|
By Christian H. Kälin, the editor and one of the co-authors of the Switzerland Business & Investment Handbook Switzerland is a federal republic rooted in a long tradition. It is arguably the only country in the world where people with different languages, religions and mentalities have formed one nation which has successfully evolved over such a long period of time and become one of the world’s most stable and secure democracies. Indeed, regardless of the various myths about Swiss history, and despite the fact that it has – like every other country – also known some darker chapters in the past, Switzerland is a success story. Switzerland’s success was made possible by accidents of history, political foresight and necessities in the past, luck as well as the hard work and diligence of many generations. |
Pearls of Switzerland |
The Switzerland Business & Investment Handbook |
A unique success story
Switzerland is a modern country with a strong identity, made up of more than two dozen different cantons each having its own traditions and peculiarities. It is a country which has been held together for centuries, and still is, by common objectives and ideals rather than by a common language, culture or religion. It is made up of cantons which are considered to be sovereign, i.e. autonomous, politically independent entities within the framework of a federal constitution. Each of the Swiss communes also enjoys broad autonomy. Although many things are now harmonised and treated more uniformly throughout the country, many important domains nevertheless remain which are subject to differing regulations between the cantons and even between communes. This applies particularly to taxation, but also to other areas, so that in many cases different answers may be given to a particular question.
Switzerland has attracted foreign business and investment for decades. Likewise, it has been and continues to be the preferred place of residence for many international celebrities, wealthy individuals and families, business entrepreneurs and retirees. It is certainly one of the most attractive countries in the world to invest, do business and live in. The country has unique traditions and outstanding political, social and economic stability. This, combined with an excellent communications and transport infrastructure, efficient public services, comparatively low taxation as well as, a beautiful, clean and safe environment offering a unique quality of life make it the ultimate choice for business and residence.
This chapter explores some of the answers to the question: Why Switzerland? It should help to explain what makes Switzerland attractive in so many ways, and why the country is unique.
Switzerland means business - and quality of life
An open multilingual society
Switzerland has four national languages: German, French, Italian and Romansh. Romansh was only made an official national language a few years ago, thereby testifying to Switzerland’s clear commitment to a multicultural and multilingual society.
Most Swiss speak at least one foreign language. Pupils start learning languages in elementary school, where English is now increasingly being introduced into the curriculum.
In businesses with an international scope of operations (and there are many in this country), English is the universal language of communication alongside the various national languages. This is particularly so in Zurich, Switzerland's economic and financial capital, but also in Geneva and other cities. In fact, English is so widely spoken in the country that it is sometimes called the fifth national language, or the lingua franca of modern Switzerland.
Thanks to the country’s openness, which – contrary to popular belief – includes its attitude towards immigrants, an enormous diversity of languages is actually spoken there and may be used for communicating.
Switzerland is home to a large number of international organizations. Most of the United Nations organizations such as UNESCO, the ILO, the WHO and others are located in Geneva. The World Trade Organization, the International Red Cross, the World Intellectual Property Organization, the Universal Postal Union and many others are also located in Switzerland.
The easily available language skills and multicultural environment are important for many businesses. An interesting example is the fact that Switzerland is even attractive for the establishment of call centers, despite the international trend to outsource these activities to countries with lower labor costs such as India. However, Switzerland offers unique advantages for call centers that require efficient multilingual staff. Many Swiss already speak two or more languages, and it is easy for an employer to find qualified staff fluent in practically any European language. The employees at a medium-sized call center, for example, answer calls in German, French, Italian, English, Spanish, Portuguese, Greek, Dutch and Polish, and they support customers in more than 36 countries. These even include customers in such countries as China, India, the Philippines, Malaysia or South Africa. Every second call that they answer originates from abroad.
A highly qualified, reliable and motivated workforce
Besides the language diversity, Switzerland is also well known for its strong work ethic and the high productivity of its workforce. Indeed, it has one of the world’s highest productivity levels per worker. Individualized agreements between employers and employees have forged peaceful industrial relations that have held for more than 60 years. There are virtually no strikes and the unemployment rate is extremely low by international standards.
Managers here are not only multilingual, they also have more extensive international business experience than in any other country. A multicultural approach and the foreign language capabilities of a large proportion of the population mean that the Swiss labor pool is highly skilled and thus productive. And yet overall labor costs are no higher than in other Western European countries or the US and Japan.
