The company currently has 80 percent of its production in Asian countries.
The East African country has had a long history in textile, leather and shoe production since its Italian occupation in 1939. Other apparel retailers have already begun sourcing products in the country, including Tesco and Chinese shoe-manufacturer Huajian, providing footwear to Guess and Tommy Hilfiger.
"Ethiopia is a country with strong development and we trust that we can sustain economic growth and job opportunities there," said Emilsson-Falk.
Despite strong economic growth, 9.9 percent on yearly average since 2004 according to the World Bank, the sub-Saharan nation remains one of the world's poorest. And one year after the death of prime minister Meles Zenawi, the country is still criticised for its lack of human rights by watchdog organisations.
"We did an extensive risk analysis for Ethiopia, looking at human rights and environmental issues in the country," said Emilsson-Falk.
"We have worked with improvement of working conditions in our production countries for many years and will apply our experience when establishing relationships with the Ethiopian suppliers."
Two Swedish journalists - Martin Shibbye and Johan Persson - were jailed in Ethiopia for 14 months until September 2012 when they attempted to investigate alleged human rights abuses in the country’s oil rich Ogaden province.