Adidas down in Frankfurt, weighs internal investigation into alleged bribery in China

(Il Sole 24 Ore Radiocor) - Adidas arced on the Frankfurt Stock Exchange after anonymous reports of a vast bribe ring in China to local executives. The stock of the world's number two sportswear maker plunged 3.3 percent to EUR217.35, finishing at the bottom of the DAX 30.The 'Financial Times' reported on Sunday that Adidas had launched an internal investigation after receiving an anonymous letter signed by "employees of Adidas China" alleging the payment of multimillion-dollar kickbacks to the group's Chinese managers by outside suppliers. The letter lists the names of several employees who allegedly received the bribes, including a senior manager in charge of the rich marketing budget in China.

A second executive allegedly pocketed 'millions in cash from suppliers and also physical assets, including real estate'. Adidas confirmed it had received the letter on 7 June warning of "possible compliance violations in China" and said it was "committed to complying with legal and internal regulations as well as ethical standards in all markets in which the group operates". The group is 'thoroughly investigating the matter with external legal counsel'. For Adidas, the affaire risks jeopardising the brilliant recovery initiated in China, after the deep crisis caused by the Covid-19 that had severely affected what was until then the group's fastest growing market.

Adidas' difficulties in China also played a role in the torpedoing of CEO Kasper Roersted last year, who was replaced by Bjorn Gulden. Last March the group indicated it expects double-digit revenue growth this year in China, after posting 37% growth in the fourth quarter of 2023. Adidas has been in China since 1997 and has 14 factories in the country, where it generated 15% of its global sales in 2023, or EUR 3.2 billion, up 8% year-on-year.