Swiss behind in battle to attract Asian firms

Chinese e-commerce giant Alibaba wants small- and medium-sized European firms to link with Asian partners

Switzerland should promote itself more actively as a business location as Asian companies increasingly look to establish European bases, a report has concluded.

Attracting 260 firms could boost the Swiss economy by four per cent – SFr20 billion ($16.5 billion) – per year and create 120,000 new jobs. The report warns that in this regard Switzerland is lagging behind European competitors.

The report by international consultancy firm McKinsey and Company predicts a boom in Asian companies setting up European headquarters in the next 15 years. It estimates that up to 3,200 such businesses will expand out of their rapidly growing domestic markets.

Each company that sets up a headquarters in Switzerland could pump an annual SFr75-80 million ($62-66 million) directly into the local economy. McKinsey believes there is potential for 120-260 such firms to move to Switzerland.

More than 180 Western corporations have been seduced in the past decade by Switzerland’s high standard of living, large pool of qualified workers, educational and transport facilities and low tax rates.

These include such heavyweights as United States food giant Kraft, IBM and Proctor and Gamble. But such attractions are relatively unknown in Asia and must be promoted if Switzerland wants to cash in on a potential bonanza.

Competitive advantage

“While in general the perception of Switzerland as a country is a definitely positive one, most Asian decision-makers do not perceive Switzerland as a prime business location,” the report said.

Several other countries, including Sweden and the Netherlands, have stolen a march on Switzerland by more actively promoting their business advantages. An important method in this strategy has been to target selected firms in China, India, Korea and Taiwan.

Switzerland, in contrast, has followed a less focused approach using chambers of commerce alongside cantonal economic departments and the state promotion agencies Presence Switzerland and Business Network Switzerland (Osec).

“We need to create awareness that Switzerland is a prime HQ location and ensure that we get on decision makers’ shortlists,” said Osec chief executive Daniel Küng.

But the combined national and cantonal budget for attracting foreign companies to Switzerland stands at SFr45 million compared with the SFr120 million marketing budget at the disposal of the national tourist board.

Bollywood image

Promotional agencies should also work harder to get the right message across, according to Waseem Hussain of the Swiss-Indian business consultancy Marwas.

“It is not just a matter of allocating adequate funds, but also of drawing up the right strategy. Do you portray Switzerland as a land of chocolate and mountains or pitch it in a different way?” he told swissinfo.

“Many Indians have a Bollywood image of Switzerland, which is perfect for tourism. Germany has a better reputation in India for professionalism and industrial engineering.”

The McKinsey report also identified the relatively complex paperwork needed to set up a company in Switzerland or to arrange visas for foreign employees.

The World Bank “Doing Business 2009” report ranked Switzerland as the 21st best country to conduct operations, but 52nd in the category of setting up a new concern.

swissinfo, Matthew Allen

Attracting Asian Firms

McKinsey interviewed 50 Asian business leaders and experts to define the best approach to attracting Asian firms to Switzerland.

It found that many Asian firms would prefer to set up regional headquarters in countries with larger economies or where they had knowledge of local conditions.

Companies displayed the tendency to set up in countries already occupied by competitors.

Final decisions also tended to be more concentrated with CEOs and owners rather than company boards.

Promotional efforts should be focussed on select target companies and on decision makers within those firms.

This would be better achieved by a single Asian business promotion agency that could also help to ease the bureaucratic burden of setting up shop.

Swiss companies already present in Asia, such as ABB or Nestlé, should be recruited to facilitate the promotional effort.

It also recommended “matchmaking fairs”, bringing together Swiss and Asian small and medium-sized enterprises (SMEs) that shared similar business interests.

Educational institutions in Switzerland should introduce specialised courses in Asian business or culture.

In addition, Zurich airport should expand the number of Asian destinations on its itinerary.

Only a handful of Asian firms have currently set up regional HQs in Switzerland.

These include Japanese car maker Nissan and Hong Kong online sales giant Alibaba, that moved from London to Geneva earlier this year.