Return to: Index of "1996 Country Commercial Guides" ||
Index of "Economic and Business Issues" ||
Electronic Research Collections Index ||
ERC Homepage
U.S. Department of State
Switzerland Country Commercial Guide
Office of the Coordinator for Business Affairs
COUNTRY COMMERCIAL GUIDE - SWITZERLAND
JUNE 1995
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY
II. ECONOMIC TRENDS AND OUTLOOK
Major Trends and Outlook
Principal Growth Sectors
Government Role in the Economy
Balance of Payments Situation
Infrastructure Situation
III. POLITICAL ENVIRONMENT
Nature of Political Relationship with the United States
Major Political Issues Affecting Business Climate
Brief Synopsis of Political System, Schedule for Elections,
and Orientation of Major Political Parties
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Use of Agents/Distributors; Finding a Partner
Franchising
Direct Marketing
Joint Ventures/Licensing
Steps to Establishing an Office
Selling Factors/Techniques
Advertising and Trade Promotion
Listing of Major Newspapers and Business Journals
Pricing Product
Sales Service/Customer Support
Selling to the Government
Protecting Your Product From IPR Infringement
Need for a Local Attorney
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Goods and Services
Best Prospects for Agricultural Products
VI. TRADE REGULATIONS AND STANDARDS
Trade Barriers, Tariffs, Non-Tariff Barriers, Import Taxes
Customs Valuation
Import Licenses
Export Controls
Import/Export Documentation
Temporary Entry
Labeling, Market Requirements
Prohibited Imports
Standards
Free Trade Zones/Warehouses
Special Import Provisions
Membership in Free Trade Associations
VII. INVESTMENT CLIMATE
Openness to Foreign Investment
Conversion and Transfer Policies
Expropriation and Compensation
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership and Establishment
Protection of Property Rights
Regulatory System: Laws and Procedures
Efficient Capital Markets and Portfolio Investment
Bilateral Investment Agreements
OPIC and Other Investment Insurance Programs
Labor
Foreign Trade Zones/Free Ports
Capital Outflow Policy
Major Foreign Investors
VIII. TRADE AND PROJECT FINANCING
Brief Description of Banking System
Foreign Exchange Controls Affecting Trading
General Financing Availability
How to Finance Exports/Methods of Payment
Types of Available Export Financing and Insurance
Project Financing Available, including Lending from
Multilateral Institutions and Projects Supported
List of Banks with Correspondent U.S. Banking Arrangements
IX. BUSINESS TRAVEL
Business Customs
Travel Advisory and Visas
Holidays
Business Infrastructure
X. APPENDICES
A. Country Data
B. Domestic Economy
C. Trade
D. Investment
E. U.S. and Country Contacts
U.S. Embassy Trade Related Contacts
Washington-Based USG Country Contacts
AmChams and Bilateral Business Councils
Swiss Trade or Industry Associations
Swiss Government Agencies
Swiss Market Research Firms
Swiss Commercial Banks
Other Multipliers Relevant for Switzerland
F. Market Research
Recent and Upcoming USDOC Industry Subsector Analyses
USDOC International Market Insight (IMI) Reporting
USDA/FAS Commodity Reports and Market Briefs
G. Trade Event Schedule
This Country Commercial Guide (CCG) presents a comprehensive look at
Switzerland's commercial environment through economic, political and
market analyses. The CCGs were established by recommendation of the
Trade Promotion Coordinating Committee (TPCC), a multi-agency task
force, to consolidate various reporting documents prepared for the U.S.
business community. Country Commercial Guides are prepared annually at
U.S. Embassies through the combined efforts of several U.S. government
agencies.
I. EXECUTIVE SUMMARY
Switzerland is a small, highly developed, multilingual market situated
at the crossroads of Europe. Its population of 6.9 million people is
diversified, well-educated and affluent. It serves as an excellent test
market for businesses hoping to introduce new products into the dynamic
European marketplace. Experiences gathered here can be translated into
successes in Germany, France, Italy, Austria and elsewhere in Europe.
Economy: Switzerland has a strong and stable economy, low inflation
(0.9%), relatively low unemployment (4.7%), and a highly qualified
workforce -- factors which contribute to making the Swiss Confederation
a desirable market environment. Per capita income is the highest in
Europe. Spending power for foreign goods and services is thus extremely
high.
Trade: Trade and prosperity are synonymous in Switzerland. The country
is dependent upon export markets to absorb its production and sustain
its wealth, but is equally dependent upon imports for raw materials and
to expand the range of goods and services available in-country. The
U.S. ranks fourth as a source of Swiss imports, and third as a
destination for Swiss exports.
Finance: Switzerland is known for liberal trade and investment
policies. Fiscal policy is moderate and cautious. The Swiss franc is
one of the world's soundest and most stable currencies. The country is
famous for its high standard of banking, ensuring rapid reliable
processing of business transactions.
Politics: Switzerland is neutral and maintains relations with almost
every nation. Its political structure, headed by a seven-person Federal
Council with rotating presidency, is stable. The country voted in 1992
against joining the European Economic Area.
Labor: A motivated workforce and agreements between trade unions and
employers' associations practically rule out labor unrest.
Infrastructure: The country offers first-rate telecommunications and
transportation networks. Connections between any points in the country
are rapid and convenient. Traders are well served by customs bonded
warehouses in and around all major cities.
Legal: The Swiss legal system is highly developed, commercial law is
well defined, and investments are protected by sound policies.
Resources: With limited natural resources, Switzerland is known for
engineering and business expertise; these skills can benefit U.S.
exporters in exploring third-country markets.
Manufacturing: The machinery, metals, electronics, and chemicals
sectors are world-renowned for precision and quality. Together they
account for well over half of Swiss export revenues.
Agriculture: Switzerland is only 65 percent self-sufficient, and
imports over $6 billion of agricultural products annually. Swiss
farmers are one of the most highly protected and subsidized groups of
producers in the world. The U.S. share of the Swiss agricultural import
market is currently quite small, but adoption of Uruguay Round measures
should improve the situation.
Services: Tourism, banking, engineering and insurance are significant
sectors of the economy and play a major role in its international
relations. Swiss trading companies have unique marketing expertise in
many parts of the world, including Eastern Europe, the Far East, Africa
and the Middle East.
Tourism: Not only does Switzerland have its own highly-developed
tourism infrastructure (making it a good market for tourism-related
equipment and services), but the Swiss are also intrepid travelers. Per
capita, more Swiss visit the United States than any other group,
providing significant revenue for U.S. tourism.
International: Switzerland is the seat of many international, inter-
governmental or private organizations ranging from the United Nations
and associated organizations to CERN, the European Laboratory for
Particle Physics, to the International Red Cross. Switzerland is also a
base for many multinational corporations.
Language: Switzerland is one of the most multilingual countries in
Europe. The national languages are German (used by 65% of the people),
French (18%), Italian (12%), and Rhaeto-Romanic (1%). English is
commonly understood in the business environment.
Bilateral Commercial Relationship: The Swiss feel comfortable doing
business with Americans. U.S. promotional themes are popular at stores,
shopping centers and restaurants, and many social groups feature
American activities. American products have a favorable reputation,
particularly high technology and labor-saving capital goods and consumer
products. A demonstrated commitment to the market, and a reputation for
reliability and high quality are important factors for success.
Country Commercial Guides are available on the National Trade Data Bank
on cd-rom or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following World Wide Web address: www.stat-
usa.gov. CCG's can also be ordered in hard copy or on diskette from the
National Technical Information Service (NTIS) at 1-800-553-NTIS.
II. ECONOMIC TRENDS AND OUTLOOK
Major Trends and Outlook
After several years of stagnation and recession, the Swiss economy
showed recovery in the last quarter of 1993, and has been expanding
continuously since then. However, real GDP increased by a modest 2.1
percent in 1994. The pace of expansion is expected to slow both this
year and in 1996.
Neither private nor public consumption are expected to be robust in
1995. Real disposable income will increase only sightly, leaving
consumers little room to increase consumption. Measures to reduce
budget deficits at all three levels of government (federal, cantonal,
communal) will affect government consumption, which will remain at the
previous year's level. Investment growth, however, will be more robust,
particularly in machinery and equipment, although the external sector
will act as a drag on growth as a larger import component in investments
more than compensates for continued strength in exports.
The recent trade-weighted appreciation of the Swiss currency has not
only induced domestic producers to shift to imported inputs, but has
also reduced Swiss export competitiveness. The Swiss franc may well have
appreciated at a very bad time in the global economic cycle.
Switzerland is a major supplier of investment goods and should be one of
the primary beneficiaries of the current worldwide investment boom.
However, Swiss exporters are losing market shares due to the exchange
rate's evolution.
In spite of the weak growth scenario, other elements of the Swiss
economic picture look good. All levels of government have taken serious
measures to reduce the substantial budget deficits of the last years, so
that the situation of public finance should improve. The overall
government deficit is expected to fall to approximately 3 percent of GDP
in 1996.
The labor market situation is also improving. Even if the low (less
than one percent) unemployment rates enjoyed through the late 1980s are
a thing of the past, the number of registered jobless has been
continuously diminishing since the peak rate of 5.2 percent in February
1994. In May 1995, the number of jobless represented 4.2 percent of the
labor force (a remarkable level by European standards). The
unemployment rate should continue to decline, although this is due more
to potential workers leaving the work force than to growing employment.
Traditionally, Switzerland's merchandise trade deficit is more than
compensated by a services surplus and, above all, by receipts from
abroad. As merchandise trade recorded surpluses in 1993 and 1994, the
current account showed record surpluses of 7 percent of GDP. For 1995,
the strength of the Swiss currency will alter this picture, but the
balance of payments will nonetheless remain in surplus, in the range of
SF 25 billion.
Principal Growth Sectors
As a country with no significant natural resources, Switzerland has
focused its economy on the manufacturing and services sectors.
Highlights of recent economic developments by sector and outlook for the
near term are as follows:
Manufacturing: The machinery industry, together with metals and
electronics, employs 12 percent of the country's workforce and
contributes 42 percent to Swiss export revenues. Emerging from a period
of falling orders and declining production, the machinery industry
(including metals and electronics) has been growing since mid-1994.
Restructuring efforts carried out over the last few years will leave
machinery in a stronger and more competitive position. Companies in
this sector put high hopes on the effects of the revitalization program
which the Swiss Federal Council began implementing in 1993, and on the
new value added tax system introduced in 1995. The switch from a system
of turnover tax to the VAT relieves the industry from a tax burden on
investments (hidden tax) estimated at SF 1 to 2 billion per year. In
addition, creativity and innovation will continue to play an important
role. The field of environmental technology, for instance, is expected
to have good growth potential.
The entering into force of the GATT agreement in 1995 is crucial for the
Swiss machinery sector. The export-oriented machinery manufacturers
will benefit from lower tariffs and liberalization of public
procurement. Other agreements included in the Uruguay Round, such as
TRIM's and TRIP's will improve conditions for direct investments abroad,
and bring better protection of patents, technical know-how, and the
like. The GATT agreement will allow Swiss companies to compensate for
price disadvantages by introducing more creative price and service
policies.
The chemical industry was one of the few sectors in the Swiss economy
that performed well in spite of the 1991-1993 recession. Similar to the
machinery sector, chemicals will also benefit from the GATT agreement;
but because this sector is even more oriented toward the external side,
the positive effects of the Uruguay Round will probably be of even
higher magnitude. Because research plays a key role in the chemical
sector, TRIP's and TRIM's represent the biggest improvements for this
sector. Within the chemical branch, pharmaceuticals offer the biggest
growth potential, since they will benefit most from longer and better
patent protection. The introduction of the VAT has also benefitted
investment activities in the chemical industry.
Services: The two most buoyant components of the services sector have
been banking and insurance. Within the banking sector, commercial and
private banks show the biggest growth potential. The increase in world
trade and industrial activity will naturally bring more business to
commercial banks. With their global operations, the large Swiss
commercial banks stand to gain a fair share of the business. Mutual
funds and institutional investors have gained in importance, and
represent good growth prospects for commercial and private banks.
The insurance industry is equally important for Switzerland, and the
Swiss are reputed to be the best-insured people in the world. There are
well over 100 insurance companies in the country, approximately ten
percent of which are specialized solely in the reinsurance business; of
the latter, Rueckversicherung is the world's second-largest reinsurance
company. The financial situation of the Swiss insurance companies is
very satisfactory, and earnings are expected to grow strongly in 1995
and beyond.
