The arrested persons were part of a 10-member gang which has involved in the business for over six months and has already sent multiple consignments to China, police said.
Seven person, including a married couple, were arrested and 4,736 donkey hides were recovered after police raided a shop in Karachi's Gulistan-e-Jauhar area yesterday.
"We have arrested a Chinese national and six Pakistanis, including a couple. The gang used to bring the hides from Lahore via train," said Sharae Faisal Station Head Officer Israr Afridi.
Donkey meat may be cheap but its hides are valued in the international market, especially in China where it is used for medicinal purpose.
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Donkey hides are used to make gelatin in China for its use in traditional Chinese medicine called Ejiao, Afridi said, adding that the medicine is beneficial in curing blood-related diseases, resulting in their soaring demand.
The police are also looking for their absconding associates, the report said.
China is making efforts to source donkey hides from abroad as the country's own native population has seen a decline.
According to animal husbandry yearbook, donkey population in China has nearly halved from 11 million in the 1990s to six million in 2013.
Pakistan is planning to sell donkeys to China after making an investment of Rs 1 billion in its Donkey Development Programme, in a bid to attract Chinese investors in the northwestern Khyber-Pakhtunkhwa province under the ambitious USD 46 billion China-Pakistan Economic Corridor.