Adidas Investigating Allegations of Shady Business Dealings in China

A whistleblower report alleging serious compliance violations in Adidas’ China offices has led to an investigation by one of the world’s biggest athletic apparel brands. 

Adidas is Investigating

Image Credit: Shutterstock / Kzenon

German athletic apparel and footwear company Adidas has launched an investigation after a whistleblower complained about “compliance violations” among company executives in China.

Going Public in China

Image Credit: Shutterstock / aerogondo2

The complaints first went public last week via Chinese state media Jiemian, which reported news of an unsigned letter from Adidas employees claiming that local executives had embezzled “millions of euros” through Adidas China.

Adidas Confirms It

Image Credit: Shutterstock / Andrey_Popov

In response to the mass media attention and criticism that ensued, Adidas then confirmed that it had received the anonymous letter on June 7 and that an investigation was underway, supported by legal counsel.

Intensive Investigation and Legal Counsel

Image Credit: Shutterstock / Bhutinat65

“Adidas is currently intensively investigating this matter together with external legal counsel,” Head of Adidas Media Relations Claudia Lange said in an email.

Taking It Seriously

Image Credit: Shutterstock / Pressmaster

The company confirmed the investigation in a separate statement, explaining that it took all allegations of compliance violations “very seriously,” reiterating its commitment to “complying with legal and internal regulations and ethical standards in all markets where we operate.”

Sent to Company Headquarters

Image Credit: Shutterstock / Robert Way

Jiemian sent the letter to the company’s headquarters in Herzogenaurach, Germany, before allowing it to be shared online. 

Shares Fall

Image Credit: Shutterstock / Romankonovalov

The whistleblower group had already promised to take the letter to media and law enforcement if their allegations were not directly addressed. Adidas share prices have fallen by 3.7% since the letter was circulated. 

Employees and Managers Named

Image Credit: Shutterstock / BlueSkyImage

The original whistleblower’s letter, which appeared briefly on Chinese social media, named specific employees and managers working on an executive level at Adidas China who took substantial kickbacks from advertising and celebrity agencies as a form of bribery.

Hundreds of Millions in Promo Money

Image Credit: Shutterstock / TierneyMJ

According to the letter, Adidas China has an enormous promotional budget of $268 million per year, and millions of dollars from this fund had been directly embezzled by executive-level managers.

Millions in Bribes

Image Credit: Shutterstock / Gatot Adri

Whistleblowers, who described themselves as “employees of Adidas China,” also named one specific senior manager who they claimed had received “millions in cash from suppliers, and physical items such as real estate.”

Accusations of Nepotism and Bullying

Image Credit: Shutterstock / New Africa

One senior manager was also directly accused of nepotism and workplace bullying by isolating certain employees and bullying them into leaving the company. She allegedly also favored employees who followed her instructions and offered them promotions over others.

A Blow to Adidas’ China

Image Credit: Shutterstock / thebigland

The allegations are a major blow to Adidas, which has spent the last few years struggling to revitalize its performance in the Chinese markets since it suffered a major downturn in 2020 and 2021.

Lockdowns and Cotton Pledges

Image Credit: Pexels / Kampus Production

This was due to the extensive Covid-19 lockdowns in China due to the pandemic which quelled consumer spending. The company was also affected by Chinese consumer backlash after it pledged to no longer use Xinjiang cotton due to claims that cotton manufacturers were using forced labor in the Xinjiang region. 

Chinese Consumer Boycott

Image Credit: Pexels / Thirdman

The pledge led to boycotts across China and also affected H&M, Nike (Adidas’ largest competitor in the region), and other Western brands that made similar pledges.

15% of Global Sales

Image Credit: Shutterstock / Freedomz

Historically, the “Greater China” region, which is composed of mainland China, Hong Kong, and Taiwan, makes up 15% of the company’s global sales.

Executive-Level Shake Up

Image Credit: Pexels / Christina Morillo

Performance in greater China was so negatively affected that it contributed to the departure of CEO Kasper Rørsted, who was replaced by his successor Bjørn Gulden last year.

New Head of Business

Image Credit: Shutterstock / Bacho

During this executive-level overhaul, Adidas also appointed Adrian Siu, the former CEO of the popular Chinese lingerie brand Cosmo Lady as head of business in the China arm of the company.

Hiring the Alleged Perpetrators

Image Credit: Shutterstock / Song_about_summer

Siu was brought in to boost sales as part of the recovery effort, and he also hired one of the managers who was implicated in the whistleblower letter.

How Will Adidas Respond?

Image Credit: Pexels / Pavel Danilyuk

Adidas’ market recovery in the country may depend heavily on how the company responds to these new allegations and the outcome of the investigation. 

No One Suspended Yet

Image Credit: Shutterstock /

As of yet no employees named in the letter or otherwise have been suspended or placed on leave due to the allegations or ongoing investigation.

Remote No More: 19 Companies Returning to the Office

Image Credit: Shutterstock / Monkey Business Images

As the pandemic wanes, companies are recalling remote workers back to the office, sparking debates on fairness, costs, and convenience. However, there are also notable productivity, coworking, and mental health benefits to consider. Feeling the effects of these changes? Remote No More: 19 Companies Returning to the Office

8 Costco Must Buys and 8 to Leave Behind

Image Credit: Pexels / Gustavo Fring

Ever wandered Costco’s aisles, questioning if that giant jar of pickles is a real bargain? Or debated buying tires where you get your rotisserie chicken? Welcome to the definitive guide to Costco shopping—a journey to save money, prevent regrets, and offer quirky insights into bulk buying. 8 Costco Must Buys and 8 to Leave Behind

23 Reasons Texas Is the Next Big Thing

Image Credit: Shutterstock / Sean Pavone

Texas is becoming a beacon of opportunity, blending cultural heritage with economic growth. From its landscapes to its industries, the Lone Star State offers a dynamic lifestyle. Here are 23 reasons why Texas stands out, attracting entrepreneurs, artists, tech professionals, and families seeking new beginnings. 23 Reasons Texas Is the Next Big Thing

The post Adidas Investigating Allegations of Shady Business Dealings in China first appeared on Liberty & Wealth.

Featured Image Credit: Shutterstock / testing.

The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

Leave a Comment