There is a cottage industry in Australia and New Zealand of people sending back milk powder and infant formula to China, often with newspapers or other proof that the package originated in Australia or NZ. There's no guarantee that the "NZ milk powder" you buy in China is real, however a sealed package from NZ is fairly certainly going to be real. I used to have a colleague from China who would bring an extra suitcase filled with infant formula and multivitamins evert time he went back home to China for his relatives.

There are now limits on the amount of infant formula you can buy at supermarkets here, especially in areas with a high concentration of Asian immigrants. Supermarket shelves were getting cleared out by grey-market exporters.

Why not produce more? I don't believe there's a shortage of milk in Aus.