Earlier this week, we held a meeting of the Swiss Technology Industry Group in Zurich with a presentation from Martin Naville, CEO of the Swiss-American Chamber of Commerce – http://bit.ly/1gd8PNU.
Martin’s presentation, which provoked a lot of lively debate, concerned the competitiveness of the Swiss economy. It made three main points:
The Swiss economy is special. Martin showed us a diagram illustrating the split of Swiss GDP by domestic companies (c.65%) and multinationals (c.35%). There is nowhere else in the world with such a concentration of MNCs (in Switzerland, there are 1.9 Fortune 500 companies per 1m inhabitants compared to Holland, at no.2, with 0.88). These MNCs have been the engine of economic growth in Switzerland in recent years, growing at around 10% a year over the last decade, creating more than 50% of new jobs and accounting for 75% of R&D investment (which, in turn, is 50% higher per capita than in the US).
Switzerland remains very attractive to big business. Switzerland offers many advantages as a hub location for MNCs: central European location, stable fiscal and political environment, good infrastructure, high quality of life, high R&D spending, excellent universities etc. and the World Economic Forum ranked Switzerland the most competitive country in the world in 2013, for the 5th consecutive year – http://bit.ly/1eAHo1i
A complacency is setting in which threatens to undermine Switzerland’s attractiveness to MNCs. Obviously, there are a number of factors affecting the country’s competitiveness which lie outside of its control. For instance, the strength of the Swiss franc has increased the cost of doing business in Switzerland by 30% in USD terms over the last 3 years (Zurich is now twice as expensive as Dublin). But, there are number of areas directly under the control of the state and population where Switzerland is advancing a less business-friendly agenda or introducing more instability to business planning, both of which threaten competitiveness. Martin cited many examples: popular initiatives against big business (Minder, the 1:12 salary cap, the cartel law), against immigration (e.g ecopop and the initiative about mass immigration on which the electorate is voting today), economic policy issues (such as USA-EU free trade agreement) and infrastructure (falling investment as well as other issues such as the backlash against nuclear power, which currently accounts for 42% of energy generation). Martin’s point was clear: MNCs typically carry out a detailed strategic review every five years to consider their optimal location and none of them is bound to Switzerland. Just as the virtuous cycle of the last decade attracted more and more MNCs, so a vicious cycle could emerge (and warning signs are there e.g. Merck Serono, Yahoo).
In his closing remarks, Martin asked us, as senior professionals in the technology industry, to be vigilant about such complacency and to counter it as much as possible – for the good of ourselves, our industry and the Swiss economy overall. We need to become ambassadors for a business-friendly Switzerland, he concluded.
If you interested in reading more about Switzerland’s competitiveness and attractiveness for MNCs, I can strongly recommend Martin’s paper from 2012 entitled “Multinational Companies in Geneva and Vaud: Growth Engine at Risk!” – http://bit.ly/NoyWZJ
For more information about the Swiss Technology Industry Group, a networking group for senior professionals working in technology sector in Switzerland, please visit our site on Linkedin – http://linkd.in/1hVryB8