Agriculture: In recent decades, agriculture has lost its relative
importance in the Swiss economy, and its preservation in current form
has been due largely to governmental intervention and support. The
Swiss system of protecting its farmers is now undergoing bold reforms,
due mainly to pressure from consumers and Switzerland's trading
partners. The Uruguay Round results require Switzerland to eliminate
non-tariff barriers, reduce export subsidies, make binding commitments
on its schedule of agricultural tariffs, and decrease levels of domestic
support payments. Beginning July 1, 1995, the date Switzerland will
begin implementing its Uruguay Round commitments, the Swiss agricultural
sector will be more responsive to market forces and increasingly
accepting of foreign goods.
Government Role in the Economy
Switzerland has a free market economy based on the principles of free
enterprise. Freedom of trade and of industry are guaranteed by the
Federal Constitution, and state intervention is minimal. Government
policy is primarily aimed at providing the economy with favorable market
conditions -- stable currency and prices, an efficient infrastructure,
and training opportunities for required skills.
Under Switzerland's federal, cantonal and communal system of governing,
the federal government is responsible for such national interest issues
as foreign affairs, internal and external security, customs,
communications, and monetary control, while the cantons control all
other state functions. In many cases, the federal government simply
legislates and supervises, while the 26 cantons implement the
legislation. The cantons enjoy a high degree of administrative
authority, with their own constitutions and laws. The communes, of
which there are over 3,000, also enjoy a high degree of independence,
control local issues, and even collect taxes. All three levels of
government have little direct involvement in manufacturing and services.
Indirect involvement is evident in the extensive number of government
regulations, especially at the local level. Building codes, regulated
hours of establishment, labor laws, zoning ordinances, garbage control,
noise codes and administered prices are examples of areas where rules
and regulations are more pervasive than in the United States. Mandatory
health insurance is a typical example of the Swiss approach to
government involvement in the economy: insurance and health care are
provided privately, but the government requires employees to have the
insurance (and subsidizes those who cannot afford it).
While government regulation is generally quite extensive, in the area of
competition law the situation is the opposite. Cartels are openly
permitted and are only broken up when the government succeeds in proving
that they are socially and economically harmful -- a daunting challenge
the government rarely attempts.
Another anomaly is the agricultural sector. To protect its farmers and
adhere to national security goals to remain 65 percent self-sufficient
in food, the government has developed a complex system of protection
which effectively blocks imports of many agricultural commodities. The
Swiss constitution provides the foundation for agricultural policy. The
two primary objectives are preservation of a viable farm sector and
stockpiling to ensure the availability of food. Swiss producers,
particularly those in Alpine and other difficult zones, are highly
supported, with approximately 70 percent of gross farm income
attributable to government intervention. Milk price support is one of
the main ways that farmers are supported, and administered prices are
over 200 percent higher than EU prices.
Agricultural reform has become a major issue in Switzerland due to the
growing federal budget deficit, consumer pressures over high food costs,
and pressure from trading partners to decrease protectionism. The
government's position has been that European Union membership is
inevitable, and Swiss agricultural policies and regulations should
therefore be adjusted to adapt to this inevitability. The government
has used the GATT multilateral trade negotiations to justify policy
reform proposals.
Pressure from consumers and trading partners involved in the GATT
Uruguay Round negotiations has accelerated food policy reform. Signs of
liberalization became evident in 1993 when the Swiss government
succeeded in increasing direct payments to farmers in exchange for
commodity price reductions as a means to reform the agricultural sector
in conformity with new rules being developed in the GATT. The
politically sensitive dairy sector was targeted for the first round of
cuts, with fluid milk support prices being decreased (by about 10%) for
the first time since World War II.
The 1995 farm support package continues this process of reform. Direct
payments decoupled from production continue to increase, to
approximately 33 percent of the Swiss federal budget for agriculture,
and amounts to an average of about $7,450 per year. Total coupled and
decoupled direct payments to farmers amounted to $1.18 billion in 1994,
representing 53 percent of the total Swiss federal budget for
agriculture.
This early move toward GATT conformity means that the main modifications
Switzerland will have to make include reducing export subsidies, phasing
out all non-tariff barriers such as quantitative restrictions and
licensing systems, and speeding up scheduled price support decreases.
In the case of products formerly subject to non-tariff measures, high
tariffs will be implemented to continue protecting domestic production.
However, the Uruguay Round agreement on agriculture will improve market
access for many U.S. agricultural exports to Switzerland, despite the
very high tariff equivalents replacing non-tariff barriers.
Balance of Payments Situation
Trade balance and current account: In spite of the appreciation of the
Swiss currency on a trade-weighted basis, robust export growth deriving
from the economic recovery of Switzerland's trade partners combined with
moderately expanding imports to create another unusually large trade
surplus in 1994, only slightly less than the record SF 3.4 billion
surplus of 1993. Simultaneously, the traditional services surplus
reached a new record in 1994, topping SF 14.3 billion. Factors income
received from abroad largely surpassed factors payments to foreign
countries. Switzerland's current account registered a surplus of SF
24.8 billion, which corresponds to a high, even by major industrial
country standards, 6.9 percent of GDP.
Based on the first months of 1995, the trade balance by the end of the
year should be drastically different. Indeed, the recent appreciation
of the Swiss franc will slow export growth while stimulating imports.
First quarter trade statistics show a return to normality, in the sense
that they display a trade deficit of SF 112 million (by comparison,
first quarter 1994 figures showed a surplus of more than SF 1 billion).
However, the services surplus and the systematically positive balance of
factor payments will more than offset this deficit. As usual, 1995
should end with another current account surplus. This scenario should
be repeated in 1996, although the current account surplus is expected to
represent approximately 6 percent of GDP.
Capital account: Reflecting Swiss investment banks' deep involvement in
portfolio management and the importance of foreign companies issuing
bonds in the country, Switzerland's capital account has been chronically
negative. In 1993 (latest data available), the capital account deficit
surged by 23 percent to reach SF 28 billion. This evolution was the
result of a series of events on the international financial markets.
The European Monetary System crisis in 1993 prompted investors to
withdraw funds from EU markets in favor of EU markets. However, these
funds were used by Swiss institutions to invest in foreign assets. The
decline in interest rates induced investors to cancel their engagement
on money markets in favor of capital markets. Swiss portfolio
investments abroad increased from SF 13.6 billion in 1992 to more than
SF 44 billion in 1993. As far as direct investment are concerned, 1993
was characterized by booming Swiss investment abroad while net foreign
direct investment was negative due to a change in the EU tax
legislation.
As 1994 was a disappointing year for financial markets on the whole, the
Swiss capital account should have experienced a less dramatic evolution.
For the future, growing Swiss direct investments abroad and the
increasing involvement of Swiss banks in portfolio management will be
key determinants.
Infrastructure Situation
Switzerland's infrastructure is as modern and well-developed as any in
the world. The country has an extremely dense and efficient rail
network, an extensive road system (complete with tunnels to compensate
for the mountainous terrain), two major international airports (Zurich,
Geneva) and several smaller airports also with international
connections, and even a marine with some 30 ocean-going vessels, and a
more extensive riverain service with connections to the North Sea via
tugs and barges on the Rhine river. The port of Basel is a major
terminus for goods handling, with efficient connections between rail,
road and water. Custom bonded warehouses and duty free areas exist in
and around all major cities.
Several major projects are currently underway to upgrade or enhance the
already existing infrastructure, and are focused on the transportation
sector. These include:
NEAT -- Construction of a transportation tunnel for enhanced movement of
goods and persons on the European-wide north-south transport axis,
valued at some $12 billion. Swiss voters approved construction of the
NEAT in a referendum in 1992, and construction of a first "test tunnel"
began in 1993. The project gained significance following another Swiss
referendum in 1994, which will limit international truck traffic on
Swiss highways as of 2004. Due to the European nature of the project,
competition from European companies will be stiff, but U.S. firms
competent in computerized traffic control systems, related
signalization, and software, as well as heavy construction and drilling
machines may find a competitive niche. The project will likely be
ongoing through the year 2006.
Swissmetro -- Construction of a high-speed, magnetic underground
passenger transportation system, valued at some $8.3 billion. The
ambitious project has attracted considerable attention, due to the
magnitude of the project and the nature of the as yet unproven
technologies. Nay-sayers equate the project to a pipe dream, but there
are several strong supporters in high levels of the Swiss government.
The fact that the German government recently approved funding for a
similar mag-lev line in Germany gives hope to the Swiss project
proponents. The Swissmetro project is currently in the feasibility
study phase.
Rail 2000 -- Upgrade of the highly-developed and extensively-used Swiss
rail network, valued at some $5.3 billion. Work is expected to continue
through the year 2005. The potential for U.S. company participation is
promising in computerized traffic control systems, related
signalization, and software.
IV. POLITICAL ENVIRONMENT
Nature of Political Relationship with the United States
U.S. relations with Switzerland are excellent. There are no serious
bilateral political disputes. The U.S. Government welcomes the Swiss
government's greater international engagement. In recent years,
Switzerland has been increasingly active in multilateral fora dealing
with finance, export controls/
nonproliferation, refugees, law enforcement, human rights, and trade, to
name only a few.
Major Political Issues Affecting Business Climate
In the wake of the Swiss voters' rejection of the European Economic Area
(EEA) Agreement in 1992, the Swiss federal government is attempting to
negotiate bilateral sectoral agreements with the European Union. To
what extent the government will succeed -- and on what terms -- is a
major political issue that will affect the domestic business climate.
The Swiss federal government is committed to achieve EU membership as a
long term goal, although this course is opposed by a significant number
of Swiss.
U.S. companies already doing business in and with Switzerland have not
to date indicated any direct problems associated with the EEA rejection
on their business; any negative repercussions to trade are more likely
to impact domestic companies' relations with the EU. U.S. companies
already acclimated to EU business practices and regulations should
experience no difficulties in Switzerland, as the underlying Swiss goal
is not to reject EU trade, but rather to make its trading environment as
compatible as possible with that of the EU while still maintaining Swiss
political and economic integrity.
Brief Synopsis of Political System, Schedule for Elections,
and Orientation of Major Political Parties
Switzerland has a relatively weak federal government and no recent
tradition of executive leadership wielded by one individual. Many
executive and administrative powers are vested in the 26 cantonal
governments rather than in the federal government in Bern. Federal
executive decision-making is undertaken by the seven-member Federal
Council (cabinet). Its members head the various federal ministries:
Treasury, Foreign Affairs, Justice, Economics, Interior, Transportation
and Energy, and Defense. The entirely ceremonial position of President
of the Federal Council (head of government) is rotated annually among
the councilors according to seniority. The current President is Defense
Minister Kaspar Villiger; Economic Minister Jean-Pascal Delamuraz will
assume the presidency in 1996. Some councilors may exchange ministerial
portfolios as new members are added. The Federal Council strives to
present a collegial image and to govern by consensus. Its deliberations
are private. Contentious issues that cannot be decided by consensus are
determined by majority vote, results of which are not released.
The composition of the Federal Council reflects the so-called "magic
formula" coalition that has governed Switzerland since 1959. Under this
informal arrangement, the four largest political parties, which
generally receive 70-75 percent of the popular vote in federal
parliamentary elections held every four years, fill the seven positions
on the Federal Council. The three bourgeois parties in the coalition
(Free Democrats, Christian Peoples' Party and Swiss Peoples' Party)
reflect center-right constituencies. The left-of-center Social
Democrats are the fourth coalition party. The three largest parties in
terms of popular vote (Free Democrats, Christian Peoples', and Social
Democrats) each receive two Federal Council seats; the Peoples' Party
receives one. In addition, it is understood that there will always be
at least two members from French-speaking cantons on the Federal
Council. According to the Constitution, no canton may have more than
one representative on the Federal Council. Federal Councilors are
elected by Parliament for life, but political tradition dictates that
they retire in their 60s.
The presence of left and right-wing elements in the governing coalition
has allowed it to coopt more extreme parties in the spectrum. The
coalition's ideological diversity has brought prolonged political and
social peace. The next parliamentary election will occur in October
1995. All governing parties will be under some pressure to dissolve the
coalition to achieve greater political coherence and decision-making
efficiency, but party leaders will be reluctant to end a system that
guarantees them control of federal ministries and jobs.
Treaties, agreements, and legislation approved by the Parliament are
subject to challenge by popular vote in Switzerland's unique system of
initiative and referendum procedures. These votes allow unusually
intense popular involvement in the legislative process and keep the
federal government under pressure and scrutiny. Most of the interesting
moments in Swiss politics occur during these initiative and referendum
campaigns.
