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Two Adidas employees out in China corruption probe

Editor’s Note: Sign up for CNN’s Meanwhile in China newsletter which explores what you need to know about the country’s rise and how it impacts the world. Hong Kong CNN  —  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 that 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 taking huge kickbacks. “While Adidas is investigating this matter together with independent external advisers, evidence has been found that in the interaction with local vendors, one employee violated the company’s code of conduct,” Claudia Lange, head of media relations at the apparel giant, said in a statement Wednesday. “Separately, a second employee failed to meet the company’s leadership expectations of demonstrating mutual respect and trust,” she said, adding that both had left the company and that the investigation continues. Chinese state media outlet Economic View reported 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 employees of Adidas China. The letter was widely publicized online earlier this month and reported by state media outlet Jiemian. Jiemian wrote that the letter had been sent directly to the company’s German headquarters before being shared on social media. Lange told CNN last week that Adidas had received an anonymous letter on June 7 “indicating potential compliance violations in China.” The reported complaint alleged that a senior executive in Greater China who manages Adidas’s marketing budget had embezzled millions of euros and taken kickbacks from external advertising and celebrity agencies. Several members of the executive’s team and other employees were also implicated, according to a copy of the letter published by the Chinese state media outlet. Adidas Greater China’s overall promotional budget amounted to €250 million ($268 million) a year, including expenses 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 reportedly said. The complaint also claimed that one of the manager’s subordinates had received “millions … from suppliers and physical items such as real estate.” Adidas is the world’s second-largest sportswear retailer. Greater China — a region that encompasses mainland China, Hong Kong and Taiwan — accounts for 15% of the company’s sales. In mainland China, Adidas is the second-largest international sportswear brand behind Nike (NKE). The German company has enjoyed a rebound in sales growth in China since Beijing scrapped Covid restrictions at the end of 2022. Adidas is well-known for playing the “celebrity” card in its marketing in China. It has previously worked with popular actors and singers as brand ambassadors, including Yang Mi, Dilraba and Yi Yangqianxi.