Yahoo Finance Adidas Ousts Two Employees in China Corruption Investigation
One week after Adidas began investigating allegations of corruption in China, the German sporting goods company revealed in a companywide conference call in China that two employees related to the case had been let go.
Adidas headquarters received an anonymous letter on June 7 indicating company employees’ potential “compliance violations,” including embezzling millions of euros and receiving kickbacks from suppliers. The news quickly circulated online, which led Adidas to launch an investigation with an independent external adviser last week.
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“Evidence has been found that in the interaction with local vendors, one employee violated the company’s code of conduct. Separately, a second employee failed to meet the company’s leadership expectations of demonstrating mutual respect and trust. As a result, both employees have left the company. The investigation is still ongoing,” Adidas’ vice president of external communication Claudia Lange said in a statement.
According to Chinese state media Economic View, both employees worked in the marketing department. Based on other local media reports, one of the employees is Judy Li, senior vice president of marketing for Adidas China. In the anonymous letter, Li was accused of receiving kickbacks from vendors and workplace bullying. According to the letter, Li has been the head of marketing since 2022. The letter identified other Adidas marketing and retail team members for alleged corruption.
The unsigned letter, which claimed to be written by “employees from Adidas China who have worked in this company for decades,” quickly made its rounds on Xiaohongshu, the Chinese social commerce platform. The whistleblowers wrote that local marketing executives received personal rebates from the media budget via advertising agencies.
The letter also claimed that Adidas’ China marketing budget in 2023 reached 250 million euros, which included expenses for marketing, branding and trade fairs.
The letter also said that this is not the first time that Adidas has encountered corruption issues in China. Former marketing executives Christine Pan and Simon Wang were also fired over allegations of corruption.
According to local media reports, an Adidas China representative said during the internal call that “this shows that certain bottom lines should never be crossed. However, this incident will not shake our confidence in the Chinese market, and we will continue to carry on our planned marketing activities and events; together with our partners, we will continue to serve our athletes and consumers,” the local media outlet quoted the representative as saying.
The Greater China region is the third largest market for Adidas, which accounted for 15 percent of overall sales in 2023. Over the year, in currency neutral terms, Adidas saw growth of 8.2 percent in Greater China, which reached 3.19 billion euros. In the first quarter of 2024, sales grew by 7.8 percent to 897 million euros in the region.
Adidas chief executive officer Bjørn Gulden said at the time that 2023 might have been a “turning point” for Adidas’ China business, with stores more productive and marketing possible again after an earlier boycott of Western brands.
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