The theft of high-end Australian wool destined for China is under investigation, authorities said Wednesday, as customers end up with lower-grade produce in a scam threatening the industry's reputation.

Australia is the world’s number one producer of premium-quality fine wool and the largest producer of all wools by value and volume, with China the dominant source of global demand.

Police in Victoria state said there had been a number of wool-tampering incidents dating back to May, with complaints of bales in Melbourne being switched for an inferior product.

Detective Inspector Jamie Templeton said the racket was being treated "extremely" seriously.

"This is not only due to the total value of the wool stolen but also the potential damage it poses to the Australian export industry," he said, without saying how much had been stolen.

"These thefts are incredibly damaging to the livelihood and reputations of the brokers who export this product."

Australia sells 75 percent of its wool to China, and although the thefts represent only a tiny portion, they were a worry, said National Council of Wool Selling Brokers executive director Chris Wilcox.

"Anything that affects the perception of the quality of Australian wool in China is a concern... It is a concern that the whole of the Australian industry has had for many years," he told AFP.

Wilcox said strong trade ties between the two countries meant the issue should be dealt with strongly but would be overcome.

"China values the quality of Australian wool very highly," he said.