US food company General Mills is investigating a report that its ice cream unit Haagen-Dazs has been making ice-cream cakes for retail outlets in China at an unauthorized, underground factory, according to a Shanghai Daily report cited by the AFX news agency.

The newspaper said top officials from General Mills China were in Shenzhen to investigate the report about the unlicensed kitchen.

Haagen-Dazs officials have admitted running the kitchen.

The report said Shenzhen police had raided the kitchen and had destroyed 75 kilograms of ice-cream cakes.

It said Shenzhen's five retail outlets had now stopped selling the product. No fines or other penalties were imposed, the paper said.