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Adidas has shied away from sourcing its U.S. merchandise from China, its CEO, Bjørn Gulden, said on the company’s Q2 earnings call.
“We have basically tried not to source any products anymore from China into the U.S.,” he said in response to an analyst question about China.
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The German firm seems to join a growing list of companies interested in procuring products from other countries. While Gulden did not indicate where Adidas is now sourcing the majority of its U.S. goods, the company publishes a public list of its global suppliers.
At a global level, Chinese manufacturers still account for more than 20 percent of all the company’s Tier 1 suppliers. The data shows Adidas is linked to 82 Chinese Tier 1 suppliers, 57 Vietnamese Tier 1 suppliers, 26 Indian Tier 1 suppliers, 22 Indonesian Tier 1 suppliers and 21 Brazilian Tier 1 suppliers. The company also has Tier 1 suppliers—though fewer in number—in Pakistan, the U.S., the UK, Cambodia and more.
Adidas did not return Sourcing Journal’s request for comment on where the Tier 1 factories producing goods for the U.S. market are located.
Adidas’ Tier 1 diversification seems to mirror the at-large industry’s play to decrease its reliance on China. Data from Bloomberg shows that, in 2023, China’s share of U.S. apparel imports came in at 20.8 percent. In 2017, China accounted for 34 percent of U.S. apparel imports.
Instead, companies have started to shift production to Vietnam, Bangladesh, India and Indonesia; those four countries accounted for 16.8 percent, 8.9 percent, 6.4 percent and 5.4 percent of U.S. apparel imports, respectively, in 2023. Mexico has also started to see an uptick in interest as nearshoring becomes an option for an increasing number of companies.
For 2024, Adidas lists just two Tier 1 suppliers in Mexico.
For many companies, moves away from China have been brought on by a questionable political environment, in more ways than one.
As the U.S. election comes closer, anti-China sentiment in business continues to creep in. Regulators have called for changes to the de minimis provision, which allows packages worth less than $800 to enter the U.S. without the same procedural requirements or duties as higher-value packages. Though many companies take advantage of the so-called loophole, legislators and agencies have shown particular distaste for companies with Chinese origins, like Shein and Temu.