The 2013/07/02 at 07:59
Marie Luginsland, in Germany
In July, Switzerland will be the first G20 country to sign a free-trade agreement with the Middle Kingdom, giving the former a considerable head start enabling it to stay in the forefront of trade between Europe and China, ahead of its European Union competitors.
There are certain acts that speak loudly. Schindler, the Swiss lift manufacture, was the first Western company to settle a joint venture in China. “And Switzerland was one of the first Western countries to recognise the new People’s Republic of China, on 17 January 1950. Those Chinese who have a good memory remember this!” comments Stéphane Graber, President of the Swiss-Chinese Chamber of Commerce, which represents 600 Swiss enterprises.
For Stéphane Graber, as for the whole of the economic sector, the signing of the free-trade agreement, scheduled for July, is a logical evolution in the history of Chinese-Swiss relations. It represents an opportunity for large groups as well as SMEs to benefit from openness.
Watches and trains
“Switzerland has always been a country that is very open to the outside world, it is one of the rare countries whose trade balance with China is positive,” continues Stéphane Graber. Indeed, Swiss enterprises whose exports have multiplied by ten in the space of a decade, are hoping to intensify their trade relations. China is already number six in terms of countries importing Swiss products.
The free-trade agreement to be ratified next month between China and Switzerland will include significant reductions in customs duties for Swiss exporters, as well as easier access to the Chinese market. First to benefit from this cooperation will be manufactured products with high added value. Luxury products, namely watches, are highly sought after by the Chinese market. Swiss machine tools are also popular with the Chinese.
“True, we can’t claim to rival with major German or French groups in all aspects of these markets. However, our industry is very efficient and perfectly positioned for niche products with high added value such as modes of transport (aeronautics and trains). The Sécheron group, for example, leads the market for electrical transformers for trains,” explains Stéphane Graber.
Developing banking and services
The renown of their products’ quality and reliability precedes the Swiss on international markets. This reputation applies as much to industrial products as to services, namely in the banking sector. China is no exception to the rule. Subject as it is to the pressure of relocation, today the country shows an interest in the development of its services. Switzerland, a country where 85 % of the GDP stems from services, stands out in this domain as a key interlocutor.
“We do not compete with one another at all in this sector, and it is in a complementary fashion that we will be intervening on the Chinese market. We will bring our savoir-faire, but it will then be up to the Chinese to transpose and develop it on a larger scale,” states Stéphane Graber. In any case, Switzerland intends to reinforce its image as a global financial market in this way. But above all, Switzerland may well rival with London, currently the key address for transactions in the Chinese currency, the Renminbi, as well as the sector of interest rates and the convertibility of the yuan.
Already in 2012, Swiss bankers had made it known that they sought a position on the market for transactions on the Renminbi. To balance this movement, Switzerland is placing its bets on the arrival of Chinese banks on its soil.
“Swiss made” makes a comeback
Ironically, this strengthening of trade links between the two countries comes at a time when Switzerland has recently reinforced the criteria of its “Swiss made” label. This measure affects the watchmaking industry in particular. From now on, 60 % of the components of a Swiss watch will need to be manufactured in Switzerland in order for the end product to aspire to the renowned Swiss made label. But it is out of the question for Stéphane Graber, as for all Swiss company heads, to envisage a hardening of barriers.
When asked about the protectionist measures in recent weeks targeting Chinese solar panels and French wine from Bordeaux, that have shaken up the relationship between China and the European Union, the President of the Swiss-Chinese Chamber of Commerce is clear: “This is not the position of Switzerland which does not have the same approach to trade relationships as the European Union.”