China Digital Wireless Reports Sharply Higher Third Quarter Revenues

China Digital Wireless, Inc. (OTC BB: CHDW) (OTC BB: CHDWE) reported revenues increased 84% to a record $7.0 million for the third quarter ended September 30, 2004, compared to $3.8 million during the third quarter of 2003. Net income increased by $113,148, or 25% to $569,772 for the three months ended September 30, 2004, compared to net income of $456,624 for the same period the prior year. The company reported earnings of $0.03 per share in both periods.

During the third quarter, the company reported sharply higher net sales as a result of increased marketing efforts in its mobile phone distribution business. Due to intense price competition, gross margin was lower in this business segment during the quarter. All mobile phones distributed by the company are pre-installed with its software, enabling users to access its information services platform.

The increase in net income during the third quarter was mainly attributable to a more favorable mix in the makeup of the company's high-margin value-added information service for mobile users in China. China Digital Wireless continued to experience a transition in its information service revenues as users gravitate away from the less functional pager platform in favor of a more expensive but feature-rich mobile phone platform. Total information service revenues rose by 18% during the quarter to $779,719. The company anticipates its pager platform will eventually be phased out during the course of 2005.

"We are very pleased with growth in net income resulting from higher service revenues," said Mr. Tai Caihua, Chairman of China Digital Wireless. "We continue to focus on new customer acquisitions and expanding our portfolio of information and entertainment services offered to mobile phone users in China. In addition to the new sales offices that opened in the first half of 2004, we initiated a new strategic marketing campaign utilizing the placement of digital TV monitors in lobbies of commercial banks and government buildings in Shanghai to promote our services and as a medium for other advertisers, potentially generating a new advertising revenue stream. We believe this initiative could contribute significantly over time."

During the third quarter, the company installed an enhanced customer management software platform that increases management's ability to analyze and track customer usage and billing. The installation of the software is now complete and fully operational however, implementation issues at the end of the third quarter caused a delay in the company's 10Q filing. With the issues resolved, the company expects this will no longer be a factor going forward.

China Digital Wireless allows wireless users in China to access financial information, execute stock trades, and access various entertainment-related services on their mobile phones. By bundling its financial information software onto the wireless phones it markets, the company is building a recurring high-margin subscriber base. China Digital Wireless intends to grow revenues by expanding its subscriber base and adding additional value-added fee-based services that are in demand in China. In addition to its value-added information services business, China Digital Wireless distributes various mobile phone models in the Shanghai, China region.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, or general economic risks and uncertainties.

Contact:
Bevo Beaven, Vice President
Bill Conboy, Senior Account Executive
CTA Public Relations
303-665-4200
Bevo@ctapr.com
Bill@ctapr.com

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