Adidas (OTC:ADDYY) shares dropped 4% on Monday after the German sportswear brand said it was investigating allegations of corruption in China after receiving an anonymous 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,” it said in a statement.
Adidas shares were down 4% at 216 euros by 1030 GMT. The company said it could not provide further information until its investigation is completed.
The claims “highlight the challenges many companies face in maintaining consistent oversight and control of their digital operations in the Chinese market,” said Jacques Roizen, managing director of China consulting at Digital Luxury Group in Shanghai.
Over the past 18 months Adidas has been working to boost sales in China, after losing significant market share to rivals since before the COVID-19 pandemic.
“This could also jeopardize the goal of finally regaining a foothold in China after the massive slumps of the past four years,” said Juergen Molnar at brokerage RoboMarkets.