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
The most effective method of importation into and distribution within
Switzerland varies according to the type of product and location of
manufacture and distribution sites. Capital goods manufacturers may
find direct exporting most desirable when contracts with a limited
number of customers represent an appreciable share of the market.
However, a company new to the Swiss market, or one whose products
require training for use and after-sales service, is well advised to
engage the services of a technically-qualified Swiss agent with good
market knowledge.
Swiss buyers of raw materials often use specialized importers. Large
orders may be made directly from producers overseas, specialized trading
firms, or transshippers. As the metals industries, except aluminum,
tend to be less developed, imported materials are usually in
semiprocessed and processed form.
A number of large international trading and transit companies operate in
Switzerland. Parent companies in Switzerland carry out the
transactions, while foreign affiliates or representatives may handle
such aspects as shipping, receipt, and verification of the goods. In
some cases, the imported goods never enter Swiss customs territory.
These firms are members of the Confederation of Swiss World and Transit
Trade Firms (Verband Schweizerischer Transit- und Welthandelsfirmen).
(Key Swiss associations, with address and contact person, are listed in
Appendix E.)
Manufacturers and exporters of consumer goods may deal with a wholesaler
(who is in most cases also the importer), engage the services of a
representative, or sell directly to buying offices of large retail
chains (in the case of mass-produced items). Most often a
representative or agent, who is usually a specialist in one or more
product groups, is made responsible for distribution in the whole
country.
Import and Wholesale Trade: Many Swiss wholesalers are also importers,
and they generally expect exclusive regional or national rights for the
imported product. Wholesalers maintain stocks of a range of products,
and provide quality control, transport, warehousing, and financing.
Associations of wholesalers have been created for various sectors to
protect sector interests and to compete effectively with other forms of
distribution. Most wholesalers and importers also belong, either
through sector associations or individually, to the Federation of Swiss
Importers and Wholesale Traders (Vereinigung des Schweizerischen Import-
und Grosshandels; address in Appendix E).
Retail Trade: The structure of retail trade in Switzerland has been
changing. One trend has been a decreasing number of independent
retailers, giving way to an increasing number of self-service and
discount stores, supermarkets, and the like. The trend to concentration
has been most noticeable among food distribution companies. Faced with
an increasing number of large, vertically integrated retail
establishments having nationwide operations, individual retailers have
set up organizations to take care of wholesale purchasing, importing,
and other services. Functioning as cooperatives, most of these
retailers' buying groups and associations are in the foodstuffs
business, but are also in such sectors as textiles, leather goods,
sports articles, pharmaceuticals, toys, and hardware.
Vertically integrated retail firms account for a large part of the trade
in Switzerland. These firms, many of which are department and other
chain stores, consumer cooperatives, discount stores and supermarkets,
do not specialize, but rather deal in a wide range of products. Their
vertical structure and centralized buying give them competitive
advantage over their independent retail competitors.
Continued strong competition has pressured retail traders to continue
rationalizing their operations. Scanner cash registers for bar-coded
articles have been installed at checkout counters in many localities
(although their prevalence is behind other European countries). The use
of electronic cards to rationalize payment transactions is similarly
growing, but also not as rapidly as elsewhere in Europe. Swiss retail
groups joined forces in 1987 to form the Electronic Payment System
Association (Verband Elektronischer Zahlungsverkehr).
Mail Order Business: The growing success of mail order business is due
to the efforts of supplier firms to offer an up-to-date range of quality
products. Market research shows that customers appreciate the wide
choice, savings in time, and possibility of comparing prices at a glance
offered by mail order firms. Swiss firms in the field belong to the
Association of Swiss Mail Order Businesses (Verband des Schweizerischen
Versandhandels).
Use of Agents/Distributors; Finding a Partner
Two principal types of representatives are provided for by Swiss law:
(1) Agents, who are independent, can work for several firms, and are
compensated by commission. Their activities are governed by a 1949
federal law on agency contracts. Swiss law does not permit a principal
to inspect the books of his Swiss agent. (2) Traveling salespeople
(Handelsreisende), who are employees of the company they represent.
Under a 1941 federal law, they are entitled to a fixed salary, with or
without commission, and reimbursement of travel and entertainment
expenses. Each salesperson is required to carry a card indicating
whether he is selling to the wholesale or retail trade.
For a company interested in entering the Swiss market, finding and
selecting the right person or firm for representation is important and
sometimes difficult. Favorable terms may be required to obtain good
representation for a new product or an unknown firm. Commission agents
are usually preferred over salaried representatives, as in the latter
case the foreign form has no direct control over the person concerned.
U.S. firms seeking representation in Switzerland should contact their
nearest U.S. Department of Commerce District Office about the
Agent/Distributer Search service (ADS), a customized search conducted by
Embassy Commercial Service specialists which helps identify agents,
distributors and foreign representatives for U.S. firms based on the
foreign companies' examination of U.S. product literature (a fee of $250
is charged). Other means of locating representation include visiting
trade fairs, advertising in Swiss periodicals, and engaging the services
of professional organizations in the United States or Switzerland.
Once a potential partner has been identified, the U.S. Department of
Commerce offers the World Traders Data Report (WTDR) service, to check
the reputation, reliability and financial status of the foreign company.
The fee is $100, and includes a recommendation from U.S. Embassy Bern's
Commercial Section as to the suitability of the company as a trading
partner.
For the agricultural sector, the Office of Agricultural Affairs, U.S.
Embassy Bern, is staffed by specialists who can provide contacts in
specific agricultural sectors. The Office keeps an updated list of
Swiss agricultural importers by commodity group.
Franchising
More than 200 franchisors are currently operating in the Swiss market,
some 20 of them with more than ten outlets. Around 25 percent of all
franchisors are of domestic origin, 20 percent are American, and over
one-third are of French origin. Franchising is on a marked increase in
the service and catering sectors. The French Accor and Wagons Lits
group runs several restaurants (Eurest), catering systems, and hotels.
Franchising has long been practiced by the automotive trade. It is a
successful distribution and retail system in clothing and in baby and
children items. Newly-successful areas are in beauty and personal care,
home decorating, giftware, gardening, and the like. Body Shop
(cosmetics) is very successful. Industry franchises (Coca-Cola, Pepsi,
Yoplait, etc.) are well introduced and active. Good opportunities exist
in the restaurant business, in the service sector, in management and
career improvement, as well as in children's training and schooling
methods. New retail concepts, home improvement services, computer
training and systems are other areas of growth.
McDonald's is a good example of local innovation of a global franchise.
Its restaurants are very popular in many Swiss cities and mountain
resorts, and its presence on selected Swiss train lines have become
legendary. McDonald's success in Switzerland can be attributed to a
formula adapted to local social and cultural habits and its emphasis on
environmental consciousness.
Franchise experts advise new-to-market franchisors and masters to adapt
the franchise package or business format and message to the cultural
traits and customs of specific regions and countries of Europe. This
advice applies especially to a small, multilingual country like
Switzerland, where franchise packages can be tested in different
cultural environments (French in Geneva or Lausanne; German in Zurich,
Basel or Bern; Italian in Lugano). Lessons learned in Switzerland can
be applied in larger, neighboring countries. The availability of
capital and Switzerland's highly-developed service, transportation and
communications sector can be used by U.S. franchisors to control their
franchise interests in Europe through a Swiss-based head office.
Prospective masters and franchisees should be properly screened. It is
advisable to make a feasibility study and invest in a pilot operation
prior to implementing a business plan which has not been tested before
in Europe.
Franchising's penetration of Swiss retail trade is far from the 35
percent of all retail sales it now represents in the U.S., mainly
because financing for one's own distribution or retail chain in
Switzerland is readily available. Further, the Swiss have been
accustomed to job loyalty and security, as well as good compensation.
With unemployment above 4 percent, however, executives and people
disposing of start-up capital are more keen to becoming entrepreneurs on
their own through franchising. Outplacement and executive counselors
often advise clients to consider franchising. The Swiss Franchise
Association (address in Appendix E) is active in holding seminars and
workshops.
Direct Marketing
Direct marketing is holding its own in Switzerland, although it is not
as developed as in other parts of Europe. In addition to mail order and
consumer goods trade, direct marketing is used in such sales areas as
company-to-company, financial services, insurance, and franchising.
Electronic teleshopping and telemarketing are becoming more widely used.
Joint Ventures/Licensing
Joint ventures: Joint ventures are usually classified under Swiss
company law as an ordinary partnership (Einfache Gesellschaft).
Legally, a joint venture consists of two or more individuals or
corporations for the realization of a particular project. Its name is
not protected by law, nor can it be registered in the Swiss Commercial
Register (Handelsregistrar).
Licensing: The Swiss often rely on licensing arrangements to acquire
know how, and excel in adding value to imported raw goods and services,
earning revenue through exports. Licensing can therefore be a
successful and profitable market entry strategy for U.S. firms. Many
U.S. firms have adopted this approach to the Swiss market.
In most sectors U.S. licensors will readily find prospective licensees
with the manufacturing and marketing skills to successfully handle the
product not only in Switzerland, but also in other countries where the
Swiss counterpart has marketing capability. Swiss expertise in
exporting, flexibility in adapting to difficult markets and skill in
precision-making and engineering will benefit a U.S. licensor.
The pros and cons of adopting a licensing strategy must, however, be
weighed against other methods of market entry. The key to success in
licensing lies in screening the selected licensee's capabilities,
interest and motivation. Swiss intellectual property legislation
protects know-how and patent transfer arrangements; and some cantons
allow tax write-offs on intellectual property and tax free or
preferential treatment of royalties earned through know how transfer and
licensing. Appropriate legal advice can be obtained from competent
Swiss-based patent and licensing attorneys. The Licensing Executives
Society has an active chapter in Switzerland.
Steps to Establishing an Office
The actual mechanics of forming and registering an office in Switzerland
can be accomplished in two-three weeks, but the planning process can be
more time-consuming, and should take many factors into consideration.
One of the most important is location within Switzerland, because tax
laws, availability of work permits, availability of labor force, and
availability and cost of business facilities vary widely among cantons.
Some cantons may also offer special incentives for foreign investors.
Once a location is selected, the company must be registered in the
Commercial Register (provided annual turnover amounts to at least SF
100,000; if less, the company may register if all other conditions are
met, but is not required to). Registration documents contain the
company name, amount of share capital, business purpose, names of
directors and managers, and names of those who have signatory powers.
Documents must be notarized and superlegalized by an "apostille"
(legalization of the notary's signature), and if required by the
particular canton, translated by a recognized translator into German,
French or Italian.
The company's board of directors must consist of a majority of Swiss
citizens resident in Switzerland; foreign controlled companies usually
meet this requirement by nominating Swiss directors who hold shares and
perform functions on a fiduciary basis. The manager need not be a Swiss
citizen, but at least one person authorized to sign with a sole
signature or two persons authorized to sign by joint signature must be
Swiss residents.
Registration also includes special wording that the company, if a branch
of a foreign corporation, is relatively independent from the
corporation's head office from an economic and noneconomic point of
view, basically enabling the branch to exist as if it were a separate
legal entity in Switzerland. The branch must have its own books of
account, although they may be kept by the company headquarters or a
third party.
Once the company has been registered, the next major concern is
employment. Foreign employees must have work permits, which are granted
at the cantonal level (by quota) and approved at the federal level.
Hiring domestic residents is more straight-forward, and there is no
minimum wage, but the company is liable for a host of benefits and
compensations, ranging from pension plan contributions to health and
accident insurance.
A final consideration is tax liability. As a rule, foreign companies
are taxable on income attributable to a Swiss permanent establishment;
on income from immovable property located in Switzerland, including
gains on the sale of such property; and in some cantons, on income from
debts secured by land there. Withholding tax is levied on dividends and
certain interest. Sales of foreign companies to a Swiss resident (or
sales through an independent Swiss agent) do not create Swiss tax
liability.
Switzerland and the U.S. have a Double Taxation Treaty. Income from
industrial and commercial activities is not taxed in either country
unless derived from a permanent establishment in the taxing country.
Switzerland taxes only those industrial and commercial profits of a U.S.
permanent establishment in Switzerland attributable to in-country
activities. The same deductions are allowed in determining taxable
income as for a Swiss corporation. Switzerland and the U.S. are
currently negotiating a new double taxation treaty that would bring
further tax relief for companies and individuals from both countries.
More detailed information regarding setting up and staffing a business
enterprise in Switzerland is available from the Swiss-American Chamber
of Commerce (address in Appendix E), and from "doing business guides"
published by such organizations as Ernst & Young and Price Waterhouse.
