Athletic apparel company Adidas has initiated an investigation into allegations of “compliance violations” in China following the receipt of an anonymous letter earlier this month. The letter accused local executives of embezzling “millions of euros,” as reported by the Wall Street Journal and Bloomberg. Adidas confirmed the receipt of the anonymous June 7 letter, which highlighted potential “compliance violations” in China. The company is currently investigating the matter in collaboration with external legal counsel.
According to Chinese state media outlet Jiemian, an anonymous group of whistleblowers claiming to be employees of Adidas China sent the letter to the company’s German headquarters. The letter, which accused senior executives and staff members of embezzlement, receiving bribes from suppliers, and engaging in kickbacks from celebrities and advertising agencies, was also circulated widely on social media. The allegations included workplace bullying and nepotism by a senior executive.
The whistleblowers warned Adidas that if the issues raised in the letter were not addressed, they would disclose the matter to external media and legal departments. In response to these developments, Adidas' shares fell by 1.73% on Tuesday. Greater China, comprising mainland China, Hong Kong, and Taiwan, accounts for 15% of Adidas’ sales, as per its 2023 annual report.
Adidas, the second-largest sportswear brand in China after Nike, experienced an 8% growth in Greater China sales in 2023. This growth followed declines in previous years due to COVID-19 pandemic lockdowns and backlash in China against Western brands that do not use Xinjiang cotton, which activists claim involves forced labor. Adidas frequently collaborates with popular Chinese celebrities like singer and actor Jackson Yee, rapper Gali, and Dilraba, a Uyghur descent Chinese singer, as brand ambassadors.
