"SNS Circulates Whistleblower Letter" Adidas Under Bribery Investigation in China

Global sports brand Adidas has launched a large-scale investigation after receiving reports that senior executives and employees in China accepted bribes, major foreign media outlets reported on the 16th (local time), citing sources.

Adidas confirmed that it received a letter containing such internal reports on the 7th and is currently conducting a focused investigation with external legal counsel.

The letter Adidas received appears to be the same internal whistleblower letter that was recently shared on the Chinese social networking service (SNS) Xiaohongshu, allegedly written by an employee of Adidas' China division.

The letter alleges that multiple executives and employees of the China division, including a senior manager responsible for the marketing budget, received rebates from external service providers. According to the letter, Adidas' annual marketing budget amounts to 250 million euros, but most of it is linked to corruption. The letter also adds that a senior manager from another department is suspected of receiving millions of dollars in cash along with real estate.

Adidas had shown rapid growth in the Chinese market until before the COVID-19 pandemic but has faced difficulties due to prolonged shutdowns and controversies such as the Xinjiang cotton issue. The replacement of the Greater China regional head in 2022 was also against this backdrop. Adrian Siu, who took office as the China representative and came from the Chinese lingerie manufacturer Cosmo Lady, declared his intention to win back the hearts and minds of Chinese consumers by promoting a patriotic clothing line. Locally, Adidas was expected to achieve double-digit sales growth in the Chinese market this year, but the confirmation of these corruption issues is seen as a potential obstacle.

Notably, one of the individuals accused of accepting bribes is confirmed to have been hired by Representative Siu. A source evaluated that although the anonymous letter writer did not provide definitive evidence of corruption charges, they seem to be well aware of very sensitive internal confidential matters.

The letter previously confirmed on SNS also included allegations that the senior manager responsible for the marketing budget turned the marketing department into a platform for personal gain and concealed rebate facts involving a former executive who was dismissed for corruption. It was also reported that harassment was widespread, including verbally abusing employees and forcing unwanted employees to resign through isolation measures.