What makes Switzerland the most competitive business centre in the world?
Patrik Wermelinger, Head of Investment Promotion at Switzerland Global Enterprise (S-GE) talks about the efforts taken by his organisation to promote Switzerland as a preferred business location for innovative foreign companies and to attract foreign investment.
In the interview, Patrik explains how companies can tap into Switzerland’s innovation clusters, large talent pool, and a well-established political, economic and financial framework to realise new potential. With a low debt-to-GDP ratio, a high spend on R&D per capita and access to clean energy, Switzerland provide the perfect environment for entrepreneurs and big corporations alike to establish, expand, and be ahead of their competition.
The interview is part of our series of paid (and thus open access) place features aimed at introducing you to high-potential business locations around the world – and to the person in charge of foreign investment attraction and economic development promotion. If you’d like us to introduce you to Patrik – or feature YOUR city or region, please contact us.
Patrik, Switzerland was just ranked the world’s most innovative country, by the World Intellectual Property Organization. To your mind, what makes it so successful in being innovative?
Switzerland is a country with 99.7% SMEs. Almost 10% of them are exporting and are often world market leaders in their niche. Due to global competition, only top quality products can ask for a “higher price”. In the last decades, the Swiss Franc got stronger and stronger. Swiss SMEs needed and still need to constantly innovate their value chain, their production process, integrate future technologies and find new ways to stay competitive globally. This agility and aspiration to respond to customer need better than their competitors is driving innovation in Switzerland.
With 3% expenditure of Switzerland’s GDP in R&D, Switzerland ranks top in Europe. A lot of new inventions are made by Swiss SMEs and foreign multinationals that have set up their European or global R&D centres in Switzerland.
And a third reason why Switzerland is innovative is the fact that we have excellent universities, attracting top talents worldwide and offering leading research facilities and labs to find solutions for the world’s challenges.
You are the Head of Investment Promotion at Switzerland Global Enterprise (the organisation in charge of promoting investment and entrepreneurship in Switzerland). What does a usual workday look like for you?
On my workdays, I mostly manage cross-functional and cross-country teams. It is everyone’s ambition within Switzerland Global Enterprise to add value for our clients and partners, with the ultimate aim to create value for Switzerland.
Together with my team, we enable the trade commissioners who are working at the Swiss Business Hubs in ten markets to most efficiently promote Switzerland as a leading innovation and technology location and identify the tech leaders in their countries.
Together with the economic promotion agencies at the regional and cantonal level, we analyse the FDI development in Europe and Switzerland and develop jointly how to better address and anticipate our customer’s needs of today and tomorrow.
How has the coronavirus impacted Switzerland as an investment location?
Switzerland is and has been a resilient location, as well during the pandemic. Even if several major FDI projects have been postponed to next year, we saw many investments in Switzerland announced this year and ongoing high demand.
Covid-19 has had an impact in selected industries in the export business and heavily for all companies in the tourism, gastronomy and event industry. Our government assured us in a very fast and pragmatic way to make state-granted loans accessible to every company up to CHF 500k at 0% interest. In only a few weeks after the decision, more than 100,000 companies received their loans in their bank accounts.
Other measures to support Switzerland’s economy have been taken as well. Thanks to the debt brake (country expenditure may not exceed receipts over an economic cycle) which was introduced in 2003, Switzerland today has a very low Debt/GDP Ratio at 41 % (2019). This ensures that the attractive tax climate and Europe’s lowest VAT will stay at that level for quite some time.
The unemployment rate is at a low of 3.3% (November 2020).
Which would you consider the main challenges or pitfalls to avoid, when promoting a country such as Switzerland to potential foreign investors or skilled workers in these testing times of the pandemic?
Many countries, their economies and people have been and still are hit heavily by the pandemic. In such difficult times, it is more important than ever to empathically explain how future technologies can help everyone to build a better world, a more human world, a more sustainable world.
Switzerland can contribute to solving major problems with its globally leading life sciences industry, by applying advanced manufacturing solutions, and by outstanding expertise in clean technology. Thanks to leading Swiss research institutes and some bright minds who are working in artificial intelligence and robotics at these institutes, new human-machine collaborations will emerge – Made in Switzerland.
What does it take nowadays to be competitive – and ultimately successful – as an investment location and business region?
Globally active companies need access to the best talents, world-leading innovation and technology ecosystems, from where they can access their most important markets. Financial and political stability, liberal labour laