Huali Group announced that its first factory in Indonesia – the Shichuan Factory – achieved its internal performance targets and turned profitable in the third quarter of 2025, marking a key step in its Indonesian capacity expansion strategy and validating its cross-region operations and localized management capabilities. Indonesia's footwear industry ecosystem is mature, and the company's actual controller has experience operating factories locally, with the core management team including personnel with Indonesian background, enabling rapid adaptation to the local environment, avoiding the typical teething risks of new production bases, and laying the foundation for production profitability.
Compared to Vietnam, Indonesia offers abundant labor supply and lower labor costs (Vietnam sees annual wage increases of about 8%), supporting long-term scaling and cost optimization. The company has made targeted management adjustments, optimized training, and adapted to local work habits, improving efficiency, with operations and ramp-up performance exceeding expectations. The first phase of the Shichuan Factory is already in production, and upon completion of the second and third phases, total annual production capacity will reach 50-60 million pairs, becoming a key capacity pillar.
In the medium to long term, Indonesia will be the "main battleground" for capacity expansion over the next 3-5 years, while Vietnam will stabilize production and optimize efficiency, forming a dual-base synergy of "Vietnam stabilizing capacity, Indonesia expanding volume." This arrangement helps the company improve gross margins through lower costs, diversify risks from rising Vietnamese costs and geopolitical factors, while Indonesia's flexible capacity can adapt to order fluctuations, enhancing responsiveness. Management stated they will continue deepening localization, advance subsequent construction, conduct monthly efficiency reviews, and ensure steady capacity release to provide stable competitive support for global markets.
Huali Group announced that its first factory in Indonesia – the Shichuan Factory – achieved its internal performance targets and turned profitable in the third quarter of 2025, marking a key step in its Indonesian capacity expansion strategy and validating its cross-region operations and localized management capabilities. Indonesia's footwear industry ecosystem is mature, and the company's actual controller has experience operating factories locally, with the core management team including personnel with Indonesian background, enabling rapid adaptation to the local environment, avoiding the typical teething risks of new production bases, and laying the foundation for production profitability.
Compared to Vietnam, Indonesia offers abundant labor supply and lower labor costs (Vietnam sees annual wage increases of about 8%), supporting long-term scaling and cost optimization. The company has made targeted management adjustments, optimized training, and adapted to local work habits, improving efficiency, with operations and ramp-up performance exceeding expectations. The first phase of the Shichuan Factory is already in production, and upon completion of the second and third phases, total annual production capacity will reach 50-60 million pairs, becoming a key capacity pillar.
In the medium to long term, Indonesia will be the "main battleground" for capacity expansion over the next 3-5 years, while Vietnam will stabilize production and optimize efficiency, forming a dual-base synergy of "Vietnam stabilizing capacity, Indonesia expanding volume." This arrangement helps the company improve gross margins through lower costs, diversify risks from rising Vietnamese costs and geopolitical factors, while Indonesia's flexible capacity can adapt to order fluctuations, enhancing responsiveness. Management stated they will continue deepening localization, advance subsequent construction, conduct monthly efficiency reviews, and ensure steady capacity release to provide stable competitive support for global markets.