Fonterra was too slow to speak out over the poison milk scandal in China, Prime Minister Helen Clark said today.
The first identified contaminated milk powder in China was sold by New Zealand dairy giant Fonterra's Chinese joint venture partner, San Lu.
Since then the chemical melamine, which causes urinary problems including kidney stones, has been detected in milk products from numerous companies throughout China.
Nearly 13,000 children have been hospitalised and at least four have died.
Hong Kong recorded its first victim over the weekend after a three year old was found with a kidney stone. She has since been discharged from hospital.
The scandal stems from the practice of adding the industrial chemical, normally used to make plastics, to watered-down milk to boost apparent protein levels.
Some Chinese press reports have said the scam had been going on for years, with the country's chaotic and corrupt food safety system unable to detect or prevent it.
In the past Helen Clark has stood by Fonterra saying it tried to blow the whistle, but had been blocked by its majority business partner and local officials.
Today the Prime Minister told Newstalk ZB that the company had been too slow to speak out.
"I think it has been too reactive from the beginning and no doubt their shareholders will want to hold the company accountable for that," Helen Clark said.
"I felt there was quite a long period of time before Fonterra spoke and I don't think that is satisfactory."
It was important that Fonterra upheld the highest possible standards, she said.
The embassy in Beijing had been advised about the problems on August 14, "but not in a way that they felt they had sufficient information to alert Wellington for another 17 days".
With hindsight people could ask whether the embassy should also have acted sooner, Helen Clark said. She said the first she knew about the issue was on September 5.
Three days later she convened a meeting of senior ministers at which she ordered officials to leapfrog the local officials and immediately inform their superiors in Beijing.
A product recall was then issued on September 11.
There have been reports from China that the practice of adding dangerous chemicals to milk has been going on for years and Shigeru Omi, Western Pacific director of the United Nations' World Trade Organisation, raised concerns the matter was not reported earlier.
"Evidently there is also a problem with internal communication," Omi told a news conference in Manila.
"It seems people already knew of this problem for some time and did not share this information."
China has endured a litany of scandals in recent years over dangerous products including food, drugs and toys, many of which were exported, dealing a blow to its manufacturing reputation.
A number of countries have now banned Chinese milk products with Burundi, Gabon and Tanzania the latest. Brunei has also employed a ban, behind Malaysia, Singapore and Bangladesh.
Meanwhile a Japanese company is recalling thousands of buns made with Chinese milk, fearing contamination.
Last year, melamine was found in exports of Chinese pet food which killed cats and dogs in the United States.
The Chinese government has pledged a crackdown on food safety issues.
Eighteen people have been arrested in China over the scandal, state media have said.