VANCOUVER - When scientist Jesse Zhu wanted to show the dairy-hungry Chinese that Canadian cows produced superior milk, he chartered a 747 cargo plane and flew two dozen Holsteins from a Quebec farm to Beijing as proof.

Almost a decade later, Zhu has found an easier and more reliable way of getting herds of Canadian cattle to China without ever having to set a hoof on an airplane again.

Zhu, through his company IND DairyTech (TSXV:IND), is sending thousands of Canadian Holstein semen and embryos to China in response to its growing demand for raw milk. The embryos are used to impregnate surrogate cows in China.

What's unique about the breeding technology Zhu's company is using is that it also sorts the semen to produce a birth rate of up to 90 per cent female cows.

That's a bonus in China, where male bulls are considered less valuable than female cows who produce the milk, not to mention give birth to other cows.

China has long been trying to increase dairy consumption among its population, and high-quality raw milk is even more coveted after its tainted milk scandal last fall.

At least six infants died and about 300,000 others got sick from baby formula and other products that were contaminated with the chemical melamine. Some Chinese dairy plants added the chemical to milk products so they would appear to have a higher protein level.

The Chinese government is trying to stimulate and improve its dairy industry in the wake of the scandal. It recently moved to increase the number of large dairy farms from the current 20 per cent to 30 per cent. It is also forcing dairy processors to obtain 70 per cent of their raw milk from managed sources by October 2011, according to IND DairyTech.

Zhu, who lives in Vancouver but spends a great deal of time in China, said in an interview that his company is working to capitalize on the demand for high-quality, high protein milk in that country.

"We got a very very good opportunity after the melamine problem," said Zhu, the chairman, president and CEO of the company known as China One Corp. It operates as IND DairyTech and will officially take that name this summer.

Zhu said the cows his company raises in China, using Canadian cattle genetics and North American farming practices, are highly sought after there because they produce better milk and more of it. Canadian Holsteins are about twice as productive as the average cow in China, he said.

The World Holstein Friesian Federation concurs. "Holstein cattle are renowned throughout the world as leaders efficient milk production with Canadian Holsteins held in high esteem by many milk producers and cattle breeders," David Hewitt, the WHFF's secretary general said in an email interview.

Today, IND DairyTech has more than 9,000 cows on various farms across China and plans to grow that herd to 30,000 by the end of the year.

The company came a step closer to that goal recently when it signed contracts to develop five new dairy farms in China, which will add another 11,000 dairy cows to its operations.

Zhu said the plan is to grow the herd to 60,000 cows by 2010 and 100,000 cows by 2011.

It now has an "inventory" of about 200,000 Canadian Holstein embryos that it intends to use to impregnate surrogate cows.

Zhu said his goal someday is to reach one million cows "to be the biggest in the world."

Zhu, whose name is actually Jiabei but uses the North Americanized "Jesse" for short, started IND DairyTech in 1999.

His earlier career was in helping advance and manufacture the diagnostic technology used in at-home pregnancy tests.

Ten years ago, he discovered the increased need for dairy cows in China, which was the catalyst for him to ship over a herd of Canadian Holsteins to show their worth.

The high cost of shipping whole cows -- coupled with subsequent outbreak of mad cow disease that led to China's ban of importing live cattle from Canada -- forced Zhu to find another way to get the livestock overseas.

James Wilkin, director of the Pacific division of the National Research Council's Industrial Research Assistance Program (NRC-IRAP), worked with Zhu in the early stages of the business and called him a true entrepreneur.

"They are real innovators in the life science biotechnology area," Wilkin said of the company in a recent interview.

After realizing that shipping live cows was an inefficient business model, Zhu began sending fertilized eggs to China instead.

Wilkin said the company would get ovaries from slaughterhouses, join them with sperm from bulls, freeze them, ship the eggs to China and then implant them into cows there.

Zhu and his team later narrowed that down to just shipping the sperm to China.

Then, about five years ago, they began testing the sorting technology, known as "Sexed Semen" or Gender Enhanced Semen (GES), which makes it possible to increase the proportion of live female calves born.

Wilkin said that is when the NRC got involved. It assembled a team and provided more than $250,000 in government funding to help advance the technology.

"We financially supported them on the development of an improved protocol for the shipping, the cooling, the separating and the freezing of the sperm. It worked tremendously well," Wilkin recalled.

He said IND DairyTech not only has "a great scientific capacity,

but they use that to exploit market opportunity.

"That's a great combination in a company," Wilkin said.

He said the program was considered a benefit to Canada because it meant hiring staff and advancing technology.

Today, the semen comes from "donor" bulls in B.C., Alberta and Quebec, are separated, then shipped to China where the calves are born and begin producing milk within months.

Zhu said the life cycle for the cows is about four years, before they are sent to the slaughterhouse.

While IND DairyTech works aggressively on expanding its herd in China, the company's thinly traded stock has been under pressure in recent months.

It last traded on the TSX Venture Exchange at 22.5 cents on March 30.

It went public in the summer of 2007 at an initial public offering price of 10 cents per share and within three months soared to a record $2.08.

The shares have dropped steadily since after the company changed its business model and began reporting a steady stream of losses to fund those changes.

In its latest financial report released in December, the company reported flat revenues of $1.37 million for the nine months ended Sept. 30, 2008 compared to the year-earlier period, but a much deeper loss of $3.2 million compared to $738,001 profit in the first nine months the year before.

It said the was largely the result of liabilities as it changed its business focus in October 2007 away from cattle sales and towards raw milk production and the use of its inventory of embryos to develop its own Canadian genetics-based Holstein herd in China.

IND DairyTech said more losses are expected "for the foreseeable future" as it develops its herd business China.