A factory which processes around 600 whale sharks annually has been found in southern China, a conservation group said Monday, calling it the world's biggest slaughterhouse for the endangered species.

Hong Kong-based conservation group WildLifeRisk said it discovered the factory in the town of Pu Qi in Zhejiang province after a four-year investigation.

It said the sharks are slaughtered and processed mostly to produce shark oil for health supplements.

Undercover video footage produced by the group showed workers cutting up the large dotted back fins of whale sharks and other shark species.

"How these harmless creatures, these gentle giants of the deep, can be slaughtered on such an industrial scale is beyond belief," said a WildLifeRisk statement sent to AFP.

"It's even more incredible that this carnage is all for the sake of non-essential lifestyle props such as lipsticks, face creams, health supplements and shark fin soup."

The slaughterhouse also handles other species of sharks including blue sharks and basking sharks and produces 200 tonnes of shark oil annually from the three species, its owner -- identified only as Li -- said in the video.

Li also said he needed to "smuggle" whale shark skin out.

In another segment of the video, a man identified as Li's brother said the whale shark skins are exported to European countries such as Italy and France, where they are used by Chinese restaurants.

Whale sharks measure as much as 12 metres (39 feet) but are harmless to humans and feed on tiny marine animals.

They are on the "Red List" of endangered species drawn up by the International Union for the Conservation of Nature.

They are also listed on Appendix II of the UN's Convention on International Trade in Endangered Species (CITES), meaning countries must show that any exports were derived from a sustainably managed population.

Exports and imports should also be monitored.