We expect that Chinese healthcare sector reform will be prolonged, as government policy initiatives take time to be thoroughly implemented," stated Mr. Wu.  "While the overall drugstore sector continues to experience revenue erosion and smaller chains and generic drug makers struggle, our shift to a hybrid model of pharmacy and convenience enables us to broaden our revenue stream and compensate for lost drug sales.  Moreover, the growth in sales of our household consumables enhances our chance of private labeling in this product category. We believe Nepstar is on its way to providing for even more consumers' healthcare and quality life needs.

However, it may take some time to see an impact on our bottom line from the introduction of new products. We are still developing our product mix strategy, as we continue to assess the contribution of new product categories to our sales revenue and profitability."