Swiss Confederation Business Guide
Introduction
Switzerland, (German: Schweiz, French: Suisse, Italian: Svizzera, Romansh Svizra), officially Swiss Confederation ("Confœderatio Helvetica" in Latin and when abbreviated: CH), is a landlocked nation of 7.5 million people in Western Europe. Switzerland is bordered by Germany, France, Italy, Austria and Liechtenstein. Switzerland is multilingual — it has three official languages: German, French and Italian, while a fourth national language, Romansh, is official only for communicating with persons of Romansh language. Switzerland is divided into 26 cantons, six of which are sometimes referred to as "half-cantons," since they have less representation in the Council of States. Switzerland has had a long history of being neutral (it has not been in a foreign war since 1815) and therefore hosts various international organizations, such as the United Nations, which, though headquartered in New York City, has many departments in Switzerland.
The titles commonly used to name Switzerland in French (Confédération suisse), Italian (Confederazione Svizzera) and Romansh (Confederaziun svizra) translate as "Swiss Confederation", while the German name of Schweizerische Eidgenossenschaft translates literally as "Swiss Oath Fellowship" or "Swiss Commonwealth of the Covenant." It dates its independence to 1291; historically it was a confederation, and it has been a federation since 1848.
Economy
Switzerland has a prosperous and stable modern market economy, with a nominal per capita GDP that is higher than those of the big western European economies, United States and Japan, though on a PPP basis, it ranks tenth. The World Economic Forum's Global Competitiveness Report currently ranks Switzerland's economy as the most competitive in the world. For much of the 20th century, Switzerland was the wealthiest country in Europe by a considerable margin. However, since the early 1990s it has suffered from slow growth and, in 2005, fell to fourth among European countries with populations above one million in terms of nominal Gross Domestic Product per capita behind Ireland, Denmark and Norway and to the tenth position in terms of Gross Domestic Product per capita at purchasing power parity (also behind the European countries Austria and Iceland. Switzerland is a member of the European Free Trade Association.
Banking, tourism, pharmaceuticals, and chemicals are very important industries in Switzerland. The manufacture of precision instruments for engineering is important, as is watchmaking, and the biological sciences industries as well enjoy a high place in the Swiss economy. The many international organizations in Switzerland contribute to the Swiss economy and labor market.
In recent years, the Swiss have brought their economic practices largely into conformity with those of the European Union in many ways, in an effort to enhance their international competitiveness. The economy has been growing most recently at around 3% per year. Full EU membership is a long-term objective of some in the Swiss government, but there is considerable popular sentiment against this supported by the conservative SVP party. The western French-speaking areas tend to be more pro-EU.
The government has established an Integration Office under the Department of Foreign and Economic Affairs. To minimise the negative consequences of Switzerland's isolation from the rest of Europe, Bern and Brussels signed seven agreements, called bilateral agreements, to further liberalise trade ties. These agreements were signed in 1999 and took effect in 2001. This first series of bilateral agreements included the free movement of persons. A second series covering nine areas was signed in 2004 and awaits ratification. The second series includes the Schengen treaty and the Dublin Convention. They continue to discuss further areas for cooperation. Switzerland most recently (2006) approved a billion euro supportative investment in the poorer eastern European countries in support of cooperation and positive ties to the EU as a whole. They have also been under EU and sometimes international pressure to open up their bank secrecy and to raise their tax rates into compliance with the EU. Preparatory discussions are being opened on four new areas: opening up the electricity market, participation in the European GPS system Galileo, cooperating with the European centre for disease prevention and recognising certificates of origin for food products. Switzerland voted against membership in the European Economic Area in December 1992 and has since maintained and developed its relationships with the European Union and European countries through bilateral agreements. Any internal debate on the subject has been suspended since March 2001, when the Swiss people refused in a popular vote to start accession negotiations with the EU. Both Switzerland and Norway have consistently voted against EU membership, although the votes have been very close.
Market Overview
-
Switzerland’s population of 7.4 million is affluent and cosmopolitan
-
GDP of about USD 378 billion; forecast growth of 2.5% for 2007
-
17th largest U.S. export market and fourth fastest growing (16%) in the world
-
Annual U.S.-Swiss trade in goods in 2006 of USD 28.6 billion
-
U.S. exports in goods to Switzerland in 2006 valued at about USD 14.8 billion
-
Bilateral trade comparable to U.S. trade with Italy and with Spain
-
World-class infrastructure, business-friendly legal and regulatory environment
-
Highly educated, reliable, and flexible work force
-
Consumer and producer of high quality, value-added industrial/consumer goods
-
Manufacturing sector is highly automated and efficient
-
Strong market demand for U.S. components and production systems
-
Strong demand for high quality products with competitive prices
-
Highest per capita IT spending in the world
-
Multilingual/multicultural European test market and business environment
-
S. suppliers benefit from the strong Swiss franc (USD 1 = 1.25 Swiss francs)
-
Many U.S. firms with European and regional headquarters in Switzerland
Market Challenges
-
Market is sophisticated, quality-conscious, high tech and competitive
-
An epicenter of European and global competition
-
Must enter Swiss market early to be competitive throughout Europe
-
EU regulations and standards as well as packaging and labeling
-
Unique Swiss requirements for medications, cosmetics, detergents, and chemicals.
Market Opportunities
-
Products with relatively advanced technologies are best prospects
-
Switzerland is strategically placed as a gateway to EU markets
-
Ideal test market for introduction of new high tech and consumer products
-
Excellent platform for marketing into Europe, Middle East and Africa
-
High concentration of computer/Internet usage per capita
-
Sophisticated market for U.S. medical devices
-
Growing demand for specialty chemicals
-
Switzerland is becoming a European center for business aviation
-
Fast growing demand for highly sophisticated security equipment/systems
-
One of world’s top countries for R&D
-
Excellent opportunities for partnerships in biotech and nanotech
-
Venture capital funds highest in Europe
