China Nepstar Chain Drugstore Reports One-time Non-recurring Penalty Payment

SHENZHEN, China, Aug. 4 /PRNewswire-Asia-FirstCall/ -- China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("Nepstar" or "the Company"), the largest retail drugstore chain in China based on the number of directly operated stores, today announced that the State Administration of Foreign Exchange imposed on the company a one-time non-recurring penalty in the amount of RMB25.5 million (US$3.8 million) for the conversion of approximately US$349 million net proceeds from the initial public offering into Renminbi in January 2008 without evidence of business operations at the time of the conversion by Nepstar Commerce Ltd, Nepstar Electronics Ltd, Nepstar Wisconsin Trading Ltd, and Nepstar Jinfu Logistics Ltd, the four investment holding companies wholly owned by the Company in mainland China, the four being the recipients of China Nepstar's IPO proceeds as foreign investment. The conversion was made at an average exchange rate of 1 U.S. dollar to RMB7.33. The Company is expected to make the payment of the penalty within 15 days.

The Company will host a conference call to address questions related to the penalty on August 4, 2010 at 9:00 a.m. Eastern Daylight Time / 9:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1- 877-407-9210 (North America) or +1-201-689-8049 (International) approximately five to ten minutes before the call start time.

About China Nepstar Chain Drugstore Ltd.

China Nepstar Chain Drugstore Ltd. (NYSE:NPD - News) is China's largest retail drugstore chain based on the number of directly operated stores. As of March 31, 2010, the Company had 2,559 stores across 74 cities, one headquarter distribution center and 13 regional distribution centers in China. Nepstar uses directly operated stores, centralized procurement and a network of distribution centers to provide its customers with high-quality, professional and convenient pharmacy services and a wide variety of other merchandise, including OTC drugs, nutritional supplements, herbal products, personal care products, family care products, and convenience products including consumables. Nepstar's strategy of centralized procurement, competitive pricing, customer loyalty programs and private label offerings has enabled it to capitalize on the robust economic growth in China and to take advantage of the demographic trend in China to achieve a strong brand and leading market position. For further information, please go to http://www.nepstar.cn

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release and the Company's strategic operational plans and business outlook, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

    For more information, please contact:

    In China:
     Lucia Qian
     China Nepstar Chain Drugstore Ltd.
     Vice President, IR
     Tel:   +86-755-2641-4065
     Email: [email protected]

    In the United States:
     Dixon Chen
     Grayling
     Investor Relations
     Tel:   +1-646-284-9403
     Email: [email protected]

     Ivette Almeida
     Grayling
     Media Relations
     Tel:   +1-646-284-9455
     Email: [email protected]

SOURCE China Nepstar Chain Drugstore Ltd.

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