Doing business in Switzerland

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Switzerland trade and export guide

Switzerland export overview

Switzerland is the world’s most competitive economy according to the World Economic Forum’s (WEF) 2013 Global Competitiveness Index.

It’s a diverse and mature economy with opportunities in all sectors.

UK exports to Switzerland are projected to grow to £29.4 billion by 2020. Bilateral trade between the UK and Switzerland is worth over £27.3 billion a year.

The business links between Switzerland and the UK are extremely strong with more than 80 flights per day linking the UK with Switzerland.

Benefits for British businesses exporting to Switzerland include:

• favourable exchange rate
• flight times under 2 hours
• English widely spoken
• multicultural market suitable for product testing
• Europe’s highest per capita income
• similar legal and regulatory environment

Strengths of the Swiss market include:

• central location in Europe
• political and financial stability
• high productivity
• excellent public infrastructure
• highly educated workforce
• innovative country
• purchasing power amongst the world’s highest
• high spend on research and development (R&D) and technology
• reliable business, legal and regulatory environment
• low Value Added Tax (VAT) compared to many European Union (EU) countries

2. Challenges

Switzerland is not a member of the EU and is not likely to join in the foreseeable future. Relations are governed by a series of bilateral agreements. Protectionist measures remain in some areas. Agriculture and recruitment services are instances which have recently affected British companies.

Doing business in Switzerland is very similar to doing business in the UK. If your product or service is successful in the UK, there’s a good chance you’ll be successful in Switzerland.

However, there are certain unique challenges when doing business in or with Switzerland. These include:

• EU standards are not always adopted
• domestic rules and regulations apply
• highly regulated market
• difficult to ensure local legal compliance for certain industries and ‘posted workers’ (employee normally working in the UK, but temporarily working in Switzerland)
• slow decision making because of the need for consensus and a reluctance to take risks
• Swiss consumers places a premium on quality

3. Growth potential

3.1 Economic growth

The Swiss economy continues to develop well. The Swiss National Bank (SNB) expects the economy to grow by 2% in the course of 2014 and to accelerate to 2.6% in 2015.

Interest rates are expected to remain at 0.25% well into the near future.

The SNB considers the Swiss franc to be overvalued. It continues to enforce the minimum exchange rate of CHF 1.20 to the Euro as a tool to avoid renewed upward pressure on the Swiss franc. Further appreciation could compromise price stability and have serious consequences for the Swiss economy, particularly for exports.

Swiss inflation is still historically low. The SNB expects average inflation rates of 0.1% for 2014, 0.3% for 2015 and 0.9% for 2016.

Switzerland’s unemployment rate, as reported by the State Secretariat for Economic Affairs, is also expected to remain low at around 3%.

SNB provides regular economic analysis reports for Switzerland.

3.2 Free trade agreements

Switzerland has 30 free trade agreements currently in place, including with China. The countries covered by these agreements account for 51% of Switzerland’s total trade. There are 7 more agreements in negotiation.

These free trade agreements mean that countries enter into legally binding commitments to relax access to each other’s markets for goods, services and investment.

4. UK and Switzerland trade

In 2013 total bilateral trade with the UK was worth £27.3 billion. It is the UK’s seventh largest export market and the third largest non-EU market.

Unlike other markets that have seen stability or decline, UK goods and services exports grew by 11.7% in 2013 to £15.7 billion.

Top UK exports to Switzerland (2013):

• chemicals and associated products
• vehicles
• precision instruments, watches and jewellery
• machinery, units, electronics
• works of art and antiques
• agricultural and forestry products, fishery
• precious metals, precious and semi-precious stones
• metals
• leather, rubber, plastics
• textiles, clothes, shoes
• paper, stationery and graphic products
• furnishings
• toys
• stone and soils
• energy sources

Globally, Switzerland is the eighth largest foreign direct investor in the UK, with a total stock value in 2012 of £34 billion. This accounts for 3.7% of all Foreign Direct Investment (FDI) into the UK. Swiss companies provide close to 200,000 jobs in the UK. Overall, it’s estimated that around 2,000 Swiss companies operate in the UK.