Selling Factors/Techniques
New-to-market U.S. exporters are well advised to participate in
established trade shows in Switzerland to give their products commercial
exposure. Swiss buyers, agents and distributors use the medium of trade
shows as a means of finding new products to a much higher degree than
their U.S. counterparts. It is often more difficult to arrange personal
meetings with prospective Swiss business partners if the U.S. product or
company has not already shown its commitment to the Swiss market by
participation in such events. Personal participation is not mandatory,
since catalog and video displays at shows tend to draw an excellent
response. Still, there is no substitute for establishing a personal
relationship with one's Swiss business partner.
In addition, for an exporter's offer to be taken seriously, it must be
accurate and complete. Swiss buyers, who receive offers from all over
the world, are generally not prepared to devote time to requesting
additional details. These must be provided at the outset with objective
and detailed information, including exact product description with
technical specifications; price details (CIF or FOB) in U.S. dollars or
Swiss francs; method of payment; quantities available; packaging; and
transport and delivery terms. An offer should also include information
on the exporting firm; production equipment available and quality
control factors; and financial references. If minimum quantities for
accepting orders are set, the exporter should take into account the
relatively small size of the Swiss market.
The first order given to a new supplier is often regarded by the
importer as a trial for testing the quality of the goods and service
provided, as well as consumer reaction to the product. Commitments
should be scrupulously observed, or the likelihood of success on the
market may be seriously compromised, as word travels quickly in
Switzerland. Professionals in a given market sector are in fairly close
contact with one another, and an exporter's reputation soon becomes
common knowledge.
Payment terms, as in the United States, are usually stipulated in the
sales contract, can be negotiated, and depend upon amounts involved.
Most common terms are payment 30-60 days net (from the date of the
invoice), payment within 10-15 days with 2-3 percent discount, and
payment after 30-60 days with an interest charge. Good customers may
expect credit of up to three months. Except for single, one-time
transactions, or first-time transactions where there is doubt about the
recipient's credit-worthiness, the costly letter of credit (LC)
procedure should be avoided; it is perceived as depriving the recipient
of the means to make deductions for faulty products or wrong shipments.
Advertising and Trade Promotion
Despite its relatively small size, Switzerland's cultural and language
diversity make it virtually impossible to apply a single advertising
policy for the whole market. Regionally-targeted advertising is far
more advisable. The creation of effective advertising requires an
intimate knowledge of the country; approaches that succeed elsewhere may
prove unsuitable to Swiss consumers' tastes. It is generally preferable
to employ the services of a Swiss advertising consultant, or one of the
several U.S. advertising firms with affiliates in country.
Seriousness, unpretentiousness and impeccable presentation are the
hallmarks of Swiss advertising. Consumers are influenced by the quality
of the printing and graphic presentation, which attain high standards in
Switzerland. Not surprisingly, and also in line with the country's high
standard of living, advertising expenditure is one of the world's
highest on a per capita basis.
Print Media: Switzerland has one of the greatest per capita newspaper
densities in the world. The exceptionally large number of newspapers is
primarily due to the country's many languages and cultural areas. Most
are oriented to particular regions or localities. The number of dailies
has changed only slightly in post-war years, but circulation in the same
period has more than doubled. Some dailies are regional editions
(Kopfblaeter) of other newspapers. There are over 100 free-of-charge
announcement bulletins published on a weekly or more frequent basis.
The Swiss also publish an extensive range of periodicals, both general
public magazines and special interest, including trade, publications.
The latter cover such diverse topics as travel, gastronomy, medicine,
environment, and hobbies.
Following are some of the major circulation print media. As noted,
given the diversity of publications and the regional or special interest
character of many, it may be advisable to secure the services of a
professional when planning a press campaign.
Major Swiss Newspapers and Periodicals
Der Bund
Type: Daily Newspaper
P.O. Box CH-3001 Bern, Switzerlan
Language: German
Circulation: 61,663
Editor-in-Chief: Konrad Stamm
Tel: (41-31) 385 11
Fax: (41-31) 385 11 12
Berner Zeitung
Type: Daily Newspaper
P.O. CH-3003 Bern, Swizterland
Language: German
Circulation: 125,228
Editor-in-Chief: Beat Hurni
Tel: (41-31) 330 31 11
Fax: (41-31) 332 77 24
Basler Zeitung
Type: Daily Newspaper
P.O. Box CH-4002 Basel, Switzerlan
Language: German
Circulation: 117,417
Editor-in-Chief: H. P. Platz
Tel: (41-61) 639 11 11
Fax: (41-61) 631 15 82
Neue Zuercher Zeitung
Type: Daily Newspaper
P.O. Box CH-8021 Zurich, Switzerland
Language: German
Circulation: 152,221
Editor-in-Chief: Dr. Buetler
Tel: (41-1) 258 11
Fax: (41-1) 252 13 29
Tages-Anzeiger
Type: Daily Newspaper
P.O. Box CH-8021 Zurich, Switzerland
Language: German
Circulation: 273,466
Editor-in-Chief: Roger de Weck
Tel: (41-1) 248 44 11
Fax: (41-1) 248 44 71
Blick
Type: Daily Newspaper
P.O. Box CH-8021 Zurich, Switzerland
Language: German
Circulation: 373,354
Editor-in-Chief: F. Luchsinger
Tel: (41-1) 259 62 62
Fax: (41-1) 262 29 76
24 Heures
Type: Daily Newspaper
P.O. Box 585
CH-1001 Lausanne, Switzerland
Language: French
Circulation: 93,406
Editor-in-Chief: J. M. Vodoz
Tel: (41-21) 349 44 44
Fax: (41-21) 349 41 10
Le Matin
Type: Daily Newspaper
P.O. Box
CH-1001 Lausanne, Switzerland
Language: French
Circulation: 54,476
Editor-in-Chief: A. Exchaquet
Tel: (41-21) 349 49 49
Fax: (41-21) 349 41 10
Journal de Geneve
Type: Daily Newspaper
P.O. Box
CH-1211 Geneva, Switzerland
Language: French
Circulation: 22,254
Editor-in-Chief: A. Maurice
Tel: (41-22) 819 88
Fax: (41-22) 819 89 89
Le Nouveau Quotidien
Type: Daily Newspaper
78, chemin de Montelly
CH-1007 Lausanne, Switzerland
Language: French
Circulation: 35,000
Editor-in-Chief: Jacques Pilet
Tel: (41-21) 626 25 24
Fax: (41-21) 626 25 23
Tribune de Geneve
Type: Daily Newspaper
P.O. Box 434
CH-1211 Geneva 11, Switzerland
Language: French
Circulation: 60,480
Editor-in-Chief: Guy Mettan
Tel: (41-22) 322 40 00
Fax: (41-22) 781 01 07
La Liberte
Type: Daily Newspaper
P.O. Box 1056
CH-1701 Fribourg, Switzerland
Language: French
Circulation: 35,385
Editor-in-Chief: Jose Ribeaud
Tel: (41-37) 86 44 11
Fax: (41-37) 86 44 00
Corriere del Ticino
Type: Daily Newspaper
Ai Mulini CH-6933 Muzzano, Switzerland
Language: Italian
Circulation: 36,521
Editor-in-Chief: S. Caratti
Tel: (41-91) 58 31 31
Fax: (41-91) 58 29 77
Giornale del
Type: Daily Newspaper
Via San Gottardo 50
CH-6903 Lugano, Switzerland
Language: Italian
Circulation: 23,166
Tel: (41-91) 23 22 72-75
Fax: (41-91) 23 28 05
Die Weltwoche
Type: Weekly Magazine
Postfach
CH-8021 Zurich, Switzerland
Language: German
Circulation: 106,511
Editor-in-Chief: R. Baechtold/J. Ramspeck
Tel: (41-1) 207 73 11
Fax: (41-1) 202 61 27
Sonntags-Zeitung
Type: Newsmagazine
Postfach
CH-8021 Zurich, Switzerland
Language: German
Circulation: 122,881
Editor-in-Chief: U. Haldimann
Tel: (41-1) 248 40 40
Fax: (41-1) 242 47 83
Sonntags-Blick
Type: Newsmagazine
Dufourstrasse
CH-8008 Zurich, Switzerland
Language: German
Circulation: 360,477
Editor-in-Chief: F. Luchsinger
Tel: (41-1) 259 62 62
Fax: (41-1) 251 80 06
Schweizer Illustrierte
Type: Weekly Magazine
Dufourstrasse 23
CH-8008 Zurich, Switzerland
Language: German
Circulation: 196,265
Editor-in-Chief: Peter Rothenbuehler
Tel: (41-1) 259 63 63
Fax: (41-1) 262 04 42
Cash
Type: Weekly News
Hohlstrasse 192
CH-8021 Zurich, Switzerland
Language: German
Circulation: 50,000
Editor-in-Chief: Markus Gisler
Tel: (41-1) 242 80 77
Fax: (41-1) 242 90 41
L'Hebdo
Type: Monthly Magazine
P.O. Box 3153
CH-1005 Lausanne, Switzerland
Language: French
Circulation: 55,000
Editor-in-Chief: J.-C. Peclet
Tel: (41-21) 320 36 11
Fax: (41-21) 320 36 17
Bilanz
Type: Monthly Magazine
Edenstrasse 20
CH-8021 Zurich, Switzerland
Language: German
Circulation: 70,000
Editor-in-Chief: Medard Meier
Tel: (41-1) 207 72 21
Fax: (41-1) 201 59 16
Schweizer Handels-Zeitung
Type: Weekly News
Seestrasse 37
CH-8027 Zurich, Switzerland
Language: German
Circulation: 37,039
Editor-in-Chief: Dr. K. Speck
Tel: (41-1) 201 35 55
Fax: (41-1) 202 01 26
Bilan
Type: Monthly Magazine
Av. de la Gare 33
P.O. Box 585
CH-1001 Lausanne, Switzerland
Language: French
Circulation: 21,528
Editor-in-Chief: Max Mabillard
Tel: (41-21) 349 48 22
Fax: (41-21) 349 40 80
Radio and TV: The Swiss Broadcasting Company (SRG) holds a monopoly on
production and broadcasting of Swiss radio and TV programming. It is
private, nonprofit, and financed through compulsory listener/viewer
fees. Matching the linguistic division of the country, Switzerland has
three TV stations. An extensive cable system permits receipt of radio
and TV programming from other European countries.
Unlike the U.S. but similar to the rest of Europe, Swiss TV advertising
is grouped in blocks of time rather than interspersed throughout and
between programs (although as of April 1992, programs over 90 minutes
may have one commercial break). TV advertising is subject to certain
restrictions, e.g., commercials for cigarettes, alcoholic beverages and
pharmaceuticals are banned. There is no radio advertising in
Switzerland, except by local radio stations. The Corporation for
Television Advertising (AG fuer das Werbefernsehen, Postfach 610,
Giacomettistrasse 15, CH-3000 Bern 31, Switzerland; tel: (41-31) 351-
2221; fax: (41-31) 351-2310) takes order for television advertising. TV
advertising prices are based on 1,000 contacts (targeted viewing
audience), and vary by time of day from SF 20-27 per unit of contacts;
seasonal and large contract discounts are offered.
Trade Promotion: As noted, the Swiss place a high emphasis on
participation in trade promotion events. Switzerland has major
exhibition centers in Zurich, Geneva, Basel, Montreux, Lausanne and
Bern, as well as a number of smaller show sites in other cities. All
have a full calendar of regional, national and international events,
taking place at intervals from twice a year to once every four years.
Appendix G summarizes the major trade events, many supported by Embassy
staff.
Pricing Product
In determining the selling price of a product, particularly consumer
goods, an exporter must take into account the considerable difference
between the price an importer is prepared to pay and the prevailing
retail selling price. The cost of distribution and the intermediaries'
and retailers' margins may increase the selling price several fold.
Markups in Switzerland generally range from 20 to 100 percent, but can
be even higher.
Price controls, part of Swiss competition law since 1986, are primarily
aimed at reducing abusive prices for goods and services resulting from a
lack of competition, and apply only to members of a cartel or similar
organizations subject to this law. There are, however, some products
whose price is influenced by protective or assisting measures from the
government; these are primarily agricultural goods and some
pharmaceuticals.
Sales Service/Customer Support
Finding a reliable means of providing rapid and efficient quality
service and after-sales customer support is absolutely essential in
Switzerland. Concluding a contract is usually dependent upon the
ability to provide this follow-up. Means of accomplishing this aim
include one or all of the following: opening one's own office in
Switzerland; finding a competent agent/distributor to provide after-
sales service; and/or keeping stock in a Swiss or European warehouse for
rapid resupply.
