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
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