Adidas to close Myanmar office but keep factory orders flowing

Adidas will shut down its Myanmar office, Adidas Sourcing Limited (Myanmar Branch), but the global sportswear giant says it will continue placing garment orders with local factories, sources told Myanmar Now. Adidas Sourcing Limited, the company’s Myanmar branch registered in 2014 to oversee business and consulting operations, is being liquidated under Section 55 of the Myanmar Companies Law.Creditors have until August 4 to submit claims, according to a notice in the Myanmar Gazette. The move is administrative and will not affect Adidas’ garment manufacturing orders in the country, an Adidas company spokesperson told Myanmar Now. "These changes are of an administrative nature and are unrelated to our suppliers in Myanmar,” the spokesperson said. “We are monitoring the situation in Myanmar closely and are fully engaged with our suppliers, to ensure that the rights of workers in the supply chain are upheld. We continue to enforce compliance with our standards through due diligence activities including on-site inspections.” The German-based sports goods manufacturing business giant Adidas has companies distributed worldwide, and Adidas Sourcing Limited is based in Hong Kong, according to the Adidas group's website.After the military coup in 2021, reports emerged of worker rights and human rights violations in garment factories, leading Swedish H&M, Japanese Uniqlo, and other international brands to announce their withdrawal from Myanmar, stating they would no longer place orders in the country. The decision to dissolve the Myanmar office branch is likely linked to growing pressure from US and international sanctions, a Yangon-based businessman who has factories in the country told Myanmar Now. He noted that many foreign companies are scaling back their local operations to avoid reputational and financial risks tied to doing business under Myanmar’s junta. "It's because of American sanctions pressure,” the source said. “Various reasons. I know that quite a few office branches have been opened here. Some don't operate openly but are working behind the scenes.” He said the Myanmar branch mainly served as an oversight office for Adidas’s Hong Kong operations, ensuring local factories met the company’s standards before receiving manufacturing orders. “They set strict criteria—everything from the number of toilets per 100 workers to regular inspections. We had to pass their audits to get orders,” he explained. Adidas works with five garment factories in Bago Region and Yangon, including Myanmar Pou Chen Co., which makes Adidas shoes. Orders at the Pou Chen factory have declined, but continue, a union member told Myanmar Now. "It's like the factory's usual pattern every year,” he said. “In July, August, and September, our orders decreased. That's the norm: there's no overtime work. Even today we don't have work. Since there's no work, we have to attend training.” In October 2022, thousands of Myanmar garment workers protested for better conditions and a wage hike to 4,800 kyat ($2 US dollars), but the effort failed and 26 workers were fired. In May, workers at the Adidas-linked Tsang Yih factory in Yangon won a raise to 12,000 kyat ($6 US dollars) after protests, though they say it still falls short—below regional standards. Due to violations of conventions that Myanmar has agreed to, such as freedom of association and elimination of forced labor, the ILO conference held in Geneva, Switzerland on June 5 decided to take action against Myanmar.According to statements from the garment industry association, Myanmar's factories employ over 700,000 workers, with related industries employing about twice that number, and their dependent family members numbering about four times that. "Labor unions are telling international brands to leave,” a labor rights activist said. “They keep saying it's impossible to do business under military rule.”

Adidas to close Myanmar office but keep factory orders flowing

The company says the move is administrative and unrelated to garment production, despite growing pressure from international sanctions

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