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Adidas expels Chinese chief as sales decline after consumer boycott in Xinjiang Uygur Autonomous Region

Adidas shook top management in China after a sportswear giant lost market share and launched a domestic brand following a consumer boycott of cotton in the Xinjiang Uygur Autonomous Region.

The German sportswear group told the Financial Times on behalf of Jason Thomas, who is responsible for the Greater China business. This move follows a 15% decline in sales for the second straight quarter of last year.

Thomas’ resignation is a year after Adidas was caught up in a fierce consumer backlash against Western brands that avoided cotton in the Xinjiang Uygur Autonomous Region due to human rights issues. Former Hong Kong chief Adrian Shiu will replace Thomas in April. Shiu will join again. The world’s second largest sportswear brand for the first time in two years as the CEO of Cosmo Lady, an underwear group in China.

The company’s commitment to respect human rights by Adidas and other foreign brands, and the ambition to increase sales in China, which has overtaken the United States to become the world’s largest fashion spender in 2019, according to a McKinsey study. As we struggle to balance, management reforms begin.

Alongside Nike and fashion retailer H & M, adidas has been hit by a Chinese boycott since last year. Western businesses have moved away from “forced labor” in the Xinjiang Uighur Autonomous Region, a western state inhabited by a minority of Muslim Uighurs who supply more than 80%. Of Chinese cotton.

Adidas said it had never manufactured goods in Xinjiang Uygur Autonomous Region and had no suppliers in the state, and in a statement from 2019, “we explicitly requested fabric suppliers not to procure yarn from Xinjiang Uygur Autonomous Region.” Stated. After learning about the allegations of forced labor there.

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As consumers abandoned Western brands, local Chinese sportswear group Anta Sports and Li Ning captured emotional changes by announcing that they would continue to use cotton from the Xinjiang Uygur Autonomous Region.

Your revenue increased by more than 50% in the first half of 2021 to reach RMB 22.8 billion ($ 3.6 billion). This is due to the further expansion of the rapidly expanding Chinese sportswear market. China’s revenue growth in Adidas was € 2.4 billion over the same period. ..

Allison Malmsten, a sportswear analyst at Daxue Consulting, a China-focused consultancy, says Nike and Adidas have given top positions in e-commerce apps such as Alibaba’s Tmall since the boycott. Instead, local online retailers promote Li-Ning and Anta. “More fierce competition”.

Jonathan Cummings, Asia Pacific President of brand consultant Landor and Fitch, said that after years of market power, Adidas and Nike were challenged with “stronger and cheaper domestic brands.”

Adidas generated almost a quarter of Greater China’s sales in the first half of last year, most of it from mainland China.

Having worked for Adidas for nearly 20 years, Thomas will move to Adidas, Dubai, as Senior Vice President of the Global Franchise.

Adidas recently said it plans to increase the number of products specifically designed for the Chinese market and strengthen local marketing.

In November, CEO Kasper Rorsted said the key to tackling the boycott was “to show gratitude and respect to consumers, gain loyalty, and complement the strengths of global brands with a strong local angle and understanding. That is “.

“Adidas still has a strong brand reputation in China,” Cummings said. “If we polish what Chinese consumers want, sales could recover.”

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