Selling to the Government
Swiss government agencies use competitive bids for procurement. In
general, the Swiss comply with GATT rules on procurement by government
entities (Switzerland implemented the GATT multilateral code Agreement
on Government Procurement in 1981).
Procurement at the federal level is generally limited to projects in
sectors in which it has primary responsibility -- utilities,
transportation, communications, defense and construction. Total federal
government procurement averages $6 billion annually. The Defense
Ministry and the PTT (the public post, telephone and telegraph
corporation within the government) have some restrictions on foreign
purchases (small arms, clothing and boots, telecom equipment). Many
public projects are carried out by cantonal and communal governments;
their procurement is about two and one-half times the federal government
amount.
The federal government exercises a great deal of discretion in inviting
bids, and selective, discretionary tenders are more common than public
discretionary tenders. Contrary to cantonal and communal practice,
federal authorities are not required to inform unsuccessful bidders of
the tender accepted or reasons for the choice. In general, quality and
technical criteria are more important than price. Cantons and communes
usually prefer local suppliers. Foreign firms may be required to
provide a Swiss bank guarantee if they have no local office or
representation.
Notices of Swiss government tenders are published in the official trade
journal Handelsamtblatt. Tenders of potential interest to U.S. firms
are made known through the U.S. Department of Commerce Trade Opportunity
Program; TOP leads are printed in many U.S. commercial journals and are
distributed electronically via the Commerce Department Economic Bulletin
Board. Tender documents can be obtained free from the Swiss government
agency. While there is no requirement to have a local agent to bid, it
is advantageous when equipment needs training, service or parts.
Protecting Your Product From IPR Infringement
Switzerland has one of the best regimes in the world for the protection
of intellectual property, and protection is afforded equally to foreign
and domestic rightsholders. Switzerland is a member of all major
international intellectual property rights conventions and was an active
supporter of a strong IPR text in the GATT Uruguay Round negotiations.
Patent protection is very broad, and Swiss law provides rights to
inventors comparable to those in the United States. Switzerland is a
member of both the European Patent Convention and the Patent Cooperation
Treaty, making it possible for inventors to file a single patent
application in the United States (or other PCT country, or any member of
the European Patent Convention, once it enters into force) and receive
protection in Switzerland. If filed in Switzerland, a patent
application must be made in one of the country's three official
languages (German, French, Italian) and must be accompanied by detailed
specifications and if necessary by technical drawings. The duration of
a patent is 20 years. Renewal fees are payable annually on an ascending
scale. Patents are not renewable beyond the original 20-year term.
According to the Swiss Patent Law of 1954, as amended, some items cannot
be covered by patent protection: surgical, therapy and diagnostic
processes for application on humans and animals; inventions liable to
disturb law and order and offend "good morals". Nor are patents granted
for species of plants and animals and biological processes for their
breeding. In virtually all other areas, coverage is identical to the
U.S.
Should a firm have concerns about possible patent infringement in
Switzerland, access to the courts is readily available and there is a
well-established and highly regarded patent bar.
Trademarks are also well-protected. Switzerland recognizes well-known
trademarks and has established simple procedures to register and renew
all marks. The initial period of protection is 20 years. Service marks
also enjoy full protection. Trademark infringement is very rare in
Switzerland -- street vendors are relatively scarce here, and even they
tend to shy away from illegitimate or gray-market products.
A new copyright law in 1993 improved a regime that was already quite
good. The new law explicitly recognizes computer software as literary
works and establishes a remuneration scheme for private copying of audio
and video works which distributes proceeds on the basis of national
treatment. Owners of television programming are fully protected and
remunerated for rebroadcast and satellite retransmission of their works,
and rights-holders have exclusive rental rights. Collecting societies
are well established. Infringement is considered a criminal offense.
The term of protection is life plus 70 years.
The Swiss also protect layout designs of semiconductor integrated
circuits, trade secrets, and industrial designs. Protection for
integrated circuits and trade secrets is very similar to that available
in the U.S., and protection for designs is somewhat broader. Because of
the complexities involved in ensuring protection in these areas,
individuals and corporations seeking protection are advised to engage
the services of a specialist.
Need for a Local Attorney
Where American citizens are involved in disputes (with private
individuals or business enterprises) and the controversy cannot be
settled amicably, the normal recourse is to seek remedy provided by the
law of the appropriate cantonal jurisdiction. American diplomatic or
consular officers may not act as attorney, agent, or representative in a
fiduciary capacity in such matters. The Martindale-Hubbell Law
Directory contains an extensive list of lawyers licensed to practice in
Switzerland. The Embassy's Consular Section also maintains a list of
local English-speaking lawyers. The fax number is (41-31) 357-7366.
Please specify the canton for which the list is needed.
The only method for a non-Swiss court or lawyer to obtain testimony or
service process in civil matters in Switzerland is through a letter
rogatory. For information on this rather cumbersome legal process,
contact either the Embassy Bern Consular Section or the Office of
Citizens Consular Services in the Department of State (202) 647-3445.
V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
Best Prospects for Non-Agricultural Goods and Services
Rank Name of Sector Opportunity/Best Prospect Code
1. Computer Software CSF
2. Computers and Peripherals CPT
3. Telecommunication Services TES
4. Telecommunications Equipment TEL
5. Travel and Tourism Services TRA
6. Aircraft and Parts AIR
7. Medical Equipment MED
8. Pollution Control Equipment POL
9. Laboratory Scientific Instruments LAB
10. Analytic Process Control Instruments PCI
11. Industrial Process Controls PCI
12. Renewable Energy Equipment REQ
13. Electronic Components ELC
14. Security and Safety Equipment SEC
15. Sporting Goods and Recreational Equipment SPT
16. Industrial Chemicals ICH
17. Drugs and Pharmaceuticals DRG
18. Automotive Parts and Service Equipment APS
19. Plastic Materials and Resins PMR
20. Apparel APP
1. COMPUTER SOFTWARE (CSF)
U.S. software enjoys the best reputation and is very popular in
Switzerland, especially in desktop, personal computer, portable
computer, and data communication applications. Software solutions which
aim at increasing productivity, automating transaction processing, and
labor-saving operations are in great demand. There are now over 2
million computers in Switzerland, of which more than three fourths are
PCs (personal computers, workstations and desktop models). The home,
and personal, professional markets are in fast expansion, along with the
commercial (office) segment.
Switzerland's sophisticated mechanical engineering, chemical and
precision instrument industries, as well as its highly-developed service
sectors (tourism, banking and insurance) all need effective software
solutions. Only through adequate systems and software will they be able
to maintain, if not increase their productivity, and compete
internationally.
Multitasking, groupware, multimedia, word processing and office, desktop
publishing, presentation, electronic mail, CAD/CAM/CAL and related
engineering software applications, including graphic user interface
software products in general, are among those packages or custom
solutions which are in great demand.
Most of the PC's used in Switzerland come or are interfaced with a
server with CD drives. It is, therefore, of advantage to package mass
software on CD-ROM disks. CD-ROM disks have made a rapid market entry
both in the commercial and consumer segments in the last 12 months. In
mobile and notebook systems, PCMCIA cards have become the standard.
In sum, U.S. suppliers of software should find a ready, albeit demanding
market in Switzerland, even though large accounts are known to be heavy
users of custom and proprietary software.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 2,495 2,575 2,702
B) Total Local Production 1,772 1,793 1,847
C) Total Exports 263 268 265
D) Total Imports 986 1,050 1,120
E) Imports from U.S. 810 875 927
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
2. COMPUTERS & PERIPHERALS (CPT)
Switzerland is one of the world's most computerized countries. In spite
of its relatively small size, it is seen as an attractive, highly-
developed and competitive test market in central Europe. This high
degree of computerization is explained by the presence of sophisticated
industries and of active business and service sectors needing computers
to compete effectively in the international marketplace. In addition,
Switzerland is host to a number of international organizations and to
regional or world headquarters of multinational corporations which need
the latest computer and communications technology.
The total number of computer in Switzerland now exceeds 2 million units,
of which around 1.8 million are PCs. Market observers report that
500,000 units will be purchased this year, either as new installations
or to replace less powerful or outdated models and dumb terminals (the
latter figure includes mobile or laptop/notebook computers).
Demand is strong in desktop equipment. In the last five years, the
consumer and home market for personal computers has exploded. Good
opportunities also exist in laptop and notebook computers.
Surprisingly, demand is picking up, albeit modestly, for mainframe and
midrange computers as well, computer categories too often regarded on
the decrease. It is strong for network systems and data communications
in organizations which operate integrated information systems. So is
demand for computer security. Likewise, Swiss industry, engineers and
architects are keen users of CAD/CAM/CIM and similar computers and
workstations. In the latter category, demand is strong for SPARC
architecture, Pentium and Alpha-chip driven workstations. The business,
financial and insurance sectors constitute another important target
audience.
Market observers believe that even though prices are likely to decrease,
market share and imports from the U.S. will increase on an average of 3-
4 percent in the next two years, depending on the type of equipment
needed by Switzerland's active banking, business, and engineering
sectors. To a lesser degree, computers are also required in industrial
automation. In general, U.S. suppliers are well introduced and enjoy
the best reputation in this liberal, albeit demanding and rich market
(its average per capita income stands at a high $ 36,000!).
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 3,325 3,662 3,759
B) Total Local Production 415 460 464
C) Total Exports 60 65 70
D) Total Imports 2,970 3,267 3,365
E) Imports from U.S. 632 760 792
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
3 - TELECOMMUNICATIONS SERVICES (TES)
Switzerland's internationally-oriented industry, service and business
sectors rely on fast, effective telecommunication services with the
United States. Switzerland is host to more than 600 U.S. companies. In
addition, Swiss companies have sizeable direct investments in U.S.
operations. The multilingual, educated and affluent Swiss, and
international business originating from Switzerland, have created a
strong user base for advanced telecommunication services. In addition
to voice, electronic mail, teleconferencing, the leased line business,
data transmission, voice and image compression, frame relay, virtual
private networks, outsourcing, mobile and radio services are targets of
opportunity for U.S. operators and suppliers. Information highways such
as Internet, Compuserve, groupware software and private operator
networks are other drivers of this sector.
A new development is the establishment of Unisource, a Swiss PTT Telecom
venture with the Swedish, Spanish and Dutch telecom organizations.
Unisource provides international business network and V-Sat services.
Unisource has joined the Worldpartner cooperative venture of AT&T in
carrier services. Other U.S. carriers (MCI, Sprint) are well
represented by their own operations in Switzerland, along with foreign
operators, such as British Telecom, France Telecom, or KDD.
Whereas basic (voice) services will not be deregulated before 1998, a
sustained, growing demand for value added services which are subject to
a competitive environment, is expected both on the part of the business
sector larger accounts, and smaller users, including the mass consumer
segment. In the latter segment, U.S. callback service companies have
recruited a great number of international customers in Switzerland. The
telephone card business (of AT&T, MCI, Sprint) has incited the Swiss PTT
Telecom to introduce its own Telecom card to Swiss-based subscribers and
international travelers. Unisource is considering extending its
activities in international mobile services and the card business as
well. Licenses for international voice services have been obtained by
private corporation network operators organized in closed user groups.
Last but not least, the International Telecommunication Union, which has
its headquarters in Geneva, is an important facilitator in world
telecommunications. It issues standard recommendations, and organizes
important conferences and the quadrennial Telecom exhibitions. This
next world summit in telecommunications, taking place in Geneva October
3-11, 1995, will be a unique meeting place and showcase for the latest
telecom services.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 947 1,098 1,207
B) Total Local Production 333 400 430
C) Total Exports 121 155 161
D) Total Imports 735 853 938
E) Imports from the U.S. 358 450 792
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
4. TELECOMMUNICATIONS EQUIPMENT (TEL)
Switzerland ranks high among European countries with the most per capita
investment in telecommunications. In order for its sophisticated
industry, business, touristic and service sectors (among which banks and
insurance companies) to operate effectively and competitively in the
international marketplace, Switzerland will continue to modernize its
public networks in ISDN (integrated services, digital networks), broad
band communications, and mobile systems. The Swiss Federal Railroads
(CFF/SBB) likewise will continue to upgrade their own fiber optic,
digital networks. The Swiss Military Department is also expected to
invest in radio systems.
