Deiss pushes for more trade with China and US

Economic bridge-building is the focus of the trip Keystone

Economics Minister Joseph Deiss embarks on a major economic offensive on Monday, starting with an official visit to China before heading to the United States.

Before the start of talks with Chinese officials on Thursday in Beijing, Deiss will attend a “mini” ministerial meeting of the World Trade Organization in Dalian, northeastern China.

Accompanied by a delegation from the Swiss business community, Deiss hopes to improve Switzerland’s economic ties with one of the world’s fastest growing economies.

Switzerland was one of the first western European countries to establish official relations with modern China, recognising the People’s Republic and establishing diplomatic ties in 1950.

While Switzerland has played a pioneering role in establishing joint ventures with China, there is still much that can be achieved, according to Stéphane Garelli, a professor of economics at the IMD international business school in Lausanne and an honorary member of the China Enterprise Management Association.

“For the moment, China is not important enough because we are still doing most of our business with traditional markets, and especially Germany which accounts for more than 23 per cent of our market,” Garelli told swissinfo.

Economic growth

But he thinks China will become increasingly important. “Obviously with an economy growing at 9.5 per cent, which was the case last year, and with the size of the market, I think we should really redirect a lot of energy towards the Chinese market,” he added.

Swiss companies have not been idle in sizing up the opportunities in China, with lift and escalator company Schindler of Ebikon perhaps the most prominent.

In May, Schindler opened the world’s largest escalator factory in Shanghai.

ABB, active in power and automation technologies, has also clearly seen the potential, with the Zurich-based group unveiling a major expansion plan in China last October.

“I do not hesitate to say the China market will be crucial to ABB’s fate, as it has been for [the company’s recent] turnaround,” ABB chairman Jürgen Dormann said.

Software

China is also moving beyond manufacturing; last week the Esmertec company of Dübendorf near Zurich, which develops software for mobile phones, opened an R&D and customer support centre in Chengdu.

But, as many companies have learned, China is not an easy place to do business. Many firms have yet to see a decent return on investment and complain of being strangled by red tape and subject to the whims of local officials.

“It’s a high-risk market because it’s growing quickly,” points out the IMD’s Garelli.

“The manufacturing sector of China is very efficient. Here at the IMD we are a bit more worried about the financial and banking systems, which are probably weaker than most people think,” he commented.

Hefty investments

This has not stopped the two main banking groups in Switzerland – UBS and Credit Suisse – from mooting some hefty investments in the country.

Only last month UBS said it was considering buying a $500 million (SFr648 million) stake in the state-run Bank of China to cement its investment bank’s position in China’s fast growing economy.

And rival Credit Suisse announced at the end of the June that it was opening a representative office in Guangzhou in southern China.

Garelli feels that Deiss can open doors and make the Swiss business community aware that it can do more in China. Deiss also hopes to persuade the Chinese that Switzerland is a solid business partner with plenty of opportunities for further cooperation.

“We are not too bad in finance and banking and probably a lot of cooperation could certainly be investigated in this domain,” he said.

After visiting China, Deiss will fly on to the US where he is expected to discuss Switzerland’s efforts to push ahead with exploratory talks on a free-trade agreement between the two countries.

swissinfo, Robert Brookes

Key facts

Swiss exports of goods to China in 2004 were worth SFr3.06 billion (25.03% up on 2003).
These included machines, chemicals and related products, precision instruments, and watches and jewellery.
Chinese imports in 2004 were worth SFr2.83 billion (17.12% up on 2003). These included textiles, clothing, shoes and machines.
There are about 270 Swiss firms active in China, employing almost 55,000 people.
Swiss investment in China totals about SFr5 billion, putting Switzerland in the top 15 countries investing in the country.
A Swiss Business Hub was opened in Beijing in March 2002.

In brief

Before an official visit to China, Swiss Economics Minister Joseph Deiss will attend a mini ministerial meeting of the World Trade Organization in Dalian.

Deiss, who is leading a Swiss business delegation, begins the official visit on July 14.

Meetings in Beijing are planned with vice-prime minister Zeng Peiyan, minister of commerce Bo Xilai, vice-minister of the National Commission for Development and Reform Zhu Zhixin and the mayor of the city, Wang Qishan.

Deiss will also hold meetings in Shanghai with the local authorities and visit a number of companies established in the area.