“Because of a blockade with the EU, companies have left Switzerland” Earthquakes at Ringier: CEO Marc Walder has nothing more to say about “Blick”.

The zero-Covid policy is in the past, China is back in it, it is said in many places. Is that correct?
Simone Wyss Fedele: Yes. We expect a strong recovery in Swiss business with China in the third quarter. Because one thing is clear: China remains very important for Swiss companies – if only because of the size of the market

Isn’t that a bit naive? Ultimately, setbacks cannot be ruled out – because of the pandemic or an escalation with Taiwan.
The dangers are real. But international companies must be able to assess the risks: how will the Chinese market develop in the best and worst cases? And then what do we do? Some companies are trying to position themselves more regionally – in relation to the supply chains, but also their own value creation.

What does that mean concretely?
We see a trend: «China + 1». Swiss SMEs that can afford it move production for the Asian market to Vietnam, Thailand or India. With a second location, the company can prepare for a possible escalation.

So hedging is the new trend?
Business diversification has always been critical. The current focus is on regionalization in international trade. Companies set up development and production for Asia in Asia, for Europe in Europe, and for America in America. Globalization becomes regional. The ability to adapt and change has become more important. Geopolitics drives society and the economy forward, the world is changing and then you have to adjust the strategy. We’re just not used to it anymore. But what we’ve been through for the past three years is the new normal, and we need to adapt to that.

How many Swiss companies have actually left China?
Certain companies have withdrawn. There are companies that are unable or unwilling to pay for risk management. The regulatory environment has also become very demanding: anyone doing business in China needs very good legal advice. At the same time, a number of Swiss companies – for example in the food, life sciences and medtech sectors – are now investing more or more. Because, as I said, China remains very important. It is our third most important trading partner and will probably be the second most important country after the US in the future.

In sensitive areas such as high-tech, companies will at some point have to decide whether to operate in China or the US.
To some extent this is already the case today. There are Swiss companies already producing “China-free” products for the US and “US-free” products for China. And it is clear: every company needs to know which country it would choose in case of emergency.

That would be the US, right?
We consider rigid blocking possible, but unlikely. But when it comes down to it, Swiss companies will choose the European bloc, that’s the feedback we get – and indirectly the US. Because without Europe it is not possible.

In the end, the companies behave typically Swiss and trade with everyone as long as they can.
I wouldn’t sign that. Companies should always ask themselves: what are our values? If the situation in Taiwan develops in the same way as in Hong Kong, do we still want to be active in China? The others are the sanctions, which the companies naturally comply with.

Keyword Hong Kong: Formerly a major Swiss export market. What’s left of it since China took political control?
Companies used to serve all of China from Hong Kong. After the events of 2020, demand has plummeted. We also had a team in Hong Kong, but not anymore.

Where have the Swiss companies that had to leave Russia in 2022 actually gone?
We supported about 260 Swiss companies in Russia that asked for our help after the attack on Ukraine – in compliance with sanctions or in reorientation. Originally we assumed that many of them would move to Eastern European countries such as Poland, Hungary or the Czech Republic. But many companies went to Latin America instead, especially Mexico. It’s a global trend. From Mexico, a company can cover all of North and Latin America, as well as China via the Pacific. The country has very good logistics and many professionals with scientific training. There are also more and more companies that are extending their feelers to Africa.

The US has replaced Germany as the largest Swiss exporting country. Will we then become more independent of Europe?
Europe as a whole is our most important trading partner and will remain so for the next 20 years. We see it in the companies we support: the first step abroad is in neighboring countries. Every market is different and in Europe you can test different situations. Only when you are well positioned in Europe do you venture into North America. And then to Asia.

So Europe remains number one – despite the increasing problems with the mutual recognition of standards that are no longer safe because bilateral agreements are no longer adjusted?
The current situation is extremely unsatisfactory and expensive for Swiss companies, but they can deal with it. On the other hand, the Swiss location is struggling. Attractiveness decreases.

Have companies left Switzerland because of the blockade in European politics?
Indeed, some companies have disappeared. But the problem is elsewhere. Swiss companies need Europe and now, with all these geopolitical tensions, Europe has become even more important to us. That is why optimal market access is so important for Switzerland. The Swiss economy could not do without Europe.

Is the Swiss EU problem another negative image of the local location that you have to fight against when looking for foreign companies to settle there?
The current situation simply leads to an increased need for information. Today we have to explain more often to international SMEs that Switzerland is actually part of the European internal market – with only one exception: medtech, where the agreement on technical barriers to trade has not been amended. And the second increased need for explanation is the European research program “Horizon”, in which Switzerland is not fully integrated.

Where do the companies that are now establishing themselves in Switzerland come from?
Most are from the US. The second most important source market is Asia, where mainly Japanese, South Korean and Indian companies are established. Incidentally, Switzerland and Ireland are the two exceptions that managed to attract more innovative companies to the country during the Covid years than left. 2022, on the other hand, has been a challenge, especially to court American companies because of the war in Europe that scares them.

Why would an American or Asian company wanting to go to Europe choose Switzerland? You could choose an EU country, then market access is assured.
A company wants more than just access to the market, it is also looking for the best employees and the best partners. For example, if an industrial company in Europe is interested in collaborating with Google, Dell and Co., Switzerland is preferred, because this is where the major tech companies have their European headquarters.

If Switzerland is really as attractive as you say, is it still necessary to promote your location?
The whole world promotes location. That’s why we must do it.

In the end, isn’t it just the low taxes that attract businesses?
It used to be like that. That is no longer the case today, on the contrary: tax benefits entail reputational risks for internationally operating companies. And with the OECD’s tax reform, the tax issue becomes even less important. Until now we had two major competitors in Europe: Ireland and the Netherlands. Ireland scored on taxes. Since this argument loses weight, we’re better off here.

So the Netherlands is Switzerland’s biggest competitor?
Just like Switzerland, the Netherlands has attractive partners and good specialists to offer to companies that want to establish themselves here. And the Netherlands is one of the countries that will continue to grow at the expense of Switzerland, should market access to Europe remain uncertain any longer. (aargauerzeitung.ch)