Under the present telecommunications regime, voice transmission and
networks are still considered the monopoly of the Swiss PTT Telecom. A
new law has been drafted, which should be implemented by January 1998,
and should open the voice and network business to private operators, in
line with EU recommendations and plans.
Meanwhile, the value-added service sector (in data communications and
transmission; and in pre-approved, closed user groups for voice) and the
interconnect and customer premise equipment market are deregulated and
part of the free market competitive system. No doubt that the forces of
deregulation and privatization at work in Europe, and the directives of
the European Commission calling for opening the market, will greatly
affect Swiss policies as well, even though Switzerland is not a member
of the European Union. At the same time, the Swiss PTT Telecom has
become active in the revenue-generating value-added sector through its
participation in Unisource and ATT's Worldpartner consortium. In doing
so, it has become a direct competitor to U.S. carriers (MCI, Sprint),
and non-U.S. operators (British Telecom, France Telecom, Deutsche
Telekom, etc.).
Mobile communications have become very popular. The PTT Telecom has
introduced the digital GSM system, in addition to the Nordic analog
Natel C system. New paging and cordless systems are likewise being
introduced. While creating new opportunities in future areas of growth,
the overall liberalization developments have resulted in a loss of 1,500
jobs in the Swiss-based telecommunications industry.
In general, present trends are expected to be favorable for foreign (and
U.S.) suppliers, in particular those selling equipment and services
meeting European (ETSI) specifications and the needs of affluent, and
demanding business, industrial, and private users. Opportunities are
especially good for U.S. mobile communication systems, network
equipment, multiplexers, codecs, modems, interfaces, fiber optic
systems, teleconferencing equipment, microwave equipment and supplies.
The predominant role of the Swiss PTT Telecom still makes the former
monopolistic operator an important strategic partner for U.S. firms.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 4,521 5,168 5,323
B) Total Local Production 4,172 4,635 4,774
C) Total Exports 797 885 916
D) Total Imports 1,146 1,418 1,465
E) Imports from U.S. 113 127 132
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
5. TRAVEL & TOURISM SERVICES (TRA)
The USA successfully keeps its top rank among the Swiss outbound
travellers' favorite overseas destinations. The unexpected steep drop
of the dollar vs. the Swiss franc this year makes travel in the U.S. a
real bargain for the Swiss, and major travel agencies note that the U.S.
is now also within lower income reaches. Florida is again attracting
vacationers who used to take holidays on the Mediterranean. Further, as
opposed to other nationalities Swiss tourists like to venture out into
the country. Small businesses (outfitters, motels, etc) in many
Southwestern states rank Swiss visitors second among their foreign
clients.
What makes the Swiss particularly attractive is their high purchasing
power. Shopping has become a lucrative by-product of a U.S. vacation.
The Swiss seem to be particularly attracted by such items as sporting
goods (golfing, tennis, shoes, apparel, physical fitness equipment),
clothing (designer brands), electronics (laptop computers, software,
games) and musical instruments. The high volume of Swiss travel has
clearly had a positive effect on the sale of U.S. made consumer goods
and cars back in Switzerland. American automobiles are very popular,
and items can be found on store shelves which one would not have thought
of a few years ago.
Although destinations such as Australia and Asian countries are making
headway, the popularity of the U.S. will be hard to beat. Much will
depend upon future development of the exchange rate. However, the Swiss
market has proven amazingly resistant even against a much more expensive
dollar. Travel agents, airlines and major tour operators remain
optimistic for the years to come.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 6,099 6,943 7,051
(Swiss outbound travel)
B) Total Local Production N/A N/A N/A
C) Total Exports N/A N/A N/A
D) Total Imports N/A N/A N/A
E) Imports from the U.S. 990 1,119 1,152
(Swiss money spent in the US)
Exchange Rates Used U.S.
Dollars 40 1.25 1.25
NOTE: The above statistics are derived from estimates obtained from the
Swiss Federal Statistical Office, USTTA, two major tour operators and
SWISSAIR.
6. AIRCRAFT & PARTS (AIR)
Inspite of a more complex political environment, imports of aircraft
parts and components are expected to increase. The main reasons are
seen in the expansion of the SWISSAIR fleet and that of commuter airline
CROSSAIR in particular. SWISSAIR is also expected to assume maintenance
of certain models of SABENA's airliners, as a result of a recent
acquisition of 49.5 percent of SABENA stock. Pilatus Aircraft Works,
the largest Swiss aircraft producer, was forced to move some of its
manufacture of PC-7 and PC-9 advanced pilots training aircraft out of
country, after they were used in Mexico and other countries for
counterinsurgency operations. Despite these difficulties, Pilatus was
able to secure new orders for less problematic end-users. They also are
successfully marketing their new commuter aircraft PC-XII, of which 30
units are in production.
Sales of general aviation aircraft are up as a direct result of the
economic recovery. In addition, retrofitting programs to adapt small
aircraft to more stringent environmental standards (noise, fuel
efficiency) are continuing. Additional impulses are expected to result
from the local assembly of the F/A-18 military aircraft as well as other
military hardware (remotely controlled reconnaissance drones).
U.S. manufacturers of instrumentation, avionics and aircraft parts still
command a leading position despite a loss in market share in general
aviation aircraft and commercial airliners. It can be attributed to the
fact that many competing aircraft include a substantial portion of U.S.
made components, including engines and avionics. Main third-country
competition are U.K. as well as French and German manufacturers. Local
competition is insignificant. It should be noted that about two-thirds
of all imported instruments and components are being reexported.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 889 1,007 1,028
B) Total Local Production 379 436 456
C) Total Exports 279 324 338
D) Total Imports 789 985 910
E) Imports from the U.S. 289 358 365
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above figures were obtained from official statistics, combined
with estimates from one trade magazine and two importers of aircraft and
parts.
7. MEDICAL EQUIPMENT (MED)
Switzerland maintains one of the best health care systems in the world.
The dispersed nature of its health care system which follows the pattern
of its federal structure with 26 autonomous cantons (states),
contributes to the buoyancy and diversity of the market. At the same
time, it favors a great variety of equipment and devices.
U.S. equipment and supplies enjoy a good reputation. Many Swiss doctors
and professors of medicine have been trained or have practiced in the
United States. Interchange in procedures and techniques is good between
both countries. These factors create a strong demand for U.S. equipment
and devices.
Soaring health care costs have created strong demand for home health
care and outpatient devices and services, a field in which U.S.
suppliers operating in a domestic mass market with volume production
have a marked lead and mostly a price advantage over European
competitors. At the same time, because of the high cost of health care
in a sophisticated high-income country like Switzerland, health
authorities and hospitals have become very cost conscious. Labor saving
devices or those contributing to containing the cost of health care will
find a good market.
Owing to budget restrictions, capital investment in large type of
equipment has flattened. Life cycles of costly equipment and
instruments are prolonged. A good local after-sales service is,
therefore, of great importance. A great number of qualified Swiss
distributors stand ready to assist U.S. firms in their market entry,
maintenance, and distribution needs. In addition, Switzerland can serve
as a test market for advanced medical equipment in Europe. Experiences
gathered in selling medical equipment in this multilingual and educated
marketplace can be translated into successes in Germany, France, Italy,
Austria and other European countries.
Opportunities are good for advanced diagnostic equipment (scanners,
imaging systems, Nuclear Magnetic Resonance/NMR scanners), monitoring
and intensive care devices, cardiology equipment, electronic medical
instruments, clinical laboratory equipment, outpatient supplies, and, in
general, orthopedic supplies and disposables, as well as surgical
consumables. In the latter volume supplies, as well as in other product
categories, U.S. suppliers have a marked price advantage, not only
because of the favorable exchange rate, but also because the scale of
production in the U.S. and the market size far exceed production and
sales volumes of competitor nations.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 901 1,022 1,028
B) Total Local Production 540 608 610
C) Total Exports 125 142 143
D) Total Imports 486 556 561
E) Imports from U.S. 98 112 115
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
8. POLLUTION CONTROL EQUIPMENT (POL)
Pollution control continues to rank high on the agenda of important
Swiss issues. The country has one of the world's densest networks of
sewage treatment plants. Air pollution control is equally important and
enforced at all levels, from cars to private homes to industrial plants,
which are all monitored and inspected at regular intervals. Solid and
hazardous wastes are recycled or burned in special incinerating plants.
In fact, there is insufficient waste to be burned in order to keep all
plants in operation, and Switzerland is considering importing waste from
neighboring countries. Fees and financial incentives have played a key
role in reducing waste. Additional steps (incentives) to reduce CO2
etc. may be introduced in the near future.
Investments are presently focused on expanding and modernizing existing
sewage treatment plants. Some $12 billion will be required for that
purpose until the year 2000, mostly financed by Cantons (states) and
communities, with some federal subsidies.
Plant expansions are combined in nearly all cases with the addition of
new, improved treatment processes (third and fourth stage
treatment/advanced water treatment). Most plants will receive automated
process controls or existing systems will be updated. Large plants will
be equipped to monitor and control additional chemical parameters.
The U.S. is an established, leading supplier of advanced wet-chemistry
analytical process control instruments. Manufacturers of analytical
instruments for on-line application (O2, Ph, DO, TOD, TOC,
chromatographic and spectrometric analyzers) should be beneficiaries of
this program. Of special interest are also analyzers to detect heavy
metals (mercury in particular) as well as other hazardous parameters.
The market for air pollution control and monitoring systems is almost
saturated.
Competition should be expected to be active and competent. Switzerland
has several manufacturers of advanced DO analyzers (portable and
stationary) as well as most other instruments such as Ph, conductivity,
flow, temperature etc. German and Japanese manufacturers provide
chromatographic and spectrometric analyzers covering all types of
applications. U.S. exporters must consider them to be their main
competitors.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 999 1,020 1,129
B) Total Local Production 950 1,080 1,088
C) Total Exports 505 559 568
D) Total Imports 554 599 609
E) Imports from the U.S. 99 114 117
Exchange rate used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are based on data obtained from EAWAG (Water
Pollution Control Institute of the Swiss Federal Institute of
Technology), two importers of analytical instruments and Von Roll AG
(environmental division). Also note that pollution control equipment is
being exported by Swiss manufacturers, particularly to the Middle East
and Asia. An estimated 5-7% of the instruments in para. A) are
reexports integrated in locally assembled systems.
9. LABORATORY SCIENTIFIC INSTRUMENTS (LAB)
Switzerland, although small, ranks among the world's top 10 nations in
R&D, investing some 2.7 percent of GDP, or about $7.6 billion annually,
for that purpose. About two-thirds are covered by the private sector;
the remainder includes state R&D as well as international research
organizations and programs. Swiss R&D focuses on physical, chemical and
biomedical research. Applied research is concentrated in the
metallurgical (machinery) and electro-technical industries, as well as
in areas such as industrial automation (CIM).
Switzerland is chairing the European EUREKA program this year, which is
creating further R&D impulses. The country's main challenge results
from its non-adherence to the EU. Swiss researchers, as a result, are
excluded from certain important R&D projects. Bilateral negotiations
are in an advanced stage, and it is expected that Switzerland will "buy
its way" back into European R&D in the near future. Also worth noting
is that Swiss companies have invested some $5.9 billion in R&D abroad.
Some programs were moved to foreign facilities for political reasons,
particularly in politically sensitive areas such as genetic research.
Importers of scientific laboratory instruments remain carefully
optimistic for the future. Virtually all major companies plan to keep
their main R&D base in Switzerland.
R&D is a key to the success of the export-oriented Swiss economy.
Investments in the latest technology in scientific instruments should
remain high in the years to come. Swiss parliament is also looking at a
program to additionally further R&D and to create a political and legal
environment for that purpose.
U.S. manufacturers of scientific laboratory instruments have always
enjoyed a privileged position as major suppliers. This is expected to
remain, although some Japanese suppliers have made inroads in areas such
as chromatographic analyzers. German, French, Italian and UK
manufacturers of certain instruments (spectrometers) also hold niches.
They tend to be somewhat more responsive to local market needs than
American counterparts. U.S. manufacturers can draw from the strong
American position as the principal suppliers of computers. Nearly all
scientific laboratory instruments are now attached to PC's as integrated
systems and compatibility is an important issue.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 334 389 408
B) Total Local Production 150 173 182
C) Total Exports 84 101 110
D) Total Imports 268 317 327
E) Imports from the U.S. 68 86 95
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are based on data obtained from the Swiss
Federal Office of Statistics, two importers of scientific laboratory
instruments, as well as the Swiss Federal Office for Education &
Research.
10. ANALYTICAL PROCESS CONTROL INSTRUMENTS (PCI)
This sector overlaps to some extent with pollution control instruments;
a clear separation is not possible. The important Swiss
pharmaceuticals, chemicals and food industries (e.g., CIBA-GEIGY,
HOFFMANN-LAROCHE, SANDOZ, NESTLE) with their large numbers of small and
medium subcontractors provide the basis for an attractive market for
analytical process control instruments. The market is, in every
respect, state-of-the-art and highly competitive. Process automation is
a must to counter high Swiss production costs. Manufacturers are
reportedly concentrating their production in Switzerland on key high
tech ingredients requiring even more complex equipment and processes,
whereas cheaper components are manufactured abroad. Credits for new
investments seem to be flowing more freely after a period of budget cuts
during the years 1991-1993. Several companies are said to be updating
existing plants. Importers and local manufacturers of instrumentation
are carefully optimistic and expect further investments connected to the
economic recovery.
Virtually all producers of advanced analytical process control
instruments are active on the Swiss market. It is considered a test
market, in particular for Japanese instrumentation. U.S. suppliers hold
a solid position although it was somewhat eroded by local competition in
the fields of inductive flow meters, pH, conductivity and similar
instruments. German exporters are also very active, offering complete
systems as opposed to their U.S. counterparts, who are rather suppliers
of key components.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 341 397 416
B) Total Local Production 205 235 254
C) Total Exports 194 224 238
D) Total Imports 330 386 400
E) Imports from the U.S. 94 111 117
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates (based on
information obtained from the Swiss Chemical Industry Association, the
trade magazine Laborscope, two importers of instrumentation, and the
local manufacturer Endress & Hauser AG).
11. INDUSTRIAL PROCESS CONTROLS (PCI)
Switzerland's industrial machinery industry reported an output of over
$40 billion in 1994. It ranks sixth among the world's main producers of
industrial equipment. Some $33 billion were exported. Its demand for
advanced process and quality control systems make it a major OEM market
for optoelectronic and laser based non-contact process and quality
control systems. The market, as a result, is disproportionately
significant compared to the size of the country. Technological progress
in electro-optical and laser based precision vision and control systems
keeps widening the already broad field of applications. On line quality
control of complex manufacturing processes are now made possible and are
becoming standard.
Swiss machinery manufacturers consider use of the latest technology
vital to justify the high cost of their equipment. In addition, the
high purchasing power of the Swiss franc favors procurement of foreign-
made advanced process controls and other components for inclusion in
locally-made equipment. This applies particularly to items invoiced in
dollars.
Competition includes a selection of German, Japanese and also French
manufacturers. All offer state-of-the-art vision systems. U.S.
manufacturers should be able to take advantage of the strong U.S.
position as a supplier of computer hard- and software, which are key
components of advanced electro-optical and laser based process and
quality control systems.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 118 146 153
B) Total Local Production 99 123 129
C) Total Exports 93 111 120
D) Total Imports 112 134 144
E) Imports from the U.S. 30 42 51
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates, obtained from two
importers of PCI equipment (vision systems), one major manufacturer
(OEM) and the VSM (Swiss Machinery Mfgrs. Assn.). Also note that some
40% of the systems included in para. A) covers systems which are
integrated and reexported in locally- made machinery.
12. RENEWABLE ENERGY EQUIPMENT (REQ)
Renewable energy is one of the pillars of the Energy 2000 program
launched by the Swiss Federal Government in 1991. The goal is, in a
first step by the year 2000, to cover 3.5 percent of the country's
energy consumption by renewable energy. This equals some 3.5 million
KWH. A budget of $192 million was approved in 1994 to finance pilot
plants, equipment and for related R&D. The private sector is expected
to spend at least twice the amount for its related programs. Energy
2000 is expected, as a side-effect, to substantially further the use of
efficient energy management systems, an area of particular interest to
the United States.
The U.S. is considered a main and important potential source of supply
for renewable energy generating systems. The first two wind turbine
powered pilot power plants are about to be installed. They will consist
of some 120 units imported from the U.S. for a total of some $90
million. Energy 2000 has resulted in a small boom at the level of
individual homes. Home owners, similar to the U.S., are now allowed to
feed excess electric energy (produced at their homes) back into the
networks. The U.S., with many years of experience in this specific
area, is believed to have interesting products and technology to offer.
Competition to U.S. manufacturers include mostly local as well as German
firms. Swiss companies are very active, trying to meet this emerging
market. They can draw from a powerful industrial base and tradition in
power generation and distribution. The same is true for German
manufacturers which are following closely and which are very familiar
with the Swiss market.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 116 212 221
B) Total Local Production 80 123 132
C) Total Exports 39 61 75
D) Total Imports 75 150 167
E) Imports from the U.S. 25 78 92
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates (obtained from two
major power generating companies, the Swiss Federal Office of Energy and
the marketing division of ABB).
13. ELECTRONIC COMPONENTS (ELC)
Switzerland's sophisticated machinery, telecom, precision control and
instrument industries are the primary users and integrators of advanced
integrated circuitry and electronic components. The Swiss market
represents less than one percent of worldwide electronic components
consumption, but it is highly specialized, and per capita consumption is
one of the highest in the world.
Even though Switzerland lacks significant consumer electronics, computer
and automotive industries, a burgeoning demand has been noted on the
part of Swiss distributors and vendors of microprocessors and memories
for U.S. made components assembled by Swiss makers of PC clones. The
watch industry produces domestically most of the components integrated
in electronic timepieces. It nevertheless constitutes an attractive
target group, partly because of its diversification in communication and
paging devices some of which are incorporated in wristwatches.
In general, U.S. electronic components find good acceptance in the Swiss
signal processing, precision instrument, sensor, process control,
robotics, and mechanical engineering industries. U.S. suppliers are
well represented by their own subsidiaries or local distributors
(Motorola maintains a European marketing and design center in Geneva),
and enjoy a good technical reputation. Several locally active
distributors are qualified to distribute or sell U.S. componentry. They
are usually well introduced with industry and large accounts.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 574 644 676
B) Total Local Production 229 250 255
C) Total Exports 56 63 66
D) Total Imports 401 457 487
E) Imports from U.S. 195 224 235
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
14. SECURITY & SAFETY EQUIPMENT (SEC)
The Swiss security and safety equipment market has grown at a steady
pace of 6-8 percent annually over the past decade. The Swiss invest
about 2.5 times more per individual alarm system than is the case in the
United States. They obviously prefer more complex, professionally
installed alarm systems. However, security consciousness as a whole is
rising sharply, resulting in a new market for security systems,
particularly for home use. Major supermarket chains and department
stores are now offering a growing selection of security devices and
systems. The market is opening up to new products, after years of
nearly total domination by two major local manufacturers, Cerberus AG
and Securitas AG. Further significant changes will occur in connection
with steps aimed at deregulating the market. Deregulation will ease
certain electrical safety and self-imposed quality standards. Quality
standards, in particular, combined with lower insurance premiums (only
for licensed equipment) were used to discourage potential buyers of non-
licensed equipment.
U.S. manufacturers should find the Swiss market considerably more
receptive for their products than has been the case before.
Professional security systems are becoming standard with the majority of
medium and large companies. U.S. manufacturers should look specifically
at the fields of access control (non contact), shop lifting prevention
systems, intelligent perimeter security (radar, seismic detection, IR),
security software, secure communication and security services. Home
security systems (consumer type equipment) range from security locks to
electronic alarm systems with several detectors.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 248 273 292
B) Total Local Production 180 219 240
C) Total Exports 94 114 125
D) Total Imports 162 168 177
E) Imports from the U.S. 44 51 59
Exchange Rates Used: $ = SF 1.40 1.25 1.25
Note: The above statistics are unofficial estimated, based on data
obtained from two major importer/manufacturers and one insurance
company.
15. SPORTING GOODS AND RECREATIONAL EQUIPMENT (SPT)
Due to reluctant consumer spending, the sporting goods and recreational
equipment market stagnated in 1994. Particularly hit were tennis
rackets and snow skis, whereas the trendy runner-ups like snowboards and
in-line skates did best. The outlook is expected to improve in 1995 and
1996.
Competition is very keen and dominated by specialized sporting goods
dealers who make up 72 percent of the market. The remaining 28 percent
of sales are made by mass merchandisers, supermarkets and department
stores.
The bulk of U.S. shipments is in the following product categories:
Bicycles, snow skis, snowboards, pistols, revolvers, sporting firearms,
exercising equipment, golf clubs and bowling equipment. Prominent U.S.
label high-end products often come from Asian low wage countries, which
distorts the reality of the true U.S. export market share.
The U.S. has a reputation for being a leader in trends and fads. For
example, there has been recent increased interest in street- and
baseball outfits, teamsports apparel and equipment, trekking/survival
gear and hiking/mountaineering equipment.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 575 650 663
B) Total Local Production 49 52 55
C) Total Exports 12 15 17
D) Total Imports 538 613 625
E) Imports from the U.S. 20 28 29
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
16. INDUSTRIAL CHEMICALS (ICH)
The Swiss chemical industry has been characterized by a high share of
pharmaceuticals and a concentration on high value added niche products,
which has led to less interdependency compared with other countries.
Faced with stiff competition from former East Block and Asian emerging
countries, European competitors who formerly produced commodity items
are also switching to specialties, which has resulted in reduced prices
and profits.
More than 75 percent of Swiss exports are intra-company transfers to
foreign subsidiaries. The same hold true for imports. While the
domestic market volume has experienced only a very modest growth of 1-2
percent, exports have performed better.
American companies and subsidiaries of large Swiss multinational
chemical firms in the U.S. are especially strong in supplying organic
chemicals such as saturated acids, phenolic materials, esters and many
other organic/inorganic compounds, in particular heterocyclic compounds,
and vitamin and hormone intermediates.
U.S. suppliers have gained competitiveness due to the recent improvement
in exchange rates. Should this trend continue, the forecast for
incremental imports from the U.S. (see data table) may turn out to be
rather conservative.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 11,918 13,384 13,354
B) Total Local Production 19,740 22,736 23,128
C) Total Exports 16,779 19,584 19,976
D) Total Imports 8,957 10,232 10,202
E) Imports from the U.S. 588 657 690
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
17. DRUGS AND PHARMACEUTICALS (DRG)
The pharmaceutical sector with the big three - Ciba, Sandoz, and Roche -
is a key sector of Swiss industry. Pharmaceuticals account for 13
percent of total Swiss exports.
The Swiss pharmaceutical industry is both innovative and world-market
oriented. Our table with imports higher than the total market size
indicates that many imported products are refined, finished, packed and
reexported. R&D expenditures for pharmaceuticals amount to 20 percent
of ex-factory sales.
Faced with high labor costs, government impediments, and public pressure
in the field of bio- and gene technology, the sector has tended to shift
production, as well as R&D, to third countries. Escalating Swiss
government expenditures in a time of budget constraints have resulted in
actions to freeze contributions and to curb costs wherever possible.
This also applies to health insurance, which is mandatory in
Switzerland. Health insurance companies are advocating the increased
use of generics, and refuse to reimburse exorbitant doctor bills.
On pharmaceuticals and drugs, the profit margin of the wholesale and
retail level combined is 43 percent of the retail price which leaves 57
percent to the manufacturer. Sixty-two percent of dispensing is done by
the country's 1,614 pharmacies; the 3,068 self-dispensing doctors
account for 18 percent; hospitals 12 percent, and drugstores 8 percent.
Most common disease are heart/coronary, cancer, and those of the
respiratory and digestive tract. There is a persisting trend toward use
of over-the-counter and homeopathic products. Biotechnologically-
produced products in excellent demand encompass Hepatitis B vaccine,
human insulin, human growth hormones, alpha and gamma interferon,
Interleukin-2, erythropoietin, blood factor VIII and various
diagnostics.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 1482 1709 1743
B) Total Local Production 7195 8334 8543
C) Total Exports 8424 9811 9950
D) Total Imports 2711 3186 3150
E) Imports from the U.S. 218 268 290
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
18. AUTOMOTIVE PARTS AND SERVICE EQUIPMENT (APS)
After a decrease in the previous year, 1994 new car sales picked
up by 3.8 percent to 270,000 units; and second-hand cars by 2.2 percent
to 635,000 units. Attractive new models from Detroit and the favorable
exchange rate resulted in new U.S. car imports of 12,000 units, a
healthy increase over the 1993 figure of 10,000.
Garage owners, however, are not overly investment prone. With a
relatively young fleet circulating in Switzerland, service intervals
have become longer. Additionally, new legislation requiring exhaust gas
tests in two years' intervals instead of one has added to this attitude.
Also, as of October 1, 1995 individuals may directly import new EU-type-
approved cars without undergoing the formerly-required costly
inspection.
However, the newly implemented requirement for diesel exhaust gas
testing has spurred sales of these analyzers and boosted relating
tuning, spares and retrofitting. In the field of test benches the many
car makes on the market often favor a specific brand which is then
recommended to the dealers. The tightly organized OEM parts market is
gaining ground at the expense of non-OEM.
U.S. suppliers of automotive parts and service equipment will find
market opportunities in Switzerland. The most promising subsectors
include clutches, bearings, drives, electrical parts and pistons for
U.S., European and Japanese cars. In the field of car maintenance
equipment, there is only room for newly developed, outerperformance
equipment.
Major Swiss parts and service equipment importers/distributors are
annually invited to visit the BIG I show in Las Vegas.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 1,152 1,325 1,352
B) Total Local Production 73 84 86
C) Total Exports 26 30 31
D) Total Imports 1,105 1,271 1,297
E) Imports from the U.S. 129 148 152
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
19. PLASTIC MATERIALS AND RESINS (PMR)
The unformed plastic materials and resins sector has overcome the
recessionary period of 1990-1993. In 1994, imports grew by 8.8 percent
and exports by 10.3 percent. Exports are higher than local production,
since many products are further processed and reexported, according to
the Swiss Plastics Association (KVS Kunststoff Verband Schweiz).
While the field of blow molding (mainly packaging) is stagnating because
of environmental pressure by consumers, thin-gage packaging, injection
molded parts, housings and components are buoyant. Increased use of PET
bottles (recycled) is popular in the mineral water and soft drink
industry. In the construction industry, the downturn in new houses
could be balanced out owing to increased remodelling and refurbishing of
old houses, which is revitalizing the paint and varnish industry.
If the favorable dollar-franc exchange rate persists, the outlook for
incremental U.S. shipments is promising. U.S. shipments are substantial
in ethylene, propylene, acrylic and vinyl/chloride polymers, epoxy and
polyester resins and polyamides.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 811 965 1013
B) Total Local Production 493 608 638
C) Total Exports 780 928 974
D) Total Imports 1098 1285 1349
E) Imports from the U.S. 72 90 102
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
20. APPAREL (APP)
The value of apparel imports in Swiss francs has been declining since
1991. This may be a consequence of a very strong local currency which
appreciated by some 23 percent vis-a-vis the dollar. Other reasons are
the trend to shift production to, and buy cheaper apparel from, low wage
countries like China and India. In the five year period 1990-1994, the
gross weight volume of imported apparel increased by 18 percent. Of
total imports, women's apparel accounts for two-thirds.
Swiss production, plagued by high labor cost and customs duty levied by
the European Union on foreign country value-added products, amounts to
less than 10 percent of the market volume. The export share of high
price, high-end quality apparel is 75 percent of the total output.
U.S. apparel shipments to Switzerland, however, have continued to be
buoyant, and increased 15.5 percent in 1994. Best selling products are
jeans, jeanswear, licensed team sportswear and headgear, quality
bodywear and lingerie, T-shirts and sweatshirts. Oversized but
functional streetball and snowboard apparel and trendy disco items are
also very popular.
DATA TABLE (in U.S. $ millions)
1994 1995 1996
A) Total Market Size 3,681 4,041 4,003
B) Total Local Production 1,005 1,103 1,092
C) Total Exports 754 828 817
D) Total Imports 3,430 3,766 3,728
E) Imports from U.S. 33 40 44
Exchange Rates Used: $ = SF 1.40 1.25 1.25
NOTE: The above statistics are unofficial estimates.
Best Prospects for Agricultural Products
HORSEMEAT
Following implementation of GATT Uruguay Round results in 1995, tariffs
will be cut by 36 percent, resulting in increased access and a duty
savings of $58,000 (at current import levels). In addition, amendments
to the Swiss food law in 1995 allow retail sales of horsemeat in any
retail store, not just horsemeat butcher shops. This change, in
addition to Uruguay Round adjustments, is expected to significantly
increase U.S. exports.
DATA TABLE (in metric tons)
1994 1995 1996
A) Total Consumption 5,664 5,700 5,750
B) Total Local Production 1,521 1,450 1,500
C) Total Exports -- -- --
D) Total Imports 4,143 4,250 4,250
E) Imports from the U.S. 1,629 1,750 1,800
NOTE: The above statistics are unofficial estimates.
WINE COOLERS
Until 1995, with the revision of the Swiss food law, imports and sales
of wine coolers were effectively prevented, because there was no
definition under existing laws for this product. Per capita wine
consumption in Switzerland is one of the highest in Europe, and fruit
juices are also popular. With aggressive marketing, wine coolers could
be positioned in Switzerland as a new and unusual product of interest to
adults of all ages.
DATA TABLE (in hectoliters)
1994 1995 1996
A) Total Consumption -- 5,000 10,000
B) Total Local Production -- -- --
C) Total Exports -- -- --
D) Total Imports -- 5,000 10,000
E) Imports from the U.S. -- 4,000 9,000
NOTE: The above statistics are unofficial estimates.
WINE
Despite a general decline in Swiss wine imports, U.S. shipments have
experienced strong growth. Consumers have shown an increased preference
for low-priced wines in bottles. A retail price of about $8 to $10 is
seen as the upper limit for a quality wine sold in supermarkets.
Currently, there are minimal restrictions on red wine imports. As of
July 1, 1995, white wine imports will be limited by a 75,600 hl tariff-
rate quota. The implementing legislation for Switzerland's Uruguay
Round commitments eliminates the allocation of licenses for white wine
imports by historical share, and, most importantly, allows individuals
to apply for unlimited amounts of the tariff-rate quota quantity. As a
result, the new system offers an unprecedented opportunity for U.S. wine
exporters seeking entry into the $456 million Swiss wine import market.
DATA TABLE (in thousands of hectoliters)
1994 1995 1996
A) Total Consumption 2,957 2,955 2,952
B) Total Local Production 1,188 1,200 1,180
C) Total Exports 14 14 15
D) Total Imports 1,753 1,765 1,770
E) Imports from the U.S. 24 25 27
Note: The above statistics are unofficial estimates.
FRESH GREEN ASPARAGUS
U.S. exports of fresh green asparagus continue to enjoy buoyant demand.
U.S. fresh asparagus sales were valued at $14 million in 1994 (up from
$11 million in 1993) of which 99 percent were green. The U.S. supplies
96 percent of total Swiss fresh green asparagus imports, which amounts
to a consumption rate of around one half kilo per person. Switzerland
is an excellent market for U.S. fresh green asparagus because of the
Swiss preference for larger-stalked asparagus. The Swiss are willing to
pay a premium price for this product which U.S. exporters have found
almost impossible to sell in most other markets.
Recent reform of Swiss import restrictions on fresh green asparagus will
result in significant opportunities for U.S. exporters. Following
implementation of Switzerland's Uruguay Round commitments on July 1,
1995, Switzerland will switch from non-tariff protection to a tariff-
rate quota.
A tariff-rate quota with an out-of-quota rate of 8.64 SF/kg may be
applied to imports a maximum of forty-six days between May 1 and June 15
each year. Imports outside the period of restriction will face a low
tariff which will eventually be reduced to zero. During the period of
restriction, certain quantities of imports will continue to enter the
domestic market at the in-quota rate. The Swiss government will set
import quantities based on input from representatives of producer,
consumer, and importer groups.
Weekly allowable import quantities during the period of restriction will
be set well in advance. This will improve transparency in the market
and provide U.S. exporters with more certainty of specific import
opportunities during the period.
DATA TABLE (in metric tons)
1994 1995 1996
A) Total Consumption 3,919 4,005 4,050
B) Total Local Production 200 200 200
C) Total Exports -- -- --
D) Total Imports 3,719 3,805 3,850
E) Imports from the U.S. 2,485 3,650 3,680
NOTE: The above statistics are unofficial estimates.
SWEET CORN
Sweet corn is growing in popularity in Switzerland. Once considered a
novelty item, or something traditionally used as fodder (field corn),
sweet corn is now appearing with greater frequency in Swiss
supermarkets. The U.S./Swiss bilateral agreement includes a tariff
concession on fresh sweet corn to reduce the present 25 Swiss franc per
100 kilogram tariff to zero. This concession is expected to be
particularly advantageous to U.S. exporters competing against other
suppliers with significantly lower transportation costs, such as France.
DATA TABLE (in metric tons)
1994 1995 1996
A) Total Consumption 6,400 6,485 6,475
B) Total Local Production -- -- --
C) Total Exports 11 15 15
D) Total Imports 5,446 6,500 6,490
E) Imports from the U.S. 1,739 1,800 2,000
NOTE: The above statistics are unofficial estimates.
PET FOOD
Pet food has been a growing sector in the past several years, totalling
approximately $300,000 per year. The U.S. market share remains small,
but nonetheless offers opportunities to U.S. exporters. Several U.S.
pet food manufacturers have distributors in Switzerland, and products
are sold through both pet shops and veterinarians. Some Swiss
distributors say they would be more interested in carrying U.S. products
if the U.S. manufacturers would not insist on large (for Switzerland)
minimum orders.
DATA TABLE (in metric tons)
1994 1995 1996
A) Total Consumption 222,000 223,000 224,000
B) Total Local Production 153,486 153,000 153,000
C) Total Exports 15,734 16,000 17,000
D) Total Imports 84,266 86,000 88,000
E) Imports from the U.S. 5,666 6,000 6,500
NOTE: The above statistics are unofficial estimates.
BEEF (0111000)
Prior to implementation of the Uruguay Round, licenses for beef were
granted depending on the amount of domestic beef an importer purchased.
Swiss importers were able to earn higher profit margins on beef from
low-cost countries and preferred not to import relatively high-priced
U.S. beef, because they could not earn the highest profit margins.
American style (grain fed) beef is attractive, however, to Swiss
restaurants and hotels and there is demand for additional quantities
despite higher prices. Swiss consumers can afford more expensive cuts
of beef and are familiar with the special characteristics of grain-fed
beef.
Under the GATT Uruguay Round reforms, tariff equivalents calculated by
the Swiss for beef are:
SF per 100 kg. Ad val equivalent
HS 0201.1000 892 190%
HS 0201.2000 1,609 223%
HS 0201.3000 2,602 225%
HS 0202.1000 892 190%
HS 0202.2000 1,450 223%
HS 0202.3000 2,420 257%
Following Switzerland's implementation of its Uruguay Round commitments
on July 1, 1995, the U.S. will have access to an increased quota of
1,500 mt for high-quality beef. Beef imports meeting the USDA
requirements of "choice" or "prime" will qualify for the quota.
Several legislative changes to the Swiss licensing system for beef
imports will significantly improve U.S. access to the Swiss market.
First, under specific conditions, licenses will be allocated to "end-
users" such as restaurants for the first time. Second, consumer-ready
cuts will be accepted. Third, licenses will no longer be allocated
according to cuts (such as rumps or loins). These changes, along with
the increased quota amounts, will provide improved market access
opportunities for beef.
DATA TABLE (in metric tons)
1994 1995 1996
A) Total Consumption 122,314 20,000 120,000
B) Total Local Production 124,917 123,600 121,850
C) Total Exports 243* 100 50
D) Total Imports 12,544 14,000 16,000
E) Imports from the U.S. 1,186 1,350 1,600
* Shipments to Bulgaria
NOTE: The above statistics are unofficial estimates.
RAW TOBACCO (1211000)
Swiss manufacturers play a major role in national policy concerning farm
support and protection. Specifically, the Swiss cigarette manufacturing
industry has a long-standing arrangement with the Swiss government and
Swiss farmers to ensure that imports of raw tobacco enter duty free.
Manufacturers support Swiss tobacco production by buying all domestic
production at prices fixed by the government, but farmers are required
to limit production to 730 hectares. This policy makes it possible to
maintain Swiss producer prices at a higher level than imported goods,
but also provides cigarette manufacturers a means to purchase the
majority of its raw tobacco needs at low cost.
The U.S. is the third largest supplier of raw tobacco with shipments.
The implementation of GATT Uruguay Round concessions will indirectly
impact U.S. tobacco exports to Switzerland. There are currently no
tariffs applied to imports of raw tobacco into Switzerland. Significant
tariff reductions in Switzerland's export markets may help Swiss
cigarette producers in the near future, although all GATT cigarette
producing countries will benefit from MFN tariff reducti