of embezzling millions of euros. Sources briefed on the matter informed the Financial Times about the allegations, which have cast a shadow over the world’s second-largest sportswear maker.
The complaint, an anonymous letter purportedly from “employees of Adidas China,” was briefly posted on the Chinese social media platform Xiaohongshu. It named several Chinese Adidas employees, including a senior manager responsible for the company’s marketing budget in China, which reportedly amounts to €250 million annually. The letter alleged that Adidas staff accepted kickbacks from external service providers commissioned by the German company. Another senior manager in a different division was accused of receiving millions in cash from suppliers, along with physical assets such as real estate.
Adidas confirmed receiving the letter on June 7, which alerted the company to “potential compliance violations in China.” The company stated its commitment to adhering to legal, internal regulations, and ethical standards in all markets and disclosed that it is conducting an intensive investigation with the assistance of external legal counsel.
Despite the gravity of the allegations, none of the accused individuals have been placed on leave, according to sources familiar with the situation. Adidas overhauled its leadership in China last year following an unprecedented crisis in the market, which had been highly profitable and fast-growing until the Covid-19 pandemic.
Between 2019 and 2022, Adidas experienced a significant drop in sales, exacerbated by prolonged lockdowns and a consumer backlash against Western brands over their stance on cotton sourced from Xinjiang. Human rights activists have claimed that the cotton industry in the region involves forced labor, leading to a boycott of Xinjiang cotton by several Western companies.
These challenges in China contributed to the departure of Adidas CEO Kasper Rørsted, who was replaced last year by former Puma CEO Bjørn Gulden. The company also appointed Adrian Siu, previously with Chinese lingerie maker Cosmo Lady, as the new CEO of Adidas China in 2022. Siu has pledged to regain the “hearts and minds” of Chinese consumers through patriotic clothing lines, blending traditional Chinese elements with international product design.
Adidas’s swift response to the bribery allegations underscores its dedication to maintaining ethical business practices and restoring its reputation in one of its most crucial markets.