New Zealand's Fonterra, the world's largest dairy exporter, on Saturday said it had found that an ingredient in some of its dairy products contained a strain of a bacteria which can cause botulism, prompting China to recall affected products.
The company said it had notified the eight customers which purchased New Zealand-made whey protein concentrate contaminated with Clostridium Botulinum, and may have used the ingredient in the production of infant formula, sports drinks, and other products.
China, which imports the majority of its milk powder products from New Zealand, asked domestic importers to recall any products which may have been contaminated by the bacteria, and ramped up scrutiny of New Zealand dairy products coming into the country.
(Read more: Chinese search for infant formula goes global)
Fonterra said that it was up to individual companies to announce recalls if necessary.
This is the second dairy contamination issue involving New Zealand's largest company this year. In January, Fonterra said it had found traces of dicyandiamde, a potentially toxic chemical used in fertilizer, in some of its products.
The announcement comes as Fonterra is planning to launch its own branded milk formula in China, five years after its involvement in a 2008 scandal in which melamine-tainted infant formula killed at least six and made thousands ill.
"Our focus is to get information out about potentially affected products as fast as possible so that our customers can make a decision about whether product recalls are required," Gary Romano, managing irector of New Zealand milk products at Fonterra, told reporters.
China's General Administration of Quality Supervision, Inspection and Quarantine said on Saturday that it had asked New Zealand to take immediate measures to "prevent the products in question from harming the health of Chinese consumers."
"The administration has also asked importers to immediately recall any possibly contaminated products and has required all local quarantine and inspection bodies to further strengthen inspection and supervision of New Zealand dairy products exported to China," it said in a statement.
Clostridium Botulinum is a bacteria often found in soil, and the Fonterra case was caused by an unsanitary pipe at one of the company's processing plants.
The bacteria can cause botulism, a potentially fatal disease which affects the muscles and can cause respiratory problems. Infant botulism is a common form of botulism, which can attack the intestinal system.
Fonterra CEO travels to China
Fonterra would not identify the customers affected or countries where the product was exported. The company is a big supplier of wholesale milk powder to Chinese dairy firms and is known to supply multinational food and beverage companies.
New Zealand's Ministry of Primary Industries (MPI) said it was working with Fonterra and its customers to identify products which posed a risk to consumers.
It also did not identify the brands or countries affected.
Fonterra said there had been no reports of any illness linked to the affected whey protein, and that fresh milk, yoghurt, cheese, spreads and UHT milk products were not affected.
A company spokesman said that Fonterra CEO Theo Spierings would travel to China from Europe at the weekend to discuss the issue.
The announcement comes just as China has started to tighten dairy import regulations to improve its overall food safety standards. In the past month or so, Beijing has introduced new regulations restricting the operations of smaller infant formula brands.
Foreign branded infant formula is a prized commodity in China, where consumers are distrustful of domestic brands given a series of food safety scandals. This has created a lucrative market for foreign brands including global heavyweights Nestle, Danone and Mead Johnson.
(Read more: Contaminated school lunch kills 25 children in India)
While Fonterra is a major supplier of bulk milk powder products used in milk formula in China, it has stayed away from the branded space after it was rocked by the melamine incident in 2008.
The company had held a stake in Chinese dairy company Sanlu, which collapsed after it was discovered to have added melamine to bulk up its formulas. The New Zealand producer was criticised for failing to blow the whistle sooner and more loudly.
Fonterra processes the vast majority of milk produced in New Zealand, whose dairy sector generates more than 7 percent of the country's GDP.