Adidas to close only wholly-owned factory

NANJING -- Adidas confirmed on Saturday that it will close its only company-owned factory in China, signaling a strategic transition by the German sportswear giant to fully subcontracted production.

The factory in Suzhou, East China's Jiangsu province, will be shut down in October this year to allow the company to "realign its global resources," according to Chen Qi, a spokesman with Adidas Greater China.

"We will not move the factory anywhere else," Chen said, adding that China, as the company's second-largest market, remains very important to Adidas.

Chen said the closure of the factory will not affect its inventory in China.

Workers at the factory suspect that the closure might be caused by rising salaries.

"The factory announced the closure not long after our salaries were hiked," said a worker who requested anonymity.

The worker said monthly pay at the factory had been kept at about 1,100 yuan ($175) before 2010 and was raised by about 400 to 600 yuan over the past two years.

Chen, however, said there was no direct link between the closure and salary hike. The factory currently employs no more than 200 people.

Adidas has opened more than 6,000 stores since it entered the Chinese mainland market in 1997.

Boosted by strong sales, the company's revenues in China went up 14 percent in the first quarter of the year to reach $4.62 billion, while net profits rose 38 percent to $351 million.