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Two employees have left Adidas as a result of an ongoing investigation by the German sportswear brand into allegations of corruption in China.
Adidas said last week it was investigating “compliance violations” in China, a key market for its sportswear, after Chinese state media reported that the company’s executives in the country had been accused of embezzling millions of euros and receiving huge bribes.
“While Adidas investigates this matter together with independent external advisors, evidence has been found that in interactions with local sellers, one employee violated the company’s code of conduct,” Claudia Lange, head of media relations at the clothing giant, said in a statement. statement Wednesday.
“Separately, a second employee failed to meet the expectations of the company’s leadership to demonstrate mutual respect and trust,” she said, adding that both had left the company and the investigation was continuing.
Chinese state media company Economic View reported on Wednesday that both former employees had worked in marketing for Adidas China.
The allegations against Adidas executives were contained in an unsigned letter from people calling themselves Adidas China employees. The letter was widely published online earlier this month and reported by state media company Jiemian.
Jiemian wrote that the letter was sent directly to the company’s German headquarters before being shared on social media.
Lange told CNN last week that Adidas received an anonymous letter on June 7 “noting possible compliance violations in China.”
The reported complaint alleged that a senior executive in Greater China, who manages Adidas’ marketing budget, embezzled millions of euros and received kickbacks from third-party advertising and celebrity agencies. Several members of the management team and other employees were also involved, according to a copy of the letter published by Chinese state media.
Adidas Greater China’s total promotional budget was €250 million ($268 million) per year, including costs for marketing, branding and trade fairs, Jiemian reported, citing the letter.
The senior manager was also accused of “nepotism” and “workplace bullying,” including isolating some employees and forcing them to leave, the letter’s authors said.
The complaint also alleged that one of the manager’s subordinates had received “millions… from suppliers and physical assets such as real estate.”
Adidas is the world’s second-largest sportswear retailer. Greater China—a region that includes mainland China, Hong Kong and Taiwan—accounts for 15 percent of the company’s sales.
In mainland China, Adidas is the second-largest international sportswear brand after Nike (NKE). The German company has enjoyed a rebound in sales growth in China since Beijing lifted Covid restrictions in late 2022.
Adidas is known for playing the ‘celebrity’ card in its marketing in China. It has previously collaborated with popular actors and singers as brand ambassadors, including Yang Mi, Dilraba and Yi Yangqianxi.
CNN’s Fred He contributed reporting.
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