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Opinion: Why Switzerland is a great place to do business

Javad Marandi, a Switzerland-based British entrepreneur with investments spanning continental Europe, explains why Switzerland remains one of the most attractive countries for investors.

Published: 6 July 2017 10:29 CEST
Opinion: Why Switzerland is a great place to do business
Photo: Rawpixel/Depositphotos
Switzerland was recently named the world’s most innovative country, topping the Global Innovation Index for the seventh consecutive year. The index commended Switzerland for the environment it provides for growing businesses and the nation’s ability to transform resources into innovations. So how has Switzerland become such an attractive environment for an investor?
 
Save haven
 
My first job was at a multinational company near Geneva and one thing has remained constant throughout my business experience – Switzerland’s status as a safe haven for investments. 
 
Its consensual form of government and politically savvy electorate ensure an immense level of political stability. It has a highly business-friendly regulatory environment with a transparent and fair legal system. It therefore comes as no surprise that around 2,000 global corporates are headquartered in this alpine nation, with some of the world’s leading multinationals – including food giant Nestlé, drug maker heavyweights Roche and Novartis, and engineering juggernaut ABB – providing a solid bedrock for economic activity. 
 
The Swiss franc is one of the world’s strongest and most stable currencies, and its independence has proved critical during turbulent times, including throughout the eurozone debt crisis that has been afflicting its neighbours since 2009. Swiss policymakers are prudent financial stewards and have little tolerance for inflation. This remarkable level of stability makes Switzerland one of the safest places to do business.
 
The Roche tower in Basel's cityscape. Photo: olli0815/Depositphotos
 
Dynamic
 
You would be forgiven for thinking that the country’s mature, low-risk market status makes it little more than a ‘safe pair of hands’, when Switzerland is in fact one of the most dynamic business environments in the world. 
 
As evidenced in its Global Innovation Index supremacy, Switzerland is an exciting place to start, grow and develop cutting-edge companies. It is home to a highly skilled and educated workforce and has the highest per-capita spending on IT products in the world, making it a great testing ground for the introduction of high technology. Spearheaded by world-leading pharmaceutical and engineering sectors, Switzerland is one of the most advanced countries for R&D. 
 
 
I am an investor in Roth Gerüste, one of the country’s best-regarded construction manufacturing companies, and the stable macroeconomic backdrop and highly qualified workforce allow us to preserve and grow this business, with compound annual turnover growth over five percent over the past few years. 
 
The country’s chocolate box landscape of mountains and valleys provides a fertile testing ground for some of the world’s most innovative construction techniques and the highly developed internal market reduces exposure to volatile economic developments on the global level.
 
Cantonal competitiveness
 
Switzerland’s unique federal system of cantons is a boon to competitiveness, with the 26 cantons allowed to set their own foreign investment attraction policies. 
 
Many cantons offer foreign investors numerous tax incentives to attract companies to establish operations and invest in their jurisdictions. This internal competitiveness is mirrored by an outward-looking heritage of international trade. 
 
Businessman Javad Marandi. Photo: Javad Marandi 
 
Commercial crossroads
 
Switzerland’s strategic location at the heart of Europe has made it a commercial crossroads for centuries and acts as a gateway to European markets. World class infrastructure, including the 57-kilometre Gotthard Base Tunnel that opened last year, facilitates trade between Europe’s largest economies and has helped to make Switzerland one of the continent’s logistics hubs.
 
 
Logistics is another of the sectors in which I have invested and see huge long-term potential. My commercial warehouses sit to the north of the country on the Swiss plateau and their positioning in Switzerland make them one of my safest long-term investments. The transport infrastructure hub lies on the doorstep of Germany and France, the two central players in Europe’s revived economic powerhouse, so we are confident about the outlook for the business over the coming years.
 
Highly-skilled, multilingual population
 
Finally, one of the most attractive factors of Switzerland is the Swiss people themselves. Aside from forming one of the most highly-skilled populations in the world, the Swiss are sophisticated, cosmopolitan people. They are traders at heart, multilingual and very used to working with international investors. 
 
Business is a very serious affair in Switzerland, which makes investing simple and straightforward. Throughout my years of doing business in the country, I have learned that the Swiss are tough but fair negotiators. Business discussions are methodological and cautious, so while decision-making can take longer than in other countries, the outcome is always very precise. 
 
 
It is important to be very punctual and well prepared for business meetings and to take note of the key decision makers as Swiss business culture has a deeply entrenched hierarchy. 
 
Ultimately, this style of doing business – along with Switzerland’s stable, innovative and competitive environment – means that the tiny Alpine nation will remain a firm favourite for investors in search of growth opportunities for years to come.
 

