Whistleblowers Accuse Adidas Executives of Embezzlement

This move comes after Chinese state media Jiemian reported accusations of embezzlement against local executives.

by Faruk Imamovic
Whistleblowers Accuse Adidas Executives of Embezzlement
© Getty Images/Joe Raedle

Adidas has initiated an investigation into allegations of "compliance violations" in China, a vital market for the sportswear company. This move comes after Chinese state media Jiemian reported accusations of embezzlement against local executives.

Whistleblower Allegations

Last week, whistleblowers, identifying themselves as employees of Adidas China, claimed in an unsigned letter that millions of euros had been embezzled. This letter, which gained widespread attention online, prompted immediate action from Adidas.

Claudia Lange, head of media relations at Adidas, confirmed that the company received the anonymous letter on June 7, indicating potential compliance issues. She mentioned that Adidas is conducting an intensive investigation with the assistance of external legal counsel.

However, Lange refrained from commenting further until the inquiry is completed. Following the news, Adidas shares fell by 3.7% on Monday. The letter, reportedly sent to Adidas' German headquarters before appearing on social media, accused a senior executive in Greater China of embezzling millions from the marketing budget and accepting substantial kickbacks from advertising and celebrity agencies.

The accusations also implicated several team members and other employees.

Impact on Adidas' Operations

Jiemian's report indicated that Adidas Greater China's annual promotional budget stands at 250 million euros ($268 million), covering marketing, branding, and trade fairs.

The whistleblowers accused the senior manager of nepotism and workplace bullying, alleging she isolated and forced out certain employees while promoting those who complied with her directives. Additionally, the complaint claimed that one of the manager's subordinates had received millions from suppliers, as well as tangible items such as real estate.

The whistleblowers vowed to disclose the information to the media and law enforcement if Adidas did not address the allegations. Greater China, encompassing mainland China, Hong Kong, and Taiwan, accounts for 15% of Adidas' sales.

Despite experiencing a sales rebound in China after the lifting of Covid restrictions in late 2022, Adidas faces fierce competition from local brands and has seen its market share decline from pre-pandemic levels. The company's stance on the Xinjiang cotton controversy also led to a boycott in China in 2021, affecting its sales.

Adidas is renowned for leveraging celebrity endorsements in its Chinese marketing campaigns, collaborating with popular actors and singers such as Yang Mi, Dilraba, and Yi Yangqianxi.