Adidas investigates bribery allegations in China

Adidas has launched an investigation into allegations of large-scale bribery in China after the world’s second-largest sportswear maker received a whistleblower complaint that accused senior staff of embezzling “millions of euros”, people briefed on the matter told the Financial Times.

The anonymous letter, which claims to have been written by “employees of Adidas China” and was also briefly shared this month on Chinese social media platform Xiaohongshu, names several Chinese Adidas employees including a senior manager involved with Adidas’s marketing budget in the country, which the document said stood at €250mn a year.

The letter alleged that Adidas staff received kickbacks from external service providers who were commissioned by the German group. A second senior Adidas manager, who works in a different division in China, is accused of having received “millions in cash from suppliers, and physical items such as real estate”.

Adidas confirmed that it had received a letter on June 7 alerting it to “potential compliance violations in China”. It said it was “committed to complying with legal and internal regulations and ethical standards in all markets where we operate” and that it was “intensively investigating this matter together with external legal counsel”.

No accused individuals have been placed on leave, according to people familiar with the matter.

Adidas revamped its leadership in China last year after suffering an unprecedented crisis in what until the Covid-19 pandemic was its fastest-growing and highly profitable market.

Sales fell off a cliff between 2019 and 2022 as the brand was hit by drawn-out lockdowns as well as a consumer backlash against western brands over their refusal to buy cotton from the Xinjiang region, where human rights activists say the industry involves forced labour.

The headwinds in China were a core reason for the ousting of Adidas chief executive Kasper Rørsted, who was replaced last year by former Puma boss Bjørn Gulden.

New China CEO Adrian Siu, hired from Chinese lingerie maker Cosmo Lady in 2022, promised to win back “the hearts and minds” of Chinese consumers with patriotic clothing lines, telling the FT last year that “we are marrying traditional Chinese elements with international product design”.

Adidas said in March it expected a rebound in China this year, predicting a double-digit sales growth rate after a 37 per cent surge in the fourth quarter of 2023.

One of the senior managers targeted in the whistleblower report was hired by Siu, according to people familiar with the matter.

While the anonymous authors of the letter did not provide hard evidence for their corruption allegations, they appear to be well-informed about highly sensitive and confidential internal issues, according to Adidas insiders.