ECONOMY

Geneva watch show opens in throes of Swiss banking turmoil

The Geneva watch fair opened this week buoyed by booming growth in the watchmaking industry, but insiders warily eyed the banking sector turmoil, evoking painful memories of the 2008 financial crisis.

Published: 28 March 2023 09:28 CEST
Geneva watch show opens in throes of Swiss banking turmoil

Industry professionals were upbeat on the first day of the Watches and Wonders annual fair, where 48 prestigious brands including Rolex, Patek Philippe and Cartier were showing off their new creations.

The fair, which runs until Sunday with the weekend open to the public, kicked off after two years of record gains for Swiss watchmakers.

Exports soared by 31.2 percent in 2021, after a strong rebound in sales in the United States and the Middle East.

And the return of luxury tourism to Europe in 2022 after two years of Covid disruptions pushed exports up a further 11.4 percent to 24.8 billion Swiss francs ($27.1 billion).

The growth has also continued so far this year, with exports up by another 10.6 percent during the first two months of 2023, according to statistics from the Federation of the Swiss Watch Industry.

But optimism at the Geneva fair was somewhat dampened by the angst surrounding the turbulence currently lashing the banking sector.

Switzerland – whose vibrant banking scene is a key part of the country’s economy and culture – has been rocked to the core after the government strong-armed the nation’s biggest bank UBS into swallowing up its troubled competitor Credit Suisse, in a bid to ward off a larger global banking crisis.

READ ALSO: ‘A dark day’: How Switzerland reacted to shock UBS buyout of Credit Suisse

‘Global repercussions’

The upheaval has brought back difficult memories for Swiss watchmakers.

After the 2008 round of bank failures sparked a global financial crisis, Swiss watch exports plunged 22.3 percent in 2009 – more even than during Covid-dominated 2020.

“I am unable to say what the global repercussions will be,” Thierry Stern, the boss of Patek Philippe, told AFP.

“But I still think it should be easier than in 2008-2009.”

Participants are seen next to a giant watch by German manufacturer of luxury and prestige watches at the luxury watch fair in Geneva', on March 27, 2023 in Geneva.

Participants are seen next to a giant watch by German manufacturer of luxury and prestige watches at the luxury watch fair in Geneva’, on March 27, 2023 in Geneva. (Photo by Fabrice COFFRINI / AFP)

For the moment the difficulties remain “very localised” as Patek Philippe “sells all over the world”, said Stern, who is counting in particular on Asia to ensure growth in 2023.

Jerome Lambert, managing director of the luxury giant Richemont – owner of the Cartier, Piaget and IWC brands – acknowledged that the turnaround in
demand in 2009 had been “very rapid” and very “severe”.

“But it was a big lesson for us,” he said, explaining that the group had since taken distribution in hand.

Edouard Meylan, owner of the Hautlence brand, nevertheless believes that “lights are turning red”.

“If there is a financial crisis, it will have a very big impact on our sector,” he told AFP, especially since with supply difficulties some watchmakers have gone from “very large orders from their suppliers” and risk finding themselves with large stocks if the market turns.

Other analysts believe there is little reason to panic just yet.

“For now, I would expect the impact to be muted,” Jon Cox, an industry analyst with the Kepler Cheuvreux financial services company, told AFP, adding that he is still expecting to see growth this year of around 10 percent in exports.

READ ALSO: Swiss sweat over size of new superbank

Full steam ahead for China?

However, the Credit Suisse debacle, which threatens tens of thousands of jobs in the financial sector, could take its toll.

“The financial community is an important part of the buying public for the watch industry and there could be impact in local markets, such as Switzerland, on domestic business,” Cox warned, adding though that “this is likely to be offset by tourism”.

For now, Swiss watchmakers are looking to the Chinese market to pick up pace and ensure their 2023 export growth.

When demand was exploding in other markets as they rolled back pandemic protection measures, the watch market in China remained subdued as the country ploughed on with its zero-Covid rules, and then saw infection numbers explode when it abruptly ended that policy late last year.

But watchmakers and experts are expecting that to change with the reopening of the Chinese economy.

Jean-Philippe Bertschy, an analyst with Swiss investment managers Vontobel, warned however that “a return to normalcy” for Chinese watch sales – traditionally Swiss watchmakers’ largest market – will take time.

On the positive side, he told AFP he was confident, given “the level of savings the Chinese had set aside during the health restrictions”.

As for tourism, he cautioned that while Chinese travellers may quickly flock to Asian destinations, “it will take more time before they return to Europe,” due to the continued limited air transport capacity and visa backlogs.

By Nathalie OLOF-ORS

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