It is just the latest safety scare to taint China's food industry after separate reports last week that Chinese police had busted a crime ring that had passed off more than $1 million in rat and small mammal meat as mutton.
Acting on a tip, Shanghai food safety inspectors and police raided a wholesale market on Friday and found packages labelled "New Zealand mutton" at one supplier that had no production date or list of ingredients, according to a report on the website of the municipal food safety committee.
In Shanghai, invoices indicated some of the meat had already been sold to several restaurants, including outlets of Yum-owned Little Sheep, the website said. The meat was being tested and results would be available in about a week, the report added.
China is New Zealand's top sheep meat export market by volume, with sales of 77,000 tonnes last year.
Beef+Lamb chairman Mike Peterson said if it was a case of mislabelled meat, it reflected New Zealand's high reputation for food quality and food safety.
Meat Industry Association chief executive Tim Ritchie said there had not been any cases of foreign meat being passed off as New Zealand product in recent years. But he would be very concerned if "fly-by-nighters" were trying to benefit from New Zealand's good reputation.
"If that good reputation is being tarnished by opportunists, we would take that very seriously," Ritchie said.
If Chinese meat was being passed off, he hoped the regulators in New Zealand would talk to their Chinese counterparts, to make sure it stopped.