SHANGHAI -- The latest baby formula scare in China highlights the loopholes in the country's food safety supervision system while dealing another blow to consumers' confidence in the country's dairy products.

Baby formula products with Hero Nutradefense labels have been taken off store shelves in many cities, including Shanghai, Beijing and Chengdu, and have been removed from major online shopping sites over the past two days, after a media report exposed safety problems with the brand.

The Shanghai food safety office has launched an investigation into the Shanghai branch of the Xile Li'er Import and Export Co., located in Suzhou, east China's Jiangsu Province, an authorized dealer of major Swiss baby formula maker Hero Group.

Xile Li'er is suspected of smuggling baby formula powder made only for the European market by Hero Group and repackaging it as Nutradefense baby formula, for which the company had a legal import certificate, according to the administrative committee of the Suzhou Industrial Park.

Meanwhile, of the 17 batches of baby formula products with the Nutradefense label that have been tested by food safety authorities, at least seven have failed to meet protein standards, it said.

State-run China Central Television (CCTV) on Thursday reported that the Suzhou company allegedly mixed expired milk powder into Nutradefense products, changed production and expiration dates and repackaged them.

The consumer quality watchdog in Suzhou closed down Xile Li'er's production line in November 2012, as the company did not have a license for food production, the report said.

Despite the closure, its milk powder products were still on sale in many cities this month.

Many consumers were enraged about the time gap between the authorities' crackdown and the media report, which has led them to question the role of the food safety supervision system.

The market watchdog in Suzhou defended what consumers are calling a dereliction of duty by saying that an executive of Xile Li'er destroyed the sales records before he was detained, and so the watchdog had difficulty tracking the faulty baby formula.

This defense, however, has met with harsh criticism.

"I do not care about paying higher prices for quality baby formula. But higher costs do not come with high quality and effective food safety supervision," said a mother of an infant in Shanghai. "You did not order a recall just because you had no idea where the faulty products were, and this is irresponsible in regards to consumers' interests."

Experts have called for strict supervision and harsh punishments, saying that any cover-ups and delays in exposure could damage the credibility of authorities.

If even one batch out of 10 was found to have quality problems, the market watchdogs should order that all the products be pulled from shelves until they can track the faulty products, said Qiu Baochang, head of the legal team of the China Consumers' Association.

An effective supervision system is badly needed after the country's food safety agencies are revamped, said Li Shuguang, a professor in the public health institute of Fudan University. "Otherwise, China's food industry has no future."

The latest scare also touched a nerve among consumers at a time when Chinese parents are showing clear preferences for foreign brands and demonstrating little confidence in local brands in the wake of a milk powder scare in 2008.