Adidas Chooses to Bypass China for US Product Sourcing

Adidas is moving away from sourcing products for the U.S. from China, according to Bjørn Gulden, CEO of Global Brands, who revealed the strategy during a July 31 earnings call.

“We have largely ceased sourcing any products from China for the U.S. market,” Gulden stated.

The CEO mentioned that Adidas has made significant progress in restructuring its supply chain. While these adjustments were not directly driven by potential new U.S. tariffs, Gulden assured that the company is well-prepared for such eventualities.

During a Q1 earnings call, Gulden informed analysts that the company’s supply chain is becoming increasingly localized, with products destined for China being produced in China, and goods for India being manufactured in India. This localization is expected to enhance the company’s speed and flexibility in responding to market demands. Currently, Adidas operates 82 factories in China, which account for approximately 23% of its Tier 1 suppliers, the highest among all countries on its 2024 Global Factory list. Vietnam and India follow China, along with suppliers in Indonesia, Pakistan, Cambodia, and others. The U.S. has 13 of Adidas’ Tier 1 suppliers.

In 2018, the Trump administration imposed several tariffs on China-made goods, significantly affecting various industries, including apparel. In May, the Biden administration proposed additional tariff increases, which are expected to heavily impact the retail sector.

The possibility of higher tariffs on China-manufactured products has prompted companies to diversify their supply chains to mitigate geopolitical risks. For example, Helen of Troy, the parent company of Oxo Pop and Osprey, is collaborating with suppliers to relocate production outside of China.

“Diversifying the supply base and minimizing exposure to tariffs seems to be the best strategy at the moment,” Helen of Troy CFO Brian Grass explained to analysts in July.

Similarly, Mattel, the parent company of Barbie, has recently closed one of its Tier 1 supplier plants in China and plans to continue shifting production away from the country. As of April, about 50% of Mattel’s products were still being produced in China.

Sign up for our Daily Newsletter: Stay updated with the latest in fashion and garments! Sign up here.