Matsuoka will establish a wholly-owned subsidiary, Annam Matsuoka Garment Co., possibly in August, to build and operate the plant.

It will be Matsuoka’s fourth plant in Vietnam after establishing one in each of the northern provinces of Phu Tho and Bac Giang and in the southern province of Binh Duong. The new plant will also make apparel on an original equipment manufacturer basis, Matsuoka spokesman Michihiro Fukagawa told Kyodo.

Matsuoka hopes to begin operations in Nghe An at an early date, but the plant’s launch date and production capacity have yet to be worked out, he said.

For the last financial year, ending March 2019, China accounted for about 60 percent of Matsuoka’s out-of-Japan production revenue, followed by Bangladesh (25 percent) and Vietnam (10 percent).

The firm’s medium-term business plan calls for reducing its reliance on China, where production costs are rising, to around 50 percent by March 2021 by shifting its focus to Vietnam, Fukagawa said.

Matsuoka sees Vietnam as a key production base for casual apparel bound for Japan and China, the spokesman said, adding that the firm’s Bangladesh arm manufactures inner wear and working wear.