From banning the entry of contaminated whey from Fonterra, China and other Asian nations have taken the botulism scare a step higher by recalling infant milk products.

Initially, it was only Nutricia that recalled a few batches of the Karicare infant formula, but the New Zealand firm has expanded the recall to all batches.

On Tuesday, the consumer quality body in China ordered the recall of two batches of milk formula brands marketed by Abbott Laboratories, which said the move was only precautionary but assured Chinese consumers it did not have the whey protein concentrate from Fonterra.

A day earlier, Abbott also recalled its milk formula products in Vietnam, while in Hong Kong and Macau, Cow & Gates recalled 80,000 cans of its stage three baby formula.

Sri Lanka has suspended milk powder imports from New Zealand and Brunei media said the country's government is considering ordering a recall.

Market experts said New Zealand's situation shows the country's vulnerability to heavy reliance on dairy products for its income.

"The events of the past few days are a stark reminder of New Zealand's increasing vulnerability to a single product and to a single export destination," Bloomberg quoted Doug Steel, economist of the Bank of New Zealand.

"Any lingering major concern about the quality of New Zealand's food production could have far-reaching economic implications," he added.

Hayley Moynihan, dairy industry analyst at Rabobank, said the current situation would be a test for buyer perception of the issue on prices and sentiment towards New Zealand products.

He made the comment on Tuesday at the fortnightly Global Dairy Trade auction. The event is the world's largest wholesale marketplace for dairy products such as milk powders, butter and cheese which are mostly manufactured in New Zealand.

Fonterra produces one-third of the global trade in dairy products and logged revenue of NZ$19.8 billion in the last 12 months ending July 2012.

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