Sept. 22 (Bloomberg) -- Taiwan banned all dairy products from China as inspectors found more cases of melamine contamination, a day after Hong Kong's two biggest supermarket chains pulled milk powder from their shelves.

Closely held King Car Food Industrial Co. recalled its instant chicken-corn soup, milk tea and Mr. Brown coffee drinks after the Taiwanese company found traces of melamine during voluntary tests of products using ingredients imported from mainland China, the island's health ministry said.

Taiwan's ban comes amid a scandal over melamine-tainted milk in China linked to four infant deaths and hospitalization of 12,892 babies. Hong Kong's two largest supermarket chains, Wellcome and ParkNShop, withdrew Nestle SA's milk products after traces of the chemical were found. Nestle yesterday said the amount was minute and wasn't considered harmful.

China's three biggest dairy producers by market value -- Inner Mongolia Yili Industrial Group Co., China Mengniu Dairy Co. and Bright Dairy & Food Co. -- are among companies whose products contain melamine, according to the government. At least 19 other Chinese producers have been found to have used melamine.

Producers seeking to cut costs can dilute milk and then add melamine, a toxic chemical used to make plastics and tan leather, to increase the apparent protein content.

The scandal was brought to light on Sept. 11 when the Beijing-based Ministry of Health said it found melamine in baby formula made by Sanlu Group Co., 43 percent owned by Auckland, New Zealand-based Fonterra Cooperative Group Ltd.

Last week China's Premier Wen Jiabao ordered an overhaul of the nation's dairy industry.

Hotline in Place

Chinese quality-control authorities said on Sept. 19 that they had found melamine in 24 batches of liquid milk and yogurt.

China and Hong Kong have set up telephone hotlines for distributing medical information to concerned parents and recalled milk products that tests show may contain melamine.

China's State Administration of Industry and Commerce had paid refunds for 304 tons of dairy products as of Sept. 20, according to Xinhua News Agency. A total of 39,965 children visited clinics after falling ill from the powder, the official CCTV reported.

Most hospitalizations were caused by Sanlu products, CCTV reported, citing health ministry statistics, without being more specific. There have been no reported cases of sickness caused by drinking liquid milk, CCTV said.

Yesterday, Hong Kong's government said a local girl developed a kidney stone after drinking Chinese milk containing melamine, the first known illness outside mainland China linked to the contamination.

South Korea hasn't yet banned Chinese dairy products, and hasn't found tainted milk products from China, the nation's food ministry said on its Web site. The government is examining butter from the mainland and will test future imports, it said.

To contact the reporter on this story: Janet Ong in Taipei at jong3@bloomberg.net

Last Updated: September 22, 2008 02:32 EDT