German sports equipment giant Adidas’s Chinese subsidiary has been accused of corruption and bribery by employees. The company has released the results of its investigation, revealing that two employees, including a reported senior executive, have resigned.
According to a report by the British Financial Times on June 26th, earlier this month, Adidas launched an investigation based on information provided in an anonymous letter, resulting in two marketing department employees, including a senior executive, leaving the company.
Sources familiar with the matter disclosed that Adidas received an internal whistleblower tip alleging that senior executives at the Chinese subsidiary were involved in corruption involving “millions of euros”. Following the tip, the company conducted an investigation and found evidence of their misconduct.
The anonymous letter, purportedly sent by “Adidas Greater China Region employees”, accused employees of the Chinese subsidiary of accepting bribes, including a senior executive involved in setting marketing budgets in China. Adidas’s annual marketing budget in China amounts to €250 million (approximately $268 million). The executive was accused of colluding with department colleagues to receive kickbacks from external service providers commissioned by the company, which were reportedly paid out of the marketing budget.
In a statement, Adidas stated: “Evidence indicates that an employee violated the company’s relevant code of conduct during interactions with local suppliers and has left the company… Additionally, a senior management member of the marketing department failed to meet the company’s leadership expectations for promoting mutual respect and trust, leading to their departure from the company.”
This incident marks the latest blow for Adidas in China. In March 2021, Adidas, along with several other well-known international clothing brands, publicly opposed forced labor practices in Xinjiang by the Chinese government and declared their stance against using Xinjiang cotton. This led to Chinese consumers with nationalist tendencies instigated by the Chinese government to boycott these brands, resulting in a significant decline in Adidas’s sales in China.
As reported by Agence France-Presse earlier, the whistleblower letter circulated on the Chinese social media platform Xiaohongshu earlier this month but has since been removed from the site. However, a few accounts have uploaded copies of the letter, and the authenticity of the letter remains unverified.
Amidst the ongoing investigation, Adidas is striving to revive its high-profit and rapid sales growth momentum from before the COVID-19 pandemic.
In March of this year, Adidas stated that following a 37% surge in sales in the fourth quarter of 2023, they anticipate substantial sales growth to continue this year.