A Ministry of Foreign Affairs and Trade spokeswoman said the false claims were being taken "very seriously" and complaints have been filed with Chinese authorities.
"The image and safety of New Zealand food exports is an important part of the New Zealand brand and reputation, which we must protect.
"In this respect, we are engaging constructively with the appropriate officials in China to help address and resolve our concerns over any misleading representation of New Zealand-origin finished products and unauthorised use of names and logos."
An industry watchdog group, Instant Milk Formula Exporters, has been set up to investigate. John Missen, director of exporters Realize Asia, said the credibility of "brand New Zealand" was being affected.
"Having the Trade and Enterprise fern is all very well, but all the copies have it too."
Infant formula is a sensitive topic in China since a melamine scandal four years ago.
In 2008, six children died and nearly 1000 were hospitalised in China after melamine was added to baby formula to apparently increase protein content.
Chinese manufacturers have also been caught adding hormones and tannery effluent to formulas.
The industry is a key export earner for New Zealand.
According to Statistics New Zealand, exports in prepared cereals, flour, and starch, were up $23 million or 45 per cent in the year to December 2011, led by infant formula.
"It's an area where you can really add value to New Zealand dairy products," said Missen.
Auckland Chamber of Commerce chief executive Michael Barnett said it was a major concern but it was important not to inflame the situation. "I accept that it's a risk to New Zealand Inc. I think it's going to be a bigger issue."
Barnett has been working behind the scenes with Customs officials in China and New Zealand to ensure manufacturers tell the truth about products' origins.
He said it wasn't just the infant formula industry being conned.
"You will get other sectors where the clean green image of New Zealand is being borrowed by others who can use it to their advantage."
New Zealand Trade and Enterprise spokeswoman Suzanne Boslem said there had been an increase in requests to use the NZTE logo. "Ten firms, including a cafe and furniture exporter, were ordered to stop using the logo last year. None were infant formula companies."
MFAT added: "In July, New Zealand industry representatives attending the Shanghai Mother and Baby Expo were made aware of a high number of claims of New Zealand origin and endorsements around infant formula products being marketed at the Expo.
"We are discussing these issues with officials from the appropriate agencies in China, and we are working with the New Zealand infant formula industry.
Last week John Key complained to infant formula makers Cowala for using his image without permission.
The central Auckland offices of New Zealand Abid Ltd were empty on Friday.
Now for a word from our non-sponsor
Prime Minister John Key says he is powerless to prevent people using his image for commercial purposes, but will act once he hears about it.
A photo of the PM at a factory opening has appeared in advertisements for Chinese baby formula, falsely labelled as made in New Zealand.
"I'd be concerned about any misrepresentation and that's simply because there are quite clear rules about how my image can be used," he said yesterday. "Companies need to substantiate any advertising claims that they make. I do hundreds of photos a day. There are at least 30 companies that source baby formula powder from that factory and I do photos with probably every single one of those suppliers - that's standard.
"I can stop them using my image for commercial reasons when I know about it, but I can't stop people doing something they shouldn't do."
