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Athletic apparel company Adidas has launched an investigation into allegations of compliance violations in China after receiving an anonymous letter earlier this month accusing local executives of embezzling millions of euros, according to news reports.
Adidas confirmed it had received an anonymous June 7 letter indicating potential compliance violations in China, the Wall Street Journal and Bloomberg reported.
The shoe and sportwear maker said it was investigating the matter together with external legal counsel, the news outlets reported.
Chinese state media outlet Jiemian last week reported that an anonymous group of whistleblowers, who called themselves employees of Adidas China, had sent the letter containing the allegations to the company's German headquarters.
The letter, which was published by Jiemian but also widely circulated on social media, accused senior executives and several staff members of embezzlement and receiving bribes from suppliers in the form of cash and real estate, and of taking kickbacks from celebrities and advertising agencies.
One senior executive was also accused of workplace bullying, such as swearing at subordinates, and of nepotism.
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The whistleblowers said that if Adidas did not address the issues brought up in the letter, the matter would be disclosed to external media and legal departments.
Adidas' shares fell 1.73 per cent Tuesday.
Greater China, which encompasses mainland China, Hong Kong and Taiwan, makes up 15 per cent of Adidas' sales, according to its 2023 annual report.
The German brand is the second-largest sportswear brand in China, behind Nike.
Adidas' Greater China sales grew 8 per cent in 2023, after declines between 2019 and 2022 due to COVID-19 pandemic lockdowns and a backlash in China against Western brands which refuse to use Xinjiang cotton. Activists say cotton produced in Xinjiang often involves forced labour.
Adidas regularly engages popular Chinese celebrities to be its brand ambassadors, including singer and actor Jackson Yee, popular Chinese rapper Gali and Dilraba, a popular Chinese singer of Uyghur descent.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
