Adidas interview: Keeping up momentum

What is your role at Adidas and what is the structure of your legal team

My role is general counsel for Adidas greater China and I head up the legal department for the region. We do not have specific legal persons in Hong Kong and Taiwan, but I work with our finance team in these two areas on their respective legal matters, and engage external local counsel if we need help. I have a team here in Shanghai that supports mainly mainland China but remotely supports the Hong Kong and Taiwan offices on certain affairs, such as internal compliance or legal strategy related matters.

We have a total of five people including me – three other counsel and one shared paralegal. The roles of the three independent legal counsel are divided by function: one supports IT, finance, administration, HR, business development, corporate affairs and other supporting functions, another works with the sales and retail department and the third is a dedicated legal resource for marketing and operations. Each of them report directly to me.

What are some of the daily challenges you face

There are challenges to leading the team and those regarding legislative developments that affect our day-to-day business and can cause tension. Greater China is almost Adidas' second-largest market right now as well as one of the most profitable. The legal team here in China, however, has not been allocated more resources, whether HR or budget, so the biggest challenge is to continuously improve my team's working efficiency without sacrificing quality of service. We still have the same head count as when I joined two years ago, but back then the team supported only three legal entities whereas now we support six. And with the increasing workload it gets harder to maintain a high morale. Luckily I have a great team, which I try to motivate and encourage by emphasising the value of not just learning the law, but also the business.

Then with this growing workload do you find yourself outsourcing work to external counsel more

No, legal expenditure has actually been reduced by half since I've been here and our efficiency has increased. We learn a few things from external lawyers but the challenge has been to keep people working and motivated by learning and doing things first hand. We have drafted and updated many contracts and subsequently enlarged our database. We have also developed many tailor-made templates on our own. Standardising contracts is just one example. I have also spent lots of time training people, and it is important to encourage them to work shoulder-to-shoulder with the business and to participate in meetings with the business partners if possible.

What laws and regulations do you keep up to date with and how do they affect your work

The PRC Anti-monopoly Law (AML) and its enforcement. There wasn't so much enforcement during the first two years after the AML became effective in 2008, but the government has become much more active. Many companies have been targeted for price fixing or territory limiting and the NDRC has been giving huge fines to MNCs, though most recently the largest fine was imposed on state-owned companies.

Adidas handles a lot of stores, many of which are franchised. We manage our franchisees by signing our standard franchise and sales agreements in order to ensure a unified business standard. To guarantee legal compliance of the agreement itself and its implementation, every half-year we do a thorough internal investigation exercise on both the legal documentation and business model and sit with the relevant departments such as sales and retail to provide a complete update on the AML developments and the cases we have found in the market. We list all the dos and don'ts and conduct a self-review.

As for provincial and city-level promulgated rules, each counsel is alerted of their role within 24 hours of awareness of a legal update and alerts the senior level. I then consolidate these and write up an overview of the legislative developments in China in a comprehensive legal newsletter, which is circulated on a quarterly basis to the senior management and legal group in the head office in Germany.

Have the recent enforcement environment and legal developments affected internal compliance

We have adapted and reviewed our code of conduct – the statement which needs to be signed off by our distributors – as part of our compliance programme. For AML-related matters, we offer tailor-made legal training to each department, as each faces unique risks, and review our legal documents. Since we have lots of upfront sales and many do not understand the restrictions on selling, we have a top-down approach in which we conduct high-level legal training for senior management. We are an MNC so we are able to learn from and share our experience with the global Adidas legal community, especially from those in western countries with a more mature AML framework.

How and why do you select external counsel

I have three primary criteria. First of all, I assess their expertise. For our industry, I will engage those who have rich experience in handling the retail business, sports and other fast-moving industries. Secondly, I look for responsiveness. This is extremely important, whether they are able to send me something within the deadline and whether the product they have developed is something I can really use, as opposed to a standard product where they have just changed the name and sent to all their clients. So responsiveness means both speed and relevance. Thirdly, ownership. The partner I work with must have reviewed all the products before sending them to me. They must be value for money. We consider this economic model in our budget, as every year we review the performance of external counsel with other teams and conduct an evaluation. We pool the best into our service provider core and then pitch them.