Beingmate has forecast a loss of $70m (€44.1m) for the first half of this year.

Shares have fallen by 10% and have been indefinitely suspended from trading. Charges have been made that the company has been involved in insider trading.

The Shenzhen Stock Exchange has ordered the company to disclose any stock transactions made by executives over the past six months, according to the Caixin news website.

During the past year the vice chairman, chief financial officer and deputy general manager have all resigned from Beingmate.

Dr Andrew Zhu of Trace, a consumer research company in Auckland, told the Press News that an investment of $700m (€441m) by Fonterra for an 18.8% share in the Beingmate was questionable.

“There is a big mismatch between Fonterra and Beingmate. The key thing is the Chinese customer doesn’t have confidence in this brand,” he said.

Dr Zhu added: “In May I went to China to do a study on infant formula and no one mentioned it. For people in the first and second tier cities, it’s not a brand they consider. It’s aimed at the lower end of the market.”

Responsible

New Zealand’s Labour Party primary industries spokesman Damien O’Connor said that senior Fonterra executives should be held responsible.

“The board approved a wasted investment of $700m of New Zealand farmer money. There is no excuse for not doing due diligence,” he said.

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