"But the sincerity of our approach, I must say, is being tested and I regret it is hard to see how much longer our patience can last if treatment is not improved."
Mandelson went on to say that "China will never properly tackle the issue of product safety, without addressing the tidal wave of counterfeit goods.
"China's long-term success depends on its reputation."
Wu Yi, the Chinese vice premier, said: "I am very disappointed with Peter Mandelson's speech."
Chinese manufacturing has been under severe pressure recently after recalls of toys, toothpaste and fish.
Wu is responsible for product safety and said earlier that the government had stepped up its attempts to guarantee product quality and food safety, in a nationwide campaign.
Wu said that 99 per cent of China's exported goods are safe, and asked for co-operation.
"I sincerely hope that developed nations can offer more to developing countries to enhance their standardisation level, improve their food production technology and raise food safety," Wu said.