A joint venture to make fabric and garments for the Uniqlo casual clothing chain in Bangladesh is making “satisfactory progress,” according to one of the partners in the project, with a small-scale garment plant already in operation.

Hong Kong based knitted fabrics specialist Pacific Textiles Holdings Ltd says it has initially leased an industrial building where it has begun to make garments, as well as familiarising itself with local business practices and training workers.

Elsewhere, the land for the integrated fabric and garment factory has been purchased and the design of the factory is underway, the company says.

Plans for the US$80m facility were revealed in November 2008, with garment production starting this year and fabric following in early 2011.

As well as Pacific Textiles, stakeholders are Uniqlo's parent Fast Retailing, Hong Kong based fabric maker Crystal International, and Ananta Group of Bangladesh.

The joint venture has also invested with Bros Eastern Company Limited to build a spinning plant in Bangladesh to ensure the supply of quality yarns.

The firms hope to capitalise on Bangladesh's tariff and quota-free access to Europe and Japan and its cheap production capacity and operating costs.

Fast Retailing is in the process of creating a global supply network to support the roll-out of its stores around the world.

It also hopes to reduce its reliance on China, where around 90% of all Uniqlo products are currently made, and intends to locate one-third of production in countries outside of China.

The Japanese fashion group yesterday (13 July) announced plans to set up a socially responsible joint venture in Bangladesh in September that will both make and sell clothing in the country. Its new subsidiary Uniqlo Social Business Bangladesh will form the venture with Grameen Bank.