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SBD Global/August 2, 2012/Finance

China Wants Compensation After Adidas Terminates Contracts To Restructure

Chinese suppliers have threatened to "turn to the courts for assistance" if adidas does not compensate them for terminating contracts, according to Xie Yu of the CHINA DAILY. Last week adidas announced its plan to shut down an apparel operation in Suzhou, Jiangsu province and terminate its contracts with five suppliers in the country. Shanghai Manlang Textile Co. Ltd. GM Sun Yingli said that adidas informed her and her colleagues in April that it "wanted to end the contract" with the textile company. About 30% of what Shanghai Manlang Textile produces is made for adidas, however, other suppliers are in "worse positions, having no other clients apart from adidas." Sun: "Some machines and software systems are tailor-made for adidas. They will be useless if we stop working with that company. What's worse, I'll have to lay off workers. Other companies may even go bankrupt." Adidas Greater China Corporate Communication Dir Sabrina Cheung said that adidas "gave its suppliers fair legal notice of its intent to terminate the business contracts." Sun added, "I hope we can sit down and negotiate a resolution as early as possible. If none is forthcoming, she and the other suppliers will turn to the courts" (CHINA DAILY, 8/1).
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