Adidas Launches Large-Scale Bribery Probe in China

Adidas announced that it has launched a probe into alleged large-scale bribery incidents in China after a whistleblower report was filed with the sports apparel and shoes giant.

According to Al Jazeera, the whistleblower complaint, claiming to be written by “employees of Adidas China,” alleged that multiple employees in China have accepted kickbacks from external service providers with whom the company conducts business. Additionally, it accused a senior manager in a different division of receiving “millions in cash from suppliers and physical items such as real estate.” The accusation, however, did not mention any employees by name.

The letter, however, does mention that there’s a senior manager associated with the marketing budget in China involved with the bribery.

“While the anonymous authors of the letter did not provide hard evidence for their corruption allegations, they appear to be well-informed about highly sensitive and confidential internal issues,” the report read.

Adidas has said that it is investigating the matter and has acknowledged receipt of the whistleblower letter.

“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,” the company said in a statement to Reuters.

The company refused to provide further information about its probe to the press, citing an active investigation.

News of Adidas’ newest probe comes in the wake of reports about a flat dividend for the previous year.

The German company announced that it will be paying a dividend of EUR0.70 per share. The business also said that it will keep paying out dividends to shareholders on a yearly basis, with a target range of 30% to 50% of net income from ongoing operations.

Concurrently, forecasts indicated that currency-neutral sales in North America would decline at a mid-single-digit rate in 2024, while a double-digit increase in sales is anticipated in Greater China and Latin America. In addition, sales in Europe, Japan, and South Korea are projected to rise at a high single-digit rate in comparison to the prior year.

This information is related to Adidas’s net loss of 75 million euros ($82 million) in 2022, as opposed to its profit of EUR612 million in 2022. Furthermore, the business reported a 5% decline in sales to EUR21.43 billion in January.

“We should see some growth already in 1Q, but I expect growth to be stronger in the second half of the year. We still have a lot of work to do, but I feel very confident we are on the right track,” said Adidas CEO Bjorn Gulden about 2024 projections.