Decision to keep plants in Indonesia sees Carry Wealth turn around three years of losses Garment maker Carry Wealth Holdings has suffered and benefited from textile quotas. In the past few months, the United States and the European Union have imposed quotas on Chinese textiles, hurting garment manufacturers with substantial production in China. In contrast, Carry Wealth is reaping benefits from this trade war, because two-thirds of its production is in Indonesia and it has virtually no garment production in China. In the first half, Carry Wealth's turnover grew 7.3 per cent to $512.88 million, while net profit was $30.48 million - a turnaround from three years of consistently falling turnover and losses from 2002 to 2004. 'I'm optimistic about our profits for the whole of this year. Our orders this year are full, and they will definitely be higher than last year,' said James Lee Sheng-kuang, a vice-chairman and co-founder of Carry Wealth. 'Outside China, our customers' orders to other countries increased.' Carry Wealth would expand the capacity of its five Indonesian factories by 20 per cent this year, and would probably increase its Indonesian production capacity by another 20 per cent next year, Mr Lee said. Virtually all Carry Wealth's sales are to the US, and its customers include US brand Polo Ralph Lauren. Carry Wealth's main products are knit shirts and cotton pants, both of which have US quotas on Chinese products. Yet the very factors benefitting Carry Wealth this year, quotas and the company's Indonesian production, were a curse last year. Last year, its turnover fell 11.3 per cent to $905.24 million, while its net loss widened to $40.9 million from $23.52 million in 2003. Last year, Carry Wealth closed a sweater factory in Indonesia. 'Our customers cut down their orders in 2004. That was the last year of global textile quotas, so our customers faced a lot of uncertainty,' explained Mr Lee. Many manufacturers from South Korea, Japan and Hong Kong shut down their Indonesian garment factories last year, because the Indonesian government raised wages to woo voters in the presidential elections, recalled Mr Lee. Some manufacturers shifted their Indonesian production to China in anticipation of a boom in Chinese exports after global textile quotas ended on January 1 this year, but Carry Wealth chose to remain in Indonesia, he said. 'I didn't believe for the next few years the US would allow a lot of business to shift to China. I was sure the US had no interest in nurturing China as a rival, an economic monster as the world's factory,' Mr Lee said. For the first seven months of this year, Indonesia's garment exports to the US grew 15 per cent to US$1.59 billion. But the growth of Indonesia's garment industry would be hurt by its government's decision to more than double oil prices last Saturday, said Carla June Natan, a co-ordinator at Urban Community Mission Jakarta, an Indonesian non-governmental organisation. The oil price rise would raise costs for garment manufacturers in the country, causing them to reduce production and lay off workers, she said. Mr Lee acknowledged that if not for trade restrictions, China was a more competitive place than Indonesia for garment production. Carry Wealth would start its first factory in China at the end of next year, as EU and US quotas on Chinese textiles would be abolished by the end of 2008, he said. By 2010, he hopes China will account for 50 per cent of Carry Wealth's production.