Adidas Group

In the course of any calendar year there is a notable movement of factories, as suppliers are added or removed, because business entities are created, bought or sold by the adidas Group, or intermediaries, such as agents, are hired or their services are terminated. The data we are reporting here is a snapshot in time, a static point capturing the situation at the end of 12 months of these movements. Data is presented on a year-on-year basis, as at the 31st December.

In 2010, we worked with 1,236 independent factories (excluding factories of our licensees) who manufacture adidas Group products in 69 countries. 69% of the factories are located in the Asia Pacific region, 17% in the Americas and 14% in Europe, Middle East and Africa (EMEA). Over one quarter, or exactly 27%, of all these factories are in China.

The total number of supplier factories is higher than the number reported in 2008 or in 2009. The reasons for this are:

1. Improved supply chain disclosure by business entities, such that suppliers that may have already been part of our supply chain have now been declared, registered and approved.
2. A change in the number of business entities within the adidas Group.
3. Increased use of secondary manufacturing locations by suppliers, especially in China.

Compared with year-on-year data for 2009, there was a notable increase in factory numbers in Brazil, Cambodia, China, India, Indonesia and Vietnam. The reasons for these increases are multi-various, as explained below.

The trend in Brazil is not the result of new factories being added to the supply chain, but improved compliance by business entities leading to fuller disclosure of manufacturing locations. In Asia, Cambodia, Indonesia and Vietnam have grown, partly in response to operating costs in China, but also due to trade restrictions forcing China based footwear suppliers to invest in other countries. In the case of India, improved transparency has added to the number of factories being disclosed and in China, additional factories have been added as suppliers have built secondary facilities to access labour in more remote locations, but they have also retained their existing coastal manufacturing facilities as development and management hubs.

There has also been a marked decline in the number of factories in certain countries around the world. Notable examples include Australia and New Zealand where there has been a consolidated sourcing approach with increased dependence on foreign imports and hence a reduced local supply chain. In South Africa the supply chain also shrank, post the 2010 FIFA World Cup South Africa™.

In 2010, the adidas Group worked with 45 licensees whose suppliers manufactured products in 307 factories in 45 countries.

The total number of licensee factories is higher than the number reported in 2009 due to improved supply chain disclosure by licensees and the increased number of licensees. In some cases the factories producing for certain licensees, such as in the field of cosmetics, are very stable being highly capitalised and specialised manufacturing facilities. A large proportion of the licensees are however apparel producers and as with the adidas Group's own direct sourcing arrangements licensees see expansion and contraction of the numbers of factories throughout the course of a year. For this reason, the data we are reporting here is a snapshot in time, a static point capturing the situation at the end of 12 months of these movements.