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 Zhang Shuhong, who co-owned Lee Der Industrial Co. Ltd., killed himself at a warehouse over the weekend, days after China announced it had temporarily banned exports by the company, the Southern Metropolis Daily said.
Lee Der made 967,000 toys recalled earlier this month by Mattel Inc. because they were made with paint found to have excessive amounts of lead. The plastic preschool toys, sold under the Fisher-Price brand in the U.S., included the popular Big Bird, Elmo, Dora and Diego characters.
It was among the largest recalls in recent months involving Chinese products, which have come under fire for globally for containing potentially dangerous high levels of chemicals and toxins.
The Southern Metropolis Daily said that a supplier, Zhang's best friend, sold Lee Der fake paint which was used in the toys.
"The boss and the company were harmed by the paint supplier, the closest friend of our boss," a manager surnamed Liu was quoted as saying.
Liu said Zhang hung himself on Saturday, according to the report. It is common for disgraced officials to commit suicide in China.
"When I got there around 5 p.m., police had already sealed off the area," Liu said.
A company official who answered the telephone at the Lee Der factory in the southern city of Foshan on Monday said he had not heard of the news. A man at Lee Der's main office in Hong Kong said the company was not accepting interviews and hung up.
According to a search on a registry of Hong Kong companies, Zhang -- whose name is spelled Cheung Shu-hung in official documents
-- is a co-owner of Lee Der. The other owner, Chiu Kwei-tsun, did not return telephone messages left for him.
The recall by El Segundo, California-based Mattel came just two months after RC2 Corp., a New York company, recalled 1.5 million Chinese-made wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line because of lead paint.
The maker, Hansheng Wood Products Factory, was also included in the export ban announced Thursday by the General Administration for Quality Supervision, Inspection and Quarantine, one of China's quality watchdogs.
The administration also ordered both companies to evaluate and change their business practices.
Lead poisoning can cause vomiting, anemia and learning difficulties. In extreme cases, it can cause severe neurological damage and death.
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 The quality watchdog also said police were investigating two companies' use of "fake plastic pigment" but did not give any details. Such pigments are a type of industrial latex usually used to increase surface gloss and smoothness.
Telephones rang unanswered at the public security bureau in Foshan and at Dongxing New Energy Company, which is the paint supplier.
In its report, the Southern Metropolis Daily said Zhang, who was in his 50s, treated his 5,000-odd employees well and always paid them on time.
The morning of his suicide, he greeted workers and chatted with some of them, the newspaper said.
Chinese companies often have long supply chains, making it difficult to trace the exact origin of components, chemicals and food additives.
On Sunday, a Chinese court sentenced a reporter to a year in jail for faking a television story about cardboard-filled meat buns in a case that has drawn even more attention to China's poor food safety record.
Zi Beijia, 28, pleaded guilty to charges of infringing on the reputation of a commodity during his trial at the Beijing No. 2 Intermediate Court, the official Xinhua News Agency said. He was sentenced to a year in jail and a fine of $132, it said.
Zi's story, reportedly shot with a hidden camera, appeared to show a makeshift kitchen where people made steamed buns stuffed with shredded cardboard softened with caustic soda plus a little bit of fatty pork.
Zi paid four migrant workers from China's northern Shaanxi province to prepare the buns according to his instructions, Xinhua said. The buns were then fed to dogs, it said.
The story was first broadcast on Beijing Television's Life Channel, where Zi was a freelance reporter, on July 8 and then again on China Central Television. It was also widely seen on YouTube.com.
[Associated Press;
by Audra Ang]
Associated Press writer Dikky Sinn in Hong Kong contributed to this story.
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