Dai Dong Vietnam Company, a branch of AZ Group in Vietnam, is the main investor in the US$50 million project.
The facility covers a total area of 9.5 hectares and has advanced technologies from Japan and Switzerland.
It will be the largest towel production line in the Southeast Asia and will yield high-quality products.
The factory will have a capacity of 4,000 tonnes of towels and luxury bath towels of various kinds a year, generating an expected revenue of US$50 million a year and creating jobs for about 860 local employees.
The project is scheduled to be put into operation by May 2017. It is also the first Japanese project in Texhong Hai Ha Industrial Park.