Attractive for headquarters and other business operations
A survey by Arthur D. Little of 50 leading international companies that relocated their headquarters put Switzerland at the very top internationally as a location for regional or global headquarters. Compared to other European countries, Switzerland is clearly the most attractive place in which to locate corporate headquarters. The survey shows that Switzerland is the first choice for the global headquarters of European companies. For American and Asian companies, it is also a very attractive location for regional headquarters (typically European, Middle Eastern & African, and even Asian).
Switzerland scores best in corporate tax advantages, qualified managers, quality of life and the support and efficiency of government authorities. Very attractive tax rulings are possible on an individual basis, allowing tax to be optimised on a local or even global scale for multinationals. In particular, Switzerland is the preferred location for a corporate structure in which the principal plays an active trading role, and it offers the most interesting tax rates for administrative companies. Government authorities are friendly and helpful and support companies efficiently in every way.
An sensible tax system
The Swiss federal structure is reflected strongly in the country’s tax system. Fiscal sovereignty is an entitlement of the federal government as well as of the cantons and their communes. Each canton has its own tax laws with its own tax rates, different tax allowances etc. The relative independence of the cantons in the sphere of taxation ensures healthy competition, making the tax burden moderate in an international comparison for both individuals and companies. Accordingly, the tax burden may vary greatly between individual cantons and even between communes.
Sophisticated financial services
World-class banks and insurance companies, well-functioning capital and stock markets and overall highly sophisticated financial services play an important role in Switzerland’s economic prosperity. Businesses that locate here benefit from this financial expertise where Switzerland scores highly in an international comparison.
An attractive market
The Swiss enjoy high disposable incomes and are enthusiastic consumers, with some 70% of the population living in cities and towns. Switzerland comes near the top in international surveys of personal income and purchasing power. At over € 20,000, per-capita consumer spending is the highest in Europe, and the third highest in the world after the USA and Japan. This makes Switzerland a lucrative market as well as being of interest to non-European companies as a test market for Europe.
Competent and friendly government authorities
In Switzerland the government administration works efficiently on all levels: whether a request is made at the local communal office, questions arise about a tax return or an enquiry is sent to the federal government in Berne, the Swiss public administration will be found to be well-organized, efficient and to be run by friendly and helpful civil servants. This is certainly very convenient and comfortable for everyone living in the country, but it is a crucial advantage for businesses: administrative matters are efficiently and speedily expedited, key government officials – such as tax commissioners – are easily accessible, and issues of any kind are normally resolved in a constructive atmosphere. There are very few nations that can match the positive impact the Swiss public administration has on the country’s business environment.
World-class education, research and development
Switzerland has an excellent education system and scores highly in international comparisons of education, research and development. There is a high concentration of reputable schools, universities and research institutions, set in a multicultural environment that attracts bright students and researchers from all over the world.
Urs Hölzle, vice president of Google, explains why Google chose to locate to Switzerland and in particular to Zurich: "Geographically Zurich is ideally situated, the city offers a high living standard, has a favorable attitude towards investors, offers high wages and uncomplicated structures for requesting visas. Proximity to a university of the quality of the ETH is important to a technology company. This was however not the sole reason for choosing Zurich; it was the combination of advantages that made us settle here."
A unique quality of life
Regardless of which survey or research results you take (IMD, The Economist, Mercer Human Resources Consulting, etc.), Switzerland ranks among the top in overall quality of life on an international scale. In the survey from Mercer, which is probably the most comprehensive report in existence on the subject, Swiss cities have for years been ranked at the very top in the world for quality of life.
“I used to work in New York and at that time Zurich was a village for me, as compared to New York. But that’s not true at all! I am amazed how international Zurich is, how superior the quality of life is here, how good the city’s infrastructure is, how easy it is to work with the authorities and how cosmopolitan Zurich is – a true “metropolis” on a small scale.” says Patrick De Maeseneire, CEO of the Barry Callebaut Group.
Michael Ganser, Vice President Central & Eastern Europe of Cisco Systems, Zurich, has also experienced first-hand what it means for a company’s employees to have an excellent quality of life: “Our international staff are very comfortable in the Zurich area. In addition to economic factors the quality of life is very important. Safety, stability, the cultural life, the largely family-friendly surroundings, the high quality prevalent in all aspects of life, the proximity of residential areas to recreational facilities and the variety of leisure activities are factors that are very much appreciated.”
“Fribourg is an ideal location from which to serve the most important European markets. In this bilingual French/German canton, a lot of people speak three or even four languages. And, last but not least, Fribourg is a pleasant and attractive place to work and live. Our quality of life really improved since we moved to Switzerland”, says Graham L. Turner, Vice President & General Manager of Atmel Switzerland Sàrl.