PacificNet YueShen Announces Distribution Agreement With China Netcom on XiaoLingTong/PHS Mobile Phone Distribution in China

New Distribution Agreement Expected to Generate Significant Increase in Telecom Revenue

PacificNet Inc. , a leading provider of CRM and value-added telecom services (VAS) in China, announced today that its subsidiary PacificNet YueShen Shandong Branch has signed a partnership agreement to become a designated distributor of China Netcom , and to distribute Netcom's XiaoLingTone/PHS mobile phone products, prepaid calling cards, wireless broadband and internet services. Shandong is one of China's largest provinces and represents a significant opportunity for PacificNet to offer telecom services.

Mr. Cao ZhiJun, Deputy Director of China Netcom Shandong Laiyang Branch, stated: "We are delighted to form this partnership to have PacificNet YueShen as Netcom's designated distributor. We are confident that YueShen's strong distribution experience and sales network will help increase China Netcom's local revenues, distribution coverage, and market share especially in the XianLingTong wireless phone services."

Ms. Li YanKuan, General Manager of PacificNet YueShen, stated, "We are excited about this important partnership with China Netcom, a leading telecom carrier in China. We expect this cooperation with Netcom will increase our overall telecom distribution revenue and profit margin."

About PacificNet

PacificNet Inc. www.PacificNet.com)">, through its subsidiaries, invests in and operates companies that provide outsourcing and value-added telecom services and solutions in China, such as call centers, telemarketing, customer relationship management (CRM), mobile applications, and sales and distribution of telecom products and services. PacificNet employs over 1000 staff in its various subsidiaries through China.

PacificNet YueShen, a subsidiary of PacificNet, is a leading distributor of telecom services including phone cards, mobile SIM cards, prepaid stored-value cards, re-chargeable phone cards, VoIP and IDD calling cards, internet access cards, and bundled cross-selling insurance cards, travel and hotel reservation cards, customer loyalty membership cards in China. PacificNet YueShen is a leading top-level distributor for the major telecom operators in China, including China Mobile, China Unicom, China Telecom, China Netcom, etc.

About China Netcom and XiaoLingTong

China Netcom www.chinanetcom.com.cn/en/index.asp)">, is one of the four major telecom carriers in China, which includes fixed line, data, Internet, and the XiaoLingTong wireless system.

XiaoLingTong (also known as "Little Smart", PAS "Personal Access System", or PHS "Personal Handyphone System"), operated by China Telecom and China Netcom, is built into existing fixed-line networks and lures users with low per minute rates, one-way charges and cheap monthly fees. It acts like a mobile phone but only good within the local metropolitan area.

This news release contains forward-looking statements. Actual results may differ from any forward-looking statements contained in this news release due to a number of factors that could adversely affect PacificNet's business, financial condition, operating results and stock price. These factors are discussed in more detail in PacificNet's filings with the SEC at www.sec.gov.