China-Pakistan JVs to boost expansion of Pakistan’s leather industry

Mia Shah – Gwadar Pro

Beijing: Pakistan and China are forging joint ventures expected to propel Pakistan’s leather industry to new heights. These collaborations involve setting up manufacturing plants, tanneries, and R&D centers dedicated to leather product innovation, according to Khalid Waleed, advisor to the Pakistan Tanners Association.

In June, the Association of Guangdong Shoe Manufacturers visited Pakistan to explore relocating their operations to the country. The Prime Minister’s Office Media Wing reported that these companies are prepared to invest between USD 5 and 8 billion in the local industry. The Prime Minister highlighted significant opportunities for the relocation of industries, including textile, leather, and footwear sectors from China to Pakistan.

Pakistan’s leather industry, a crucial export-oriented sector and the second most dynamic after textiles, has recently faced competitive challenges. It is the only country in the region to see a decline in leather exports, signaling a critical issue within the industry.

In fiscal year 2022-2023, Pakistan’s leather exports fell by 7%, dropping to USD 887 million from USD 953 million the previous year. This downturn was paralleled by an 18% decrease in other leather products and an 11% reduction in leather garments, as noted by the Pakistan Leather Garments Manufacturers and Exporters Association.

China, a leading global producer and exporter of leather and leather products, manufactures over 4 billion square feet of leather annually. In 2023, China exported leather, fur, and related products worth USD 96.98 billion, according to the China Leather Industry Association.

The synergy between China’s production capabilities and Pakistan’s advantages—including high-quality leather and lower labor costs—presents significant cooperative potential. Pakistan’s market also shows strong consumer demand for fashionable footwear and bags. Furthermore, preferential import policies for these products create a conducive environment for joint ventures under the China-Pakistan Economic Corridor (CPEC).

These joint ventures are poised to boost the growth of leather-related small and medium enterprises (SMEs) in Pakistan, providing opportunities for modernization and technological upgrades through Chinese investment and support.

The enhanced infrastructure and trade routes under CPEC offer Pakistani leather products improved access to the vast Chinese market, promising a boost in sales and increased market presence.