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Adidas Investigates Corruption Allegations In China
https://www.whatjobs.com/news/world-news/adidas-investigates-corruption-allegations-in-china
By Nithya Bose in Business News, posted June 18, 2024
Adidas has opened a probe into potential compliance violations in China after allegations senior executives received major kickbacks from service providers.
The German sportswear giant has received a letter accusing its executives in China of accepting personal rebates from various marketing services providers.
The letter is reportedly written by longtime Adidas employees in China.
It has prompted the company to engage external legal counsel to conduct a thorough investigation.
A company spokesperson said: “Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate.”
This investigation is critical for Adidas as it seeks to rejuvenate its brand in China.
It sees the country as a crucial market for its global growth strategy.
The Financial Times was the first to report on the probe.
Following the news, Adidas shares fell by about four percent in early afternoon trading in Europe.
“Adidas takes allegations of possible compliance violations very seriously and is clearly committed to complying with legal and internal regulations and ethical standards in all markets where we operate”
Adidas has encountered several challenges in China in recent years.
The COVID-19 pandemic resulted in extensive lockdowns and store closures, significantly impacting sales.
In 2021, Adidas, alongside other Western companies like H&M and Nike, pledged not to use cotton sourced from Xinjiang.
This decision was in response to allegations by US and Western governments authorities in Xinjiang had detained millions of Uyghur and other minority people.
It was claimed they were subjected many to forced labor.
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Beijing has consistently denied these allegations.
The company's stance on Xinjiang led to a nationalist backlash in China, negatively impacting its sales.
Adidas also faces intensified competition from local brands like Anta Sports Products and Li Ning.
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