At least 13 children across the US fell ill as a result of swallowing parts of the toy. Five children were admitted to hospital in Australia and the US.
Millions of units of the toys, which are sold as "Aqua Dots" in the United States and as "Bindeez" in Australia, were recalled in those countries as well as in Britain, Malaysia, Singapore and elsewhere during the past week.
Children poisoned
Hong Kong's customs department said on Friday that tests showed the toys were coated with the industrial chemical 1,4-butanediol, widely used in cleaners and plastics.

The toy beads were supposed to use 1,5-pentanediol, a non-toxic compound found in glue, but instead contained 1,4-butanediol which is much cheaper.

China's product safety watchdog had already suspended the export of the toys suspected of containing toxic substances.
The US Consumer Product Safety Commission recalled  4.2 million units of "Aqua Dots" last week after two children slipped into comas after swallowing parts of the toy distributed by Spin Master in Toronto, Canada.


"The coating on the beads that causes the beads to stick to each other when water is added contains a chemical that can turn toxic when many are ingested," the commission said in a statement. 


The Xinhua news agency quoted safety officials as saying production of the toys had been outsourced to a factory in Shenzhen by a Hong Kong company that was an agent of Moose Enterprises, the Australian-based maker of the toys.


Product scandals

The Shenzhen factory started to produce the bead toys after trial products provided to the agent received no objection, Xinhua said.
The recall is the latest in a slew of product quality scandals that has tarnished China's image as an exporter of reliable goods.
The government has tried to bolster the country's reputation by increasing inspections, selectively punishing companies and launching a campaign to boost quality.

Companies worldwide have increasingly outsourced manufacturing, often choosing Chinese factories for their cost and quality.
But heated competition among factories and the rising cost of labour, land and fuel have put pressure on profits, causing some producers to cut corners.

China exports 60 per cent of the world's toys, totaling $22 billion overseas sales in 2006.