China's safety watchdog has confirmed that toy beads recalled in the United States and Australia after sickening children contain a substance that can turn into the "date-rape drug" after ingestion.

The Wangqi Product Factory in Shenzhen, Guangdong Province, made the toys that are coated with industrial chemical 1,4-butanediol, the General Administration of Quality Supervision, Inspection, and Quarantine said in a statement issued on Saturday.

When ingested the chemical metabolizes into gamma hydroxy butyrate, also known as GHB, which can cause breathing problems, loss of consciousness, seizures, drowsiness, coma and death.

Millions of units of the popular craft toys, which are sold as Aqua Dots in the US and as Bindeez in Australia, were recalled in the two countries last week after children who swallowed their beads fell sick. At least nine children in the US and three in Australia became ill after swallowing the beads, The Associated Press reported yesterday.

The toys are made for Australia-based Moose Enterprises, and production was outsourced to Wangqi by a Hong Kong agent, the watchdog said. It did not identify the Hong Kong firm.

Investigations showed the Wangqi Product Factory used the toxic 1,4 butylene glycol as a softener in the production, and the product contained 14.5 percent of 1,4 butylene glycol.

The Shenzhen factory started to produce the bead toys after its trial products provided to the agent received no objections. Moose Enterprises provided the bead samples, the AQSIQ said.

The packaging of the toys carried warnings including "swallowing can cause danger" and "not suitable for children under three."

The Chinese government has suspended exports of the toys and the toy maker's export license, according to the AQSIQ.

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

The bead toys were supposed to be coated with nontoxic 1,5-pentanediol, a chemical commonly used in ink. This chemical generally sells for three or four times the price of the toxic compound found on the tainted toys.