Switzerland is one of the most stable political and economic systems of the world. With changing times, the country has opened up to foreign ventures and employs a whopping 71 percent of the working population in the tertiary and service sectors. It is followed by the manufacturing sector while barely more than 1 percent of the people are involved in the agro businesses. Switzerland has been providing a safe investment opportunity to many foreign businessmen till date. In fact, a majority of the Swiss corporate sector is based on the activities of the SMEs. As more and more foreign capital pours in the economic scenario of the country, it is becoming an even better investment haven for the businesspersons and investors alike.
The Swiss economy is composed of many large and small sectors that bring loads of revenue to the people and the companies. The industrial sector in Switzerland has been predominated by the watchmaking and the food processing industries. Nestlé has been one of the most well-known multinational corporations originating in and operating from Switzerland. In fact, the company has been able to win hundreds of accolades around the world and has created several brands, 29 of which reap an annual sales turnover of a mind-boggling $1 billion. The extensive industrial section is also composed for pharmaceutical companies like Roche and Novartis. Sika AG is one of the companies producing chemicals for industrial use. More companies are coming up and making their presence felt in Switzerland. Be it international brands like Coca Cola or SMEs of the various cantons, there is a vast scope for other industries in the state as well.
The agricultural sector in Switzerland is well known for producing amazing varieties of Swiss cheese. This is a unique kind of cheese that is available in hundreds of varieties and is made with authentic Swiss recipes. Though Switzerland has now become more in sync with the European Union policies, the country still has a very protective and conservative attitude towards its agro sector. There are extensive rates of domestic subsidization, high tariffs and government encouragement for increase the domestic produce. The agro sector, thus, enjoys a lot of privileges from the authorities and continues to flourish. 60% of the food consumed in the country is produced locally. The European Union provides only 35% subsidy, which is almost half of the 70% subsidy provided in Switzerland.
Talking about trade, Switzerland manages a favorable trade balance. As per the World Factbook, Switzerland is the 18th largest importer and the 20th largest exporter in the world. Switzerland finds one of their largest trading partner in Germany. About 29% of Swiss imports and 21% of Swiss exports move to and from Germany. The United States is ranked number 4 in Swiss imports and second for exports. Italy, France, Austria, Japan, China and Turkey are the other major trade partners of Switzerland. Switzerland is a highly developed country that has a very skilled workforce. The Swiss people are also known to be inventive, analytical and innovative. This is also one of the reasons why they have more than 100 Nobel Prize Winners.
The manufacturing sector in Switzerland focuses largely on the precision instruments of high tech products. You would find watches, glycosides, vaccines, medicaments, precious jewelry and a lot of orthopedic appliances being manufactured in Switzerland. Switzerland does not export much of raw metals or ores. Instead, it focuses more on finished and refined products. Agricultural products do not make up for a huge chunk of the Swiss produce even though Swiss cheese, chocolate and wine are hugely popular worldwide. Cars, on the other hand, make for one of the largest imports by the country. One of the biggest advantages of Swiss workforce is that the people are quite peaceful and they are known to be very industrious. Therefore, any kind of trade that involves high level of human precision must employ only Swiss people.
With a multitude of small and large scale industries and trades operating on the Swiss soil, let’s have a look at all those industries that have made a huge impact on the Swiss economy.
The Swiss Watchmaking Industry
If any watch or clock in the world has been imprinted with these words ‘Swiss Made’, you must believe that it has been made with the highest levels of precision and comes with an equally dependable quality. Swiss watches in particular have been playing a primary role in making ‘Swiss Made’ one of the biggest names in the world. The Swiss watches are known for their precision and their beautiful designs. The quality of these watches has been par excellence ever since they were first introduced to the world. A watch is considered to be Swiss Made if it has a Swiss movement. This means that a watch whose movement in Swiss encased or the one that has finally been controlled by the manufacturer in Switzerland would be considered Swiss Made.
Though there are many controversies regarding this rule, the centuries old Swiss watchmaking industry has only been gaining a lot of repute lately. You should also note that a watch that says Swiss Quartz is also a genuinely made Swiss watch. However, this label has often been exploited by foreign watchmakers. The story of the Swiss watchmaking industry started in the 16th century Geneva. As jewel wearing was banned by Jean Calvin, a new art was born and it was called watchmaking. Therefore, Genevan watches became the hallmark of the best quality watches that one can find. The industry later shifted to the more peaceful environment of the Jura Mountains. The perpetual watch, the self-winding watch and the chronograph was first introduced by the Swiss watchmaking industry only.
Though Switzerland was already exporting more than 60,000 watches yearly, the mass production of these watches started only in the wake of the 20th century. Standardization and new technologies worked in the favor of the watchmaking industry. Since then, Switzerland has been the top gun in making exceptional quality watches that are envied by other watch markets of the world. Jaeger-LeCoultre, Omega, Rolex, Patek Philippe, Vacheron Constantin, Tissot and Breguet have been the top Swiss manufacturers of watches that have a global presence and are loved by the fans.
The Swiss Pharmaceutical Industry
More than 30% of all Swiss exports are credited to this industry. The Basel area has become well known around the world for its pharma industry base. Hoffmann-La Roche and Novartis are one of the biggest pharmaceutical companies of all times that belong to Switzerland. However, as foreign investments are being encouraged on the country, more than 41 life sciences companies have opened their international headquarters in this region. 29 more companies operate through their regional headquarters in Switzerland, making it the heartland of this sector of the economy.
Roche and Novartis are both based in Basel area. Other important pharmaceutical companies include Ferring Pharmaceutical, Naari, Janssen-Cilag, Frewitt, Octapharma, Merck Serono, Mondobiotech and Galderma. The domestic pharmaceutical companies are continuously evolving and developing their base. As the country has become a hub for such companies, the competition is really high and each one of the manufacturers is trying to bring in innovation and excellent research opportunities in order to excel in their job. Some of the non-domestic pharmaceutical companies like Onyx Pharmaceuticals, Medtronic, Biogen Idec, Celgene and Amgen have established their offices in Switzerland, making it an even better place to take the pharmaceutical industry forward.
The whole pharmaceutical sector is based on a single concept-innovation. All the companies based in Switzerland are driven with an urge to bring something new for their customers and industries. This is why none of the companies, especially the domestic holdings, adopt a closed or conservative approach. They are more open to opportunities and even risks. It is important to be noted that this industry produces more than 30,000 products for the users. Moreover, more than 90% of this industry works exclusively in specialties, which is a remarkable number as compared to the world averages. The specialties include fragrances, pigments, lacquers, diagnostic pharmaceuticals, specialty chemicals, crop protection agents and many more. About 40% of the sales are generated from America and Europe, followed by Asia. Switzerland itself has a very small domestic market for these products.
The Swiss Food & Beverage Industry
The food & beverage industry of Switzerland finds momentum because of the agriculturally favorable economic conditions. Nestlé has become the hallmark of this industry in the world. This 140 year old company works extensively in food processing and has numerous brands like Cerelac, KitKat, Maggi and many more. This brand has been bringing billions of dollars in the form of sales revenue to the country and has been ranked in the top 10 of the Fortune Global 500 as well. The dairy industry, which includes the famous Swiss cheese is also flourishing under the food & beverage industry only.
In such cases, we must specially mention the Swiss chocolate industry. Though the ingredients of these chocolates are imported from different lands, it is the recipe, the shape and the great quality of chocolate that has been loved by the people around the world. Most of the chocolate made in Switzerland is consumed domestically and only a small percentage is exported out. You must be surprised to know that the Swiss have the highest rate of per capita chocolate consumption in the world. 53% of the chocolate that is left after domestic supplies are exported to different countries, Germany being one of the top buyers. Though chocolate does not make up for a significant amount of exports for the country, it still manages to bring in a lot of money.
The Swiss Tourism Industry
The Swiss tourism sector is highly developed and boasts of a robust infrastructure. The mountains and scenic landscapes of this country have been attracting thousands of tourists to this place since many years. This is why, there is a great market for all tourism related activities and businesses in this area. The highest concentration of hotels is in Grisons and Valais, which are in the Eastern part of Switzerland. Central Switzerland also has 9% hotels. The highest lodging ratio was also record in Grisons which happened to be 8.3. Most of the lodging nights were booked by Germans and the British followed by Americans, French and finally the Italians.
The total volume of financial gains coming from this industry are valued at 35.5 billion Francs. The total gross financial volume from tourism is 14.9 billion. This makes for about 2.9 percent of the GDP of the country. Therefore, tourism can be labelled as one of the fastest growing and promising business opportunities in Switzerland. Zurich, Bern, Geneva, Lausanne, Canton Ticino, Lugano, Ascona and Basel are some of the favorite destinations for global tourists. The Swiss Alps continue to be the top attractions for the people visiting Switzerland.
The Swiss Banking & Financial Industry
The financial sector has been one of the most promising sectors of the Swiss economy. Most of the Swiss workforce, accounting to 71% in total, are employed in the tertiary and service sectors and banking services make for one of the golden opportunities for the skilled Swiss residents. The financial sector accounted to more than 11.6% of the total Swiss GDP in 2003 and it has been on a steady rise ever since then. More than 5 percent of Swiss workforce working in the tertiary sector is working for the financial industry.
The concepts of national sovereignty, a stable political environment and the policy of neutrality favored the growth of a baking sector in the country. It is because of the neutral attitude of the country that the foreign nationals also recognize the Swiss banks to be better than any other financial institutions around. It is estimated that about 28 percent of offshore funds are kept in the Swiss banking instructions. Apart from the domestic banking sector, you would also find the Bank of International Settlements based in Basel. It is an institution that helps in bringing the central banks of the world together. The bank and many other offices of international organizations like the UN, were based in Switzerland because of its neutrality.
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