Swiss companies strive to remain competitive

Daniel Küng of Switzerland Global Enterpise has praise for Swiss companies Keystone

Export-oriented Swiss companies have accomplished a great deal in the year since the Swiss National Bank did away with the euro peg, but they’re not yet over the hump, says Daniel Küng, head of Switzerland Global Enterprise.

“You have to tip your hat to these companies – it’s commendable what they’ve done recently in order to remain competitive,” said Küng in an interview in the Sunday newspaper NZZ am Sonntag.

A survey conducted by Switzerland Global Enterprise shows that companies have taken a range of actions in order to remain competitive, among them optimising procurement, calculating in euros or dollars, reducing salaries, sinking production costs, raising prices, searching for other lucrative markets, or pulling out of foreign markets.

More than 90% of Swiss exporters do business in Europe, and thus have been affected by the SNB decision, says Küng.

He counsels the companies to diversify; not to concentrate too exclusively on business in Europe. The biggest chances for growth for small- and medium-sized businesses lie in countries with a developing middle class, in Asia, Latin America and to an extent in the Gulf states, Küng said.

Many companies have fought to retain their market shares, often at the expense of profits, according to Küng. Almost 75% of companies reported a decrease in margins.

One problem with companies’ current strategies is that they have little to invest in innovation, and that will have an effect on competitiveness over the medium term, Küng said.

He highlighted the importance of companies that will add value to Switzerland, such as the American biotech firm Biogen, which brought 400 jobs and a billion-franc investment to Solothurn.

But whereas 500 foreign companies new to Switzerland brought 3,500 new jobs in 2005, the number of new firms dropped to 274 and the number of jobs to 800 in 2014, said Küng. Reasons for the decline include not only the strong increase in the value of the Swiss franc, but also the uncertainty of the political situation in Switzerland in connection with a recent spate of people’s initiatives.