In Dong’e town, where more than 100 factories produce ejiao, we watch as hundreds of hides from South Africa are unloaded from a truck by forklift outside a factory. They are laid out and will be left to dry for up to 45 days before, as tradition dictates, being put in huge vats to be boiled down from December 21 until the end of the winter.

A by-product of the industry is a cluster of donkey restaurants in the centre of Dong’e. At one, a tethered young animal has a hood placed over its head. After being brought to its knees by the first blow, the donkey staggers back to its feet and tries to escape before more blows to the head fell it for a final time.

WARNING: GRAPHIC CONTENT FOLLOWS

The slaughtered animal is then cut up as pedestrians and cyclists pass by, more curious at the sight of a foreigner than that of a donkey being chopped up on the pavement.

“We kill up to three donkeys a day this way,” the restaurant owner tells us. “Slaughterhouses are a long way out of town and they are inconvenient.”

As donkey numbers plummet, demand for ejiao within China continues to surge even as its price climbs, prompting producers to scour the world for animals.

Having set up a farm on the outskirts of Dong’e with the capacity to hold 10,000 animals bred specifically to be killed and skinned, China’s biggest ejiao factory – Shandong Dong-e E-Jiao (DEEJ), which employs 10,000 of the 200,000 popula­tion of Dong’e and processes a million donkey hides a year – is negotiating a deal to open a processing plant in Australia.

A TRADITIONAL Chinese medicine for nearly2,000 years, ejiao was once made exclusive­ly for members of the imperial family. An account by early 18th-century French Jesuits recalls how there was a well in Dong’e used only to draw water to make ejiao for the imperial court.

Mao Zedong and other mem­bers of the Communist Party elite used it, the chairman send­ing letters to colleagues praising its health benefits and giving ejiao as gifts. Today, it is endorsed as part of President Xi Jinping’s policy of developing the traditional medicine market.

Sales are fuelled by sometimes outlandish claims about ejiao’s almost magical benefits at a time when people in rich but heavily polluted eastern seaboard cities are increasingly fretting about their health. One case in particular seems to have caught the public imagination. A 2010 broadcast on national television featured Zeng Shixin, an unusually youthful 90-year-old with long dark hair from Wuhan, Hubei province, who claimed to have taken ejiao every day for 40 years. (She is still alive and healthy, six years on.)

The mythology surrounding the product dictates that ejiao made on the first day of winter is especially prized: we see one 250-gram slab on sale in Dong’e for an eye-watering 21,000 yuan.

The town’s factories have expanded the market massively by mixing ejiao – traditionally sold in solid slabs, for up to 7,000 yuan a piece – into health snacks or tablets and selling it in powdered form to drink with tea. A daily dose in the form of a snack or powder capsule costs about 400 yuan a month.

DEEJ also produces ejiao in the form of beauty masks and face creams.

“When a man takes ejiao he will be strong and virile and he will have a long life,” says a saleswoman in the shop at DEEJ’s vast factory complex. “When a woman takes ejiao, she will keep her youth and become as beautiful as a princess.”

The complex contains a museum celebrating ejiao’s history. Visitors learn that Yang Guifei (719-756), an emperor’s consort during the Tang dynasty, who was known as one of the Four Beauties of Ancient China, credited ejiao for maintaining her perfect complexion. In one display room, a giant map shows the countries DEEJ claims to source donkey skins from, which include Brazil, Bolivia, Colombia, Peru, Pakistan, Iran, Turkey and four European countries: Spain, Italy, France and Germany.

It seems Australia, too, will soon be added to the list. DEEJ is negotiating a deal with authorities in the Northern Territory under which the area’s feral donkeys would be rounded up and their hides exported to China. Australian officials were given a tour of the DEEJ factory in July. Alister Trier, a Northern Territory government official, said in an interview in Australia that there had been “quite significant” interest and more than a dozen inquiries from Chinese companies wanting to farm donkeys in what’s known as the Top End.

“Those inquiries were primarily driven by the view that there were huge numbers of donkeys roaming around the Northern Territory,” said Trier. “The reality is far different from that.” There may be no more than five million, rather than the 20 million the Chinese estimate.

Nevertheless, said Trier, “From our point of view, donkeys present a diver­sifi­cation opportunity, but it would be a mid- to long-term process.”

IN DONG’E, WE JOIN A group of salespeople from around China on a visit to the DEEJ factory. They are told by a company official leading them on a tour of the work­shops, “If you sell ejiao to farmers in the countryside, they can work all day without getting tired. We give two boxes a month to each of our workers and it makes them speed up and work faster all day long.”

At the company’s farm, young donkeys of various breeds are kept in row upon row of large pens. Naturally sociable and people-friendly, they rush to the sides of their pens to be stroked and nuzzled when anyone approaches.

A giant poster hanging on a wall in the centre of the farm spells out the value of the animals to workers: each donkey is worth the equivalent of a mu (667 square metres) of land, the poster says, adding: “You should regard the donkeys as crops.”

In one corner of the farm, workers tell us, scientists are attempting to create breeds of donkey that grow bigger and faster, to provide skins at a younger age.

“This is the first of his kind,” an employee tells us, showing us a sturdy, thickset black donkey he says is only a year old.

Less than a kilometre from the DEEJ facility is another major ejiao factory – Beneton Ejiao. Here, the president – Zhang Tengzhi, 42 – invites us into his office, where he proudly hands out individually packaged square cereal bars containing ejiao mixed with dates and nuts.

“If you take one of these every day, you will never get a cold,” he says. “We give it to our workers every day and they are always full of energy and never get ill.” Glancing at my bald head, he adds, “Even your hair would start to grow back. Not all, but some of it.”

Zhang, who claims to eat a bar every morning before work, says, “One of our women workers had ugly black spots all over her face after giving birth. She ate one of these every day and after just a few weeks, her skins was flawless again.”

Beneton Ejiao – which currently processes 3,000 tonnes of hides a year – is doubling in size and capacity to try to keep up with demand. The company sold 1.2 billion yuan of ejiao products last year and is preparing to go public next year. However, Zhang admits, it is a struggle to maintain supplies.

“There are very few donkeys left in China so we are now getting our hides from countries like Afghanistan,” he says. “In the 1990s, there were 11 million donkeys in the country but now there are only 6 million, so we have to import donkey skins from places like Southeast Asia, Africa, the Middle East and South America.

Zhang says he foresees a day when his supply line runs dry.

“I fear that, in the future, China’s ejiao industry will have the embarrassment of having no rice to cook.

“With pigs you can breed them and kill them in a year. With donkeys you must wait two to three years,” he says. “I have a strong feeling of crisis. Australia may be our last resort for donkey hides before long.”

His concerns are shared by DEEJ vice-president Wu Huaifeng, who told shareholders earlier this year: “Our main problem is raw materials. There is a mismatch between the donkey skin supply and strong market demand for ejiao.”

Wu said his company wanted to “explore and control the global sources”.

With seemingly bottomless pockets and no limit to China’s appetite for the gelatin, that ambition may be good news for middle-class women who worry about their com­plexions. For the world’s remaining donkeys, however, it is anything but.