China Nepstar Chain Drugstore to acquire eight drugstores

China Nepstar Chain Drugstore Ltd. (NYSE: NPD) ("China Nepstar" or the "Company"), the largest drugstore chain in China based on the number of directly operated stores, today announced that it has entered into a definitive agreement with Wenzhou Ren Ren Hao Chain Drugstore Ltd. ("Ren Ren Hao") to acquire the operations of all of its eight drugstores in Wenzhou City. This acquisition represents China Nepstar's first retail presence in Wenzhou, one of the most affluent markets in Zhejiang province in terms of consumption power. The transaction is expected to be completed by the end of 2009.

Located on the east coast of China, Wenzhou is situated between the Yangtze River delta and Pearl River delta and is Zhejiang province's most populous city with a total residential population of approximately 8 million. Together with the cities of Hangzhou and Ningbo, Wenzhou is one of the key contributors to the GDP of Zhejiang province, which is one of China's top three economic growth regions. As of June 30, 2009, China Nepstar had 186 stores in Hangzhou and 178 stores in Ningbo, and holds the largest market share in each of these markets.

Founded in 2006, Ren Ren Hao generated unaudited revenues of approximately RMB 17 million in 2008. The eight Ren Ren Hao drugstores have an average store size of 250 square meters and are located in the city center or in prime locations in nearby major townships.

Mr. Ian Wade, Chief Executive Officer of China Nepstar, commented, "This acquisition represents our continued penetration in affluent provinces in China. With a well-established customer base and brand awareness in the other large cities in Zhejiang province, this entry into the Wenzhou market lays the foundation for extending our market leadership in eastern China. We plan to further expand in Wenzhou through a gradual ramp-up in new store openings and selective acquisitions."