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China Dongsheng International Announces Fiscal Year 2008 Second Quarter Financial Results

    -- Company's strategic plan realizes initial results of manufacturing its
       own branded products in-house.
    -- Second quarter gross profit increases 39% to $8.51 Million
    -- Gross margin improves to 85% from 58% versus prior comparable period
    -- Net income increases 12% to $4.33 Million quarter over quarter as the
       net margin improves to 43.2% from 36.8%.

'We continue to execute our strategic plan to vertically integrate operations and focus on our own branded products. We are pleased to be able to increase our net earnings during this transition period while dramatically improving our gross margins,' said Mr. Aidong Yu, Chairman of China Dongsheng International, Inc. 'Moreover, we expect to see continued significant growth in profits from our branded products in the coming quarters as we continue to roll-out new production lines at our manufacturing facilities. With our extensive distribution, strong demand for our branded products, expanded R&D team, and our GMP certified manufacturing facilities, the Company is becoming increasingly well positioned to capitalize on the growth of the healthcare market in China'

Second Quarter Fiscal Year 2008 Results

Net sales for the fiscal year second quarter ended December 31, 2007 totalled $10.01 million and were relatively unchanged compared to the total of $10.49 million in the same period in 2006. This largely reflects our focus on our higher margin branded products manufactured in-house and discontinuing the distribution of certain lower margin products from third parties.

We sold 676,462 units of our Chitosan based branded products for the three month ended by December 31, 2007 compared to 231,172 units in the previous period of 2006. The sales of our branded products increased 159% to $9,405,036 from $5,612,729 in the previous period in 2006.

The increase in our branded product revenues was offset by our decision to no longer distribute lower margin third party products including ozone purifiers. Accordingly, we discontinued the supply relationship with Harbin Jiujiu Ozone Purifier Co. as we plan to bring the manufacturing in-house. However, as of December 31, 2007, the new product line was not yet completed.

Compared to the corresponding period in 2006, cost of goods sold decreased by $2,904,833, or 66% for the three months ended December 31, 2007. The decrease is due in the lowered raw material purchase expenses. Dongsheng began manufacturing its own branded products and was able to drastically reduce the cost of the raw materials by negotiating more favorable terms with suppliers. This planned shift in production has considerably reduced our cost of goods sold and generated the improved gross margin.

Gross profit margin increased to 85% for the three months ended December 31, 2007, compared to the three months ended December 31, 2006 of 58%. This increase is primarily due to the lower cost of goods sold which results from our in-house manufacturing capabilities as well as the improved revenue mix.

Operating expenses were $2,281,877. Dongsheng accounted for $1,690,347 while Paperclip accounted for $591,530 compared to $403,606 for the quarter ended December 31, 2006.

Operating expenses increased by $1,878,271 for the quarter ended December 31, 2007. This increase in total operating expense is part of Dongsheng's plan to strengthen its management and maintain its core sales force. We have supplemented our sales force with fixed salaries in addition to their commissions in an effort to provide additional incentives to the current and future sales force as we focus on our branded products.

Net income for the fiscal year second quarter ended December 31, 2007 increased 11.8% to $4,326,248 million compared to $3,866,700 million for the same period 2006.

On the balance sheet, total net assets for the fiscal year second quarter of 2008 were $49.4 million.

About China Dongsheng International, Inc.

China Dongsheng International, Inc., through its 100%-owned subsidiary, Jilin Dongsheng Weiye Science and Technology Development Co., Ltd, is engaged in the development and manufacture of nutritional supplements and personal care products domestically in China. The Company sells these products through approximately 200,000 distributors (with 18,000 full time salespersons) and 2,500 retail outlets (with over 400 exclusive franchise stores) in twenty-six provinces throughout China.