Chinese firms turn Savar tannery waste into $1.5m exports

What was once deemed a burden and an environmental nightmare has now become a high-value industry. 

For years, chemical-laden solid waste from leather tanneries was dumped in the open, polluting surrounding ecosystems. Today, a Tk100 crore investment by a Chinese group has turned that hazard into an opportunity. 

Establishing two firms in Bangladesh, China's Wenzhou Yuanfei Group is converting tannery refuse into industrial protein powder and pharmaceutical-grade gelatin – turning hazardous waste into essential commercial materials.

Since last year, the group has exported around $1.5 million worth of products to China, Cambodia and other countries – around $1.3 million in gelatin and $300,000 in protein powders.

It has also recently received a $400,000 order from Hong Kong for gelatin products, according to a letter submitted to the finance ministry.

Infograph: TBS

The group now plans to expand its export destinations to Turkey and the US after obtaining the necessary documents, as it has found significant demand from buyers in those markets.

Operating near the Savar Tannery Industrial Estate, Bangladesh JW Animal Protein Company Limited and Yongli Biotechnology Company Limited – both under their parent group, Wenzhou Yuanfei – have set up manufacturing facilities with combined foreign investment of around Tk100 crore and started processing tannery waste for export since last year.

Yongli Biotechnology, registered in Bangladesh in 2024, is an industrial protein powder manufacturer and a 100% export-oriented enterprise. Its primary raw materials are wet blue dust, leather trimmings and other waste sourced from the tannery industrial estate.

Bangladesh JW Animal Protein Company, meanwhile, was established in 2023 as a Chinese-invested joint venture between Wenzhou Yuanfei and Pingyang groups, according to Yuanfei's website. It has started producing gelatin using modern machinery and an Effluent Treatment Plant (ETP).

Its factory has an annual production capacity of 5,000 tonnes of gelatin, valued at approximately $22.50 million in foreign currency. The company also produces industrial protein powder from tannery waste.

The companies collect around 15,000 tonnes of tannery waste annually and recycle it using modern machinery at their factories to produce industrial protein powder and gelatin for export.

Highlighting the sector's growth prospects, Md Masud Hossain Khan, group managing director of the companies, told The Business Standard that their enterprises are currently the only operators in this market segment, with no local companies engaged in the business.

He said by processing raw tannery waste, which was previously dumped in the open and caused severe environmental pollution, into high-value export products, the two manufacturing firms are contributing to environmental sustainability while generating foreign exchange earnings.

"We have already created around 1,000 jobs in the factories," he further noted.

"We have the full capacity to manage all the waste generated by the tannery estate. If Bangladesh Small and Cottage Industries Corporation provides us with free space inside the estate, we will be able to recycle all solid waste, including fleshing and other waste," Masud added.

Fleshing is a major by-product of the leather tanning process, consisting of excess fat, tissue and muscle scraped or cut away from the flesh side of animal hides and skins.

He also called on the government to stop the export of rawhide trimmings and prevent wet blue shaving dust and trimmings from being diverted from local use.

In April last year, JW Animal Protein signed a memorandum of understanding with Dhaka Tannery Industrial Estate Waste Treatment Plant Company Ltd to facilitate the collection and processing of tannery waste. 

Speaking to TBS, Golam Shahnewaz, managing director of the waste treatment plant company, described the initiative as a major milestone in efforts to address tannery waste management.

The companies' operations also have the potential to reduce Bangladesh's dependence on imported gelatin and related pharmaceutical materials.

According to company officials, industrial protein powder is primarily used to soften finished leather, while gelatin is used to make the coating of pharmaceutical capsules, products that are currently imported by local industries.

Raw-material supply a concern

Despite the progress, the companies say their operations face a growing threat from exports of cow rawhide trimmings, a key raw material for gelatin production.

At the end of June, JW Animal Protein submitted a letter to several ministries, a copy of which was obtained by TBS.

In the letter, the company urged the government to prohibit exports of cowhide trimmings from the Savar tannery estate and take measures to protect domestic gelatin production and foreign investment.

The company noted that it had invested about Tk75 crore in Bangladesh to date and had completed US Food and Drug Administration (FDA) registration as well as international certifications, including Halal and GMP.

According to the company, producing its annual target of 5,000 tonnes of gelatin requires around 30,000 tonnes of cow rawhide trimmings. 

It estimates Bangladesh's total annual production of such trimmings at about 20,000 tonnes, meaning the available domestic supply is already insufficient for its planned production.

However, according to the company, some local businesses had recently begun exporting the trimmings, putting its factory operations at risk of closure.

It also noted that gelatin worth $3.5 million was imported into Bangladesh in 2025. Gelatin is used as a raw material for pharmaceutical capsule shells, while $1.98 million worth of capsule shells were imported in the same year, according to the company's letter.

A tiny export with a bigger market ahead

Between FY2023 and FY2026, Bangladesh exported about $195,446 worth of empty gelatin capsules to seven countries, equivalent to around Tk2.40 crore at the current exchange rate of Tk123 per dollar, according to Export Promotion Bureau (EPB) data.

Exports stood at $72,408 in FY23, fell to $32,525 in FY24 and then rose to $67,189 in FY25. In FY26, the country exported another $23,324.

The value remains small compared with Bangladesh's overall exports, but the changing destinations offer a glimpse of a developing market.

Malaysia was the largest buyer in FY23, Pakistan in FY24, and Germany in FY25. In FY26, Mexico emerged as the dominant destination, accounting for 94% of exports.

The global empty capsules market is projected to reach $4.19 billion in 2030, up from $3.19 billion in 2025, with the market expected to grow at a compound annual growth rate of 5.6% over the period.

According to research by MarketsandMarkets, a market research and consulting firm, the market is being driven by "increasing demand for nutraceuticals and personalised supplements, expansion in pharmaceutical R&D, and innovations in functional and modified-release capsules."

The firm also said "a significant shift toward vegetarian and clean-label options, combined with sustainability-driven regulations, is further accelerating adoption".

It said future growth was expected to come from localised production in emerging markets and the development of biodegradable capsules.