American Dairy Reports FY 2004 Net Income Increased By 207%.

BEIJING -- American Dairy, Inc. (OTCBB:ADIY), one of the leading producers and distributors of milk powder and soybean products in China, announced today that it has filed its Form 10-KSB with the SEC.

Net income increased by 207% from $2,036,807 in 2003 to $6,258,380 for 2004. This increase in net income is attributable primarily to the following factors: (1) a 40% increase in sales; (2) a 35% increase in gross profit margins from 41% in 2003 to 52% in 2004; and (3) a 70% increase in distribution expenses, offset in part by: (i) a 21% decrease in general and administrative expenses, and (ii) a $600,134 decrease in enterprise income tax expense.

Revenues increased by $10,780,391 or 40% from $26,635,832 in 2003 to $37,416,223 in 2004. This increase was due primarily to expanding market areas and adding new value added products. Increase in sales is due to the following factors:

--  Increased popularity of "Feihe" brand of mainland China
        following the successful advertising campaigns in the previous
        year and extensive networks of Agencies in 25 provinces;

    --  Demands boosted by improved and high-quality ingredients for
        several products such as CA+Zn CPP series and nucleotides
        series and families or markets mostly accepted these products;

    --  Increase in overall sales quantity by 2,975,862 kilograms or
        28% year-on-year to 13,478,645 kilograms for the year ended
        December 31, 2004 compared to the same corresponding period of
        10,502,782 kilograms in 2003; and

    --  The dairy milk industry scandal in China in 2003 and the
        resulting strict control over dairy producers (quality and
        ingredient contains) drove many unscrupulous dairy producers
        and their tainted dairy products out of the market. Consumers
        concentrated on dairy products produced by such reputable
        dairy producers as Feihe Dairy. Increases in sales quantities
        of several high profit margin major products such as:

        --  Milk Powder with Ca+Zn totaling 4,719,669 kilograms (2003:
            3,718,421 kilograms) by 26.9% year-on-year;

        --  CPP services totaling 2,398,578 kilograms (2003: 785,483
            kilograms) by 205% year-on-year; and

        --  Nucleotides series totaling 219,152 kilograms in 2004
            (2003: 27,155 kilograms) by 707% year-on-year.

Basic Net Income Per Common Share = $0.52

About American Dairy, Inc.

American Dairy, Inc. conducts operations in the The People's Republic of China ("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, land 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.

Forward-Looking Statements

Statements in this document that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates," "will" or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.