Chinese dairy company Hunan Ava Dairy Industry Co. is recalling some of its infant formula after a quality watchdog in the southern Chinese city of Guangzhou found a carcinogenic toxin in some of the company's products, which is the latest blow to the country's scandal-ridden dairy industry struggling to restore consumer confidence, local newspaper Yangcheng Evening News reported.

The dairy company in central China is pulling five batches of its formula, Nanshan Bywise, produced between July 2011 and December from the nation's store shelves, a consumer sales and safety representative for Hunan Ava Dairy said Monday.

Those products failed sample tests for aflatoxin, a toxin produced by a fungus that is widespread in nature, the Guangzhou Industrial and Commercial Administration Bureau said in a statement issued last Friday. It didn't identify a source, though it said packaging, pollution or improper storage are often the cause, the Wall Street Journal reported.

With food safety being a prominent concern of the public, the national media immediately turned the spotlight on Ava.

Local dairy producers lost trust with the public after several years of scandals, including the 2008 melamine crisis that killed 6 babies and sickened at least 300,000.

Earlier last month, China’s prominent dairy company, Inner Mongolia Yili Industrial Group Co. Ltd. (600887.SH) recalled a brand of infant formula after government tests found traces of mercury.

In the most recent scandal, about 300 cartons of Bright Dairy & Food Co. Ltd. (600597.SH)’s brand, Ubest were contaminated by by alkaline water.

China is the world's largest baby formula market and is expected to overtake the U.S. as the largest dairy market by 2020, attracting an increasing number of global dairy producers.

Nowadays, global food and dairy companies are making another round of big bets on China's fast growing dairy sector, AFP said. They are lured by projections of 10 percent annual growth for the sector and by Chinese consumers' willingness to pay a premium for foreign brands as they remain wary of local brands' safety records.

For instance, Denmark’s dairy giant Arla Foods became a strategic investor in Mengniu Dairy Co. Ltd. (2319.HK), China’s largest milk producer by sales volume, after buying a 5.9 percent stake at a price of 1.7 billion Danish crowns ($289 million) recently.

The cooperation with foreign firms can bring in advanced management experience, but deep-rooted  problems like quality control in milk production that cannot be solved by the deal will still mainly rely on Chinese companies and authorities, Song Liang, a dairy industry analyst at the Distribution Productivity Promotion Center of China Commerce, told the Global Times.