The Strategist

Will Switzerland be Attractive to Foreign Business?

08/19/2015 - 15:04

Switzerland is famous not only for banks and chocolate, but also for its favorable framework conditions for doing business, being attractive to both domestic and foreign business people. More precisely - famous so far because the strong Swiss franc and the migratory restrictions, entering into force soon, may cause serious damage to the Confederacy, fobbing off perspective foreign investors.

The liberal economy, stable political environment, infrastructure, rule of law, an independent judiciary and the media - all of this, and not only that, turn Switzerland into one of the most attractive economic centers of the world. Confederation is a small country, but if you look at it more closely, and come closer, it would appear, that the small patch of 41.3 thousand sq. km. hosts regions with very different business potential.

The famous Zug is the most attractive industrial and business center of the country now. This follows from the analysis of the annual reports published by banks Credit Suisse and UBS. Banks call financial framework conditions, the availability of highly educated and motivated labor personnel, convenient transport location of the canton, the stability of the political system of the region among the factors that allow this small lake district to hold such a prestigious leadership.

-    When foreign companies choose a place for residence around certain regions of the world, there are always above-mentioned four points in the list of their priorities. And if any of these factors start to deteriorate in Switzerland as a whole, the canton of Zug will feel it very soon. Something that we see now, for example, a clear reduction in the number of new companies that have moved to the Confederation from abroad ", - says Beat Bachmann, Director of the Cantonal Office for the development of small and medium business (Zuger Wirtschaftsförderung).

-    The reason is obvious - the results of some of the referendums, held in Switzerland in recent years, have forced foreign top managers to think very seriously. Switzerland in their eyes accurately started to lose popularity and appeal, and the issue of qualified personnel is now the most important negative factor in this regard. Finding good employees has become more difficult today, than before, and will probably be even more difficult, - said B. Bachmann.

However, he clearly alludes to referendum, held in February 2014, on which the Swiss have decided to restrict the inflow of labor personnel from the EU. The official notes that the problem is not limited by this referendum. As it known, the restrictive measures are well established in Switzerland in relation to workers from countries outside the EU / EFTA. These measures are already were strict, but now the authorities have not only further tightened the conditions for obtaining the right to work of persons from "third countries", but also significantly cut the number of allowances allocated to these workers.

According to B. Bachmann, such action "sent completely wrong signal to the foreign investors and cause a sudden stop. Of course, when launching a new business abroad, any company should be based primarily on their own capacities and know-how, although, it is pretty hard to do without local personnel".
In the canton of Zurich, which is in second place after Zug in the ranking of business-attractive regions of Switzerland, the problem of small and medium-sized businesses is being solved by the economic and employment Office (Amt für Wirtschaft und Arbeit), which is part of the Cantonal Ministry of Economy. Office is engaged in not only the creation of favorable conditions for business, but also the selection of personnel.

-    In our work, we try to take into account the interests of both the economy and society as a whole, which means that we are close to people who are in search of work," - says a spokesperson for the Ministry Irene Tschopp. "If, for example, we suddenly begin to receive from a particular company one by one applications for the right to bring, for example, IT specialists from the so-called "third countries" to Switzerland, we first enter in contact with the authors of these petitions and offer to look for relevant specialists among the unemployed people from Switzerland itself,"- says I. Tschopp.

She quite understands why foreign business wary to face a shortage of local personnel and therefore does not go to Switzerland as active as the local government would like. In fact, every year the Confederation itself launches too small number of specialists, and their loss is felt particularly in innovative sectors, such as the scope of IT. But at the time, "such innovative companies like Google or Zimmer Biomet are not only going to reduce its presence in Zurich, but, contrariwise, are actively increasing, despite the alleged shortage of staff in Switzerland".

«Finding great people is key to any business success» - this was the title of one of the advertisements issued by business associations Greater Zurich Area AG (GZA) in the region of Zurich, which includes leading business representatives from the cantons of Zurich, Zug and eight other regions of Switzerland. The task of the association is to promote the Greater Zurich abroad as an attractive business platform.

Listing its advantages, GZA also primarily indicates a high level of quality of life in this part of the country, a developed infrastructure and skilled labor personnel. "When we take the initiative and go out to certain companies abroad, offering them to transfer their production to us, the first thing, we are asked about, is just the availability to hire the necessary specialists at the site", - says executive director of GZA Sonja Wollkopf Walt.

In her opinion, the existence of the regime of free movement of personnel, services and capital between Switzerland and the united Europe is perhaps the most important of any argument by which «GZA» until recently could convince foreign "masters of the economy" in the benefit transfer of its production into the economic heart of Switzerland.

Then, there was a referendum on February 9, and plain distrust started to flicker in the eyes of foreign investors. They started to ask if all is well in the Switzerland? This was especially true of companies working in the field of innovative technologies. "Unfortunately, we cannot guarantee today that all these companies will be free to recruit the right people themselves and get them under appropriate immigration permission from the authorities, because no one yet knows how the people's vote of 9 February actually be implemented in practice"- says Sonja Wollkopf Walt.  

This leads to a dangerous uncertainty, including in the tax area. Foreign companies still prefer to wait for the most part and not risk - she adds, referring to the latest statistics.

Thus, in the period from 2009 to 2013, 464 firms that have established in Switzerland 4165 jobs moved in the Greater Zurich by GZA efforts. This means that on average, over 80 companies got here in a month, creating 830 jobs over the same month. In 2014, these figures decreased respectively to 65 companies (457 jobs), and experts predict that these numbers will have become even more modest by the end of 2015.