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Situated in the heart of Western Europe, Switzerland offers convenient access to more than 30 countries by rail or car, and to the rest of the world via air travel. The country’s geographic position makes entry into European, Middle Eastern, and African markets quite viable. The level of access to these other countries is at least partly due to Switzerland’s leading position in Non-Governmental Organization and International Organization arenas. Switzerland is indeed a good entry point to many international markets.
Switzerland’s non-inclusion in the European Union (EU) has not hampered the country’s growth performance in the least. It has a rich economy with a variety of exports, more than half of which are EU exports. Switzerland fosters a pro-business environment, offering incentives and subsidies in order to attract entrepreneurs to establish or relocate to the country.
Reasons for Doing Business in Switzerland
The World Economic Forum (WEF) has named Switzerland’s economy as the most competitive for seven years running. This is due in part to outstanding achievements in labor market efficiency, business sophistication, and innovation. As a member of both the European Free Trade Association (EFTA) and the World Trade Organization (WTO), the country has signed economic cooperation agreements with some of the largest countries across the globe.
Switzerland’s liberal and highly skilled labor market give it a distinct edge, providing a well-established international business environment with an excellent infrastructure.
Innovation is a key component in Switzerland’s economic success. The focus on technology and research and development is evident in the country’s dollars spent in these areas and has placed it as a strong contender in the pharmaceutical industry. Basel, where both Roche and Novartis are headquartered, has become a pharma capital in Europe. A third of Switzerland’s robust export trade comes from pharmaceuticals, due at least in part to the country’s Rhine port.
Switzerland has signed double taxation treaties with over 50 countries, and there are additional tax incentives at the canton level. Switzerland also offers a Value Added Tax (VAT) that is considerably lower than most other EU countries.
Challenges of Doing Business in Switzerland
While Switzerland’s avoidance of EU membership gives it autonomy in many areas, this factor can be problematic to some companies. A series of bilateral agreements govern economic relations and areas like recruitment services and agriculture may be subject to protectionist measures. Companies should proceed with caution due to these potential challenges:
Salaries in Switzerland are higher on average than the rest of Europe. This poses certain barriers to recruiting. (Namely, it is quite costly.)
Signatures or legal certification or documents, a common trait among Swiss-German business, can be cumbersome. Businesses are often required to complete numerous forms and get them notarized — so many, in fact, that they can lose track or miss some if they are not careful.
The dream of living among gorgeous glacier studded mountains and crystal clear sparkling lakes can have its drawbacks as well. Living in Switzerland can be very expensive. Landlords rule the real estate market, and demand for space is often higher than the supply.
The culture in Switzerland also tends to be more formal then that of the U.S. Spontaneity is discouraged both socially and professionally and meetings are done by appointment. Punctuality is held in extremely high regard and tardiness can turn social occasions sour. In many parts of the country, particularly the German speaking areas, being late even five minutes is considered a serious breach of etiquette. Italian and French speaking areas are not quite as stringent, but punctuality is still held in very high regard in those areas as well.
It can sometimes take years for a company to accrue enough local knowledge to operate without needless difficulty. This interval can be greatly shortened by partnering with experts who have deeper awareness of local laws and regulations. This is doubly important when it comes to the more challenging aspects of expanding operations in this region.
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