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CNN
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Adidas says it has began an investigation into allegations of “compliance violations” in China, a key marketplace for its sportswear.
Chinese language state media Jiemian reported last week that native executives had been accused of embezzling “hundreds of thousands of euros” in an unsigned letter written by whistleblowers calling themselves workers of Adidas China. The letter was extensively publicized on-line.
Claudia Lange, head of media relations on the attire large, informed CNN on Monday that it had obtained an nameless letter on June 7 “indicating potential compliance violations in China.”
“Adidas is presently intensively investigating this matter along with exterior authorized counsel,” she mentioned in an emailed response. Lange declined additional remark pending the result of the inquiry.
Shares of Adidas fell 3.7% on Monday.
Jiemian wrote that the letter from whistleblowers had been despatched on to the corporate’s German headquarters earlier than being shared on social media.
The reported criticism alleged {that a} senior government in Better China who manages Adidas’ advertising finances had embezzled hundreds of thousands of euros and brought enormous kickbacks from exterior promoting and superstar companies. A number of members of the manager’s crew and different workers have been additionally implicated, in response to a replica of the letter printed by the Chinese language state media outlet.
Adidas Better China’s total promotional finances amounted to 250 million euros ($268 million) a 12 months, together with bills devoted to advertising, branding and commerce festivals, Jiemian reported, citing the letter.
The senior supervisor was additionally accused of “nepotism” and “office bullying,” together with isolating some workers and forcing them to depart, the whistleblowers’ reportedly mentioned. Individuals who adopted her directions have been promoted, they added.
The criticism additionally alleged that one of many supervisor’s subordinates had obtained “hundreds of thousands … from suppliers and bodily objects similar to actual property.”
The whistleblowers vowed to reveal the matter to the media and regulation enforcement if the corporate didn’t tackle the allegations.
Adidas is the world’s second largest sportswear retailer. Better China — a area that encompasses mainland China, Hong Kong and Taiwan — contributes 15% of the corporate’s gross sales.
In mainland China, Adidas is the second largest worldwide sportswear model behind Nike (NKE). The German firm has loved a rebound in gross sales progress in China after Beijing scrapped Covid restrictions on the finish of 2022.
However its market share has declined considerably from pre-pandemic ranges due to competitors from native rivals and an issue over its refusal to make use of Xinjiang cotton.
In 2021, Adidas — together with H&M, Nike and different huge Western attire manufacturers — confronted a boycott in China due to the stand they’d taken towards the alleged use of forced labor to provide cotton within the nation’s western area of Xinjiang.
Adidas is well-known for enjoying the “superstar” card in its advertising in China. It has beforehand labored with well-liked actors and singers as model ambassadors, together with Yang Mi, Dilraba and Yi Yangqianxi.