November 25, 2003

China's Feihe Dairy Make Acquisition in Heilongjiang To Add New Production Line for Milk Powder

American Dairy, Inc., one of the leading producers and distributors of milk, milk powder and related dairy products in China, yesterday announced that its wholly owned subsidiary Feihe Dairy will acquire Heilongjiang-based Kedong BEIBEI Foodstuff Co., Limited.

American Dairy will acquire all outstanding shares of Kedong BEIBEI Foodstuff Co., Limited. for a total equity consideration of US$400,966, the appraisal value for the property is over US$1,000,000. The property consists of land use rights of 40,000 square meters of land and 6,000 square meters of factory building in Kedong County Heilongjiang Province, China.

"This acquisition demonstrates American Dairy's aggressive execution of key expansion and business development strategies," said Leng You-Bin, Chairman, Chief Executive Officer and President of American Dairy. "Through the acquisition of Kedong BEIBEI Foodstuff, Co., Limited's land use rights and processing capacity, Feihe Dairy will establish a new production line of milk powder. Leveraging our strong brand identity and reputation, we believe that this new milk powder production line will be the premier line of its class in China and among the top milk powder production lines in the world.

"Feihe will be able to process an additional 300 tons of fresh milk daily following the acquisition," You-Bin added. "Already one of the largest independent dairy enterprises in China, we compete with few large volume dairy processors, and most of China's milk is produced by small scale, low production dairy farming households. Our acquisition of Kedong BEIBEI Foodstuff, Co., Limited would significantly increase our production scale in our market region, and will enhance our efforts to capture a growing share of the Chinese dairy market."

Currently, American Dairy's large-scale dairy production has annual processing power of 112,000 metric tons. American Dairy's access to cattle herds of approximately 8,500 milk cows generates annual milk output of approximately 30,000 metric tons. Affiliated farmers have grazing rights covering over 516,000 acres in Kedong County in northeastern China.

About American Dairy, Inc.

American Dairy, Inc. conducts operations in China through its wholly owned subsidiary Feihe Dairy. Founded in 1962, Feihe Dairy is one of the leading producers and distributors of milk powder, soybean milk powder, liquid milk and related dairy products in China. Feihe Dairy's 99% owned subsidiaries Sanhao Dairy and Baiquan Feihe Dairy produce and supply processed milk to Feihe Dairy.