Second wave of economic expansion brings a different type of expatriate to China

By Sirva, Inc.

CHICAGO, Sept 18, 2006 /PRNewswire-FirstCall via COMTEX News Network/ — SIRVA, Inc. (NYSE: SIR), a global relocation services provider, has released the findings of its China Urban Index, a mobility study investigating the suitability of first- and second-tier cities for business operations and expatriate relocations in China. The study, conducted in conjunction with the Hong Kong University of Science and Technology, serves as a baseline for the challenges businesses and expatriates are facing and will face during the second wave of economic expansion in China's key cities.

SIRVA initiated the China Urban Index to provide business leaders with access to credible data about China's infrastructure and livability indices in order to make informed decisions regarding their mobility programs. Using benchmark cities, including Beijing, Hong Kong and Shanghai, SIRVA's China Urban Index compares and contrasts five geographically significant, but lesser known cities: Chengdu, Dalian, Hangzhou, Qingdao and Wuhan. These second-tier cities were selected because they are increasingly becoming preferred areas to conduct business on the mainland.

"In 2005, China's GDP totaled $2.26 trillion, making its economy the fourth-largest in the world," said Mark Blumenthal, General Manager, Global Services Channel, SIRVA Relocation. "This incredible pace of change in China is unlike anything seen in recent history, but information about the changing dynamics of working and living in its biggest cities is often unreliable, contradictory and misleading."

Second Wave of Expansion Brings a Different Type of Expatriate to China

China is entering its second wave of economic expansion, and financial capital is increasingly pouring into locations beyond the three established first-tier cities into second-tier cities. However, studies indicate that only 10 percent of Chinese job candidates are considered suitable for working in a multinational environment. As a result, China will experience an influx of expatriates relocating to the country in an effort to overcome the shortage of available local talent. Some estimates indicate the expatriate pool in China will increase by 50 percent by the end of 2006.

Companies will no longer be able to rely on professional expatriates as they did in China's first wave of economic expansion (1979 - 2003). Instead they will be forced to leverage individuals that have little to no experience living overseas. These second wave expatriates differ greatly from their first wave counterparts. They will generally require more support from their companies to successfully adapt to new locations, and will likely be expected to take assignments simply as a lateral move with less potential for career advancement, salary increase, or possibly no guarantee of a job when/if they repatriate.

Key Insights and Observations

The China Urban Index provides several key insights and observations, including:

• Hong Kong is still the easiest place for an expatriate to live and work ~ Hong Kong offers expatriates an excellent business and living infrastructure, the largest number of local English speakers, a wide array and availability of goods and services, quality health care, and multiple educational and transportation options.

• Shanghai is fast becoming the premier city on the mainland ~ Shanghai has aggressively transformed itself into a thriving international city. It is a good place to live and conduct business. While not as highly developed as Hong Kong, Shanghai is seen by many as the most advanced city on the mainland. Many believe that Shanghai has surpassed Beijing as the premier place to live and conduct business.

• Beijing, the capital city, is rich in culture and entertainment and has a strong secondary education system ~ Beijing rated the highest among expatriates for its access to culture and in the top third in terms of available entertainment. It also received the highest rating among expatriates for ease of establishing a social network. Additionally, the city boasts a strong secondary education system. Three of the world's top 500 universities, and five of the top 25 universities in mainland China, are in Beijing. Its more than 500,000 registered students serve as a strong foundation for businesses recruiting local talent.

However, Beijing has yet to shed the remnants of a more rigid culture with limited access to places of worship and negative expatriate views of the local government's corruption and high level of intervention.

• Though Chengdu, Dalian, Hangzhou, Qingdao and Wuhan lag behind first- tier cities, they are rapidly improving ~ Change in China is happening at an accelerated rate. While Chengdu, Dalian, Hangzhou, Qingdao and Wuhan rate behind Hong Kong, Beijing and Shanghai, they generally offer companies and expatriates lower costs for housing and goods and services. In addition, they are less densely populated and are less polluted. While these are significant differences, expatriates living in these cities find them friendly, and once they have adjusted to the city, a comfortable place to live and work.

The China Urban Index rated the quality of life based on the determinants that have the greatest impact on an expatriate's ability to adapt to life in China. The cities were rated as follows: Hong Kong (71), Beijing (54), Shanghai (50), Qingdao (49), Dalian (48), Hangzhou (44), Chengdu (42) and Wuhan (37). The close ratings for Beijing, Shanghai, Qingdao and Dalian are surprising, indicating that expatriates are likely to experience little difference in their quality of life moving between these cities. However, expatriates relocating to a second-tier city from a larger metropolitan area in the west or Hong Kong will likely perceive a significant impact to their quality of life.

The study also assigned business environment ratings based on the opportunities and challenges of establishing and operating a business in each of the eight index cities. The cities were rated as follows: Hong Kong (77), Shanghai (72), Beijing (59), Hangzhou (48), Chengdu (47), Qingdao (47), Dalian (46) and Wuhan (33). There is a distinct difference between first- and second- tier cities in terms of business environment. While the quality of life ratings had a lower variation between cities, in the business environment index, the first-tier cities rated in the top third of the ratings, and the second-tier cities fell at least 10 points below the top tier.

Expatriates Will Face Challenges in China's Second-Tier Cities

Expatriates relocating to second-tier cities can expect a more challenging expatriate infrastructure, evolving or opaque local business practices, as well as difficult environmental factors and obstacles related to education and health care. Together, these factors create numerous challenges for global assignees and their families.

Not surprisingly, the China Urban Index indicates the largest obstacle Western expatriates and businesses are bound to encounter in China is the lack of English-speakers. Hong Kong is the only city studied where expatriates witnessed a large number of English speakers. Expatriates found health care services from public hospitals challenging due to the language barrier and the misunderstanding of diagnoses, instead preferring to utilize private clinics when available for health care services. In addition, the language barrier made it difficult to find suitable housing and buy basic goods and services.

The China Urban Index is the result of more than 120, face-to-face, in- depth interviews with expatriates living and working in the country. The information gleaned from these interviews was analyzed in combination with data from statistical yearbooks, government agencies and other published sources to provide a holistic picture of the China expatriate experience. The report segments information by quality of life, business environment and city summaries.

Companies wishing to learn more about, or receive a copy, of SIRVA's China Urban Index should visit http://chinaindex.sirva.com/ or call 1.800.228.3093.

About Hong Kong University of Science and Technology

The Hong Kong University of Science and Technology (HKUST) is a leading international research university dedicated to the pursuit of new knowledge in cutting-edge fields and the education of tomorrow's leaders. Opened in 1991, HKUST comprises four Schools: Science, Engineering, Business and Management, and Humanities and Social Science. Faculty and students (5,500 undergraduates and 3,000 postgraduates) come from more than 40 countries, and the University has established academic, industry and research partnerships worldwide.

HKUST established the Center on China's Transnational Relations (CCTR) in September 2004. The mission of the CCTR is to focus on the interactions between China and the world. With a goal of encouraging more timely information on the dramatic changes taking place in China today, CCTR offers public lectures, organizes conferences and conducts research studies to provide insights into these changes. For more information about HKUST, visit www.ust.hk, and for more information on CCTR, visit www.cctr.ust.hk.

About SIRVA, Inc.

SIRVA, Inc. is a leader in providing relocation solutions to a well- established and diverse customer base around the world. The company is the leading global provider that can handle all aspects of relocations end-to-end within its own network, including home purchase and home sale services, household goods moving, mortgage services and title insurance. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees and moving individual consumers. The company operates in more than 40 countries with more than 5,000 employees and an extensive network of agents and other service providers. SIRVA's well-recognized brands include Allied, northAmerican, Global, and SIRVA Relocation in North America; Pickfords, Huet International, Kungsholms, ADAM, Majortrans, Allied Arthur Pierre, Rettenmayer, and Allied Varekamp in Europe; and Allied Pickfords in the Asia Pacific region. More information about SIRVA can be found on the Company's Web site at www.sirva.com.

Source: http://www.sirva.com/Default.aspx?tabid=184&Article=NR/NR_China_9-18-06&NodeId=AS3.11