Police have arrested 27 people in their investigation into tainted milk that has made 53,000 children ill and embarrassed China's reputation abroad, state media reported on Tuesday.
Those arrested are among 36 detained since law enforcers in Hebei province started investigating Sanlu Group in early September.
The arrests follow the discovery that the industrial chemical melamine, normally used to make plastics, had been added to powdered baby formula made by Sanlu Group. The Chinese company is 43% owned by New Zealand dairy giant Fonterra.
At least 22 other companies have been implicated in the milk scandal.
Four Chinese babies have died and a further 53,000 have been made ill by tainted milk. It is believed producers in China added the nitrogen-rich chemical to make products appear to have a higher protein content.
Health experts say that ingesting small amounts does no harm, but sustained use can cause kidney stones and renal failure, especially in young children.
The state-run Xinhua news agency had reported 22 detentions by Monday and said they were involved in a network that made and sold melamine and added it to milk.
According to police investigations in Hebei, where Sanlu is headquartered, the melamine was produced at underground plants and sold to breeding farms and purchasing stations, the China Daily reported on Tuesday.
It said Chinese officials, learning that the purchasing stations were among the key links in how the contaminated milk spread, have begun a national campaign to overhaul the system.
Thirty-one provinces in total have set up special task forces to supervise the purchasing centres and implement more standardised practices, the paper said.
Cadbury recalls products
As the tainted milk scandal has multiplied, a growing range of China-made products abroad have been pulled off shelves.
British sweetmaker Cadbury on Monday said it found had traces of melamine in products made at its Beijing factory, and recalled products made there and on sale in Australia, Hong Kong and Taiwan.
Cadbury said none of its products produced in New Zealand have been recalled.
Indonesia's food supervisory agency said at the weekend that it discovered some 16 Chinese-made diary products contained melamine, adding that all those products - including well-known brands such as Snickers and M&M's chocolates - would be immediately destroyed.
Mars said it was "extremely surprised" by that decision, insisting other tests had cleared its products of contamination.
More than a dozen Asian and African countries, plus the 27-member European Union, have taken steps to ban or limit consumption of Chinese dairy product
NZ dairy products tested
The New Zealand Food Safety Authority says it has detected the presence of melamine in one New Zealand dairy product, but the level is so small it falls below the level of detection.
The authority says it has tested 116 dairy products, including lactoferrin - a highly processed and expensive dairy product used in some baby formulas and milk drinks.
One result, from lactoferrin produced by Hokitika-based Westland Milk Products, showed minute traces of melamine concentrated at one part per million.
The authority says this does not constitute a health hazard, particularly as lactoferrin is a minor ingredient that is not used in food on its own. However, it says it is working with the industry to find out where the melamine came from.