Trading Standards officials stopped the consignment of Russko Plush Flumpz for safety testing, which it subsequently failed.
The products, which are used in amusement arcade games, were found to be a potential chocking hazard and their labels were incorrect.
Russko is now conducting its own tests.
Raj Kotecha, the firm’s director, said: "We would not put these toys on sale unless they were 100 per cent suitable. I was gobsmacked to hear they had failed the tests. But we have done nothing wrong. I have nothing to hide. I am a father myself and I would never put anything out there if it could be a risk to children.
"We are having safety tests done ourselves in the UK and are now waiting on the results. If they are not safe then we will be speaking to our people in China as they had already passed tests there. Obviously, we could stand to lose quite a bit of money from this. But the safety of these toys is a priority."