The world's largest dairy exporter, New Zealand's Fonterra, has said an ingredient in some of its products contains a strain of a bacteria that can cause botulism.
The announcement has prompted China to recall affected products.
The firm said it has notified the eight customers which bought the whey protein concentrate contaminated with Clostridium Botulinum.
Made in New Zealand, the product may have been used to make 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.
The Chinese authorities have increased scrutiny of dairy product imports from New Zealand.
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 fertiliser, in some of its products.
It comes as the company is planning a major launch of milk formula in the huge Chinese market.
Fonterra said that it was up to individual companies to announce recalls if necessary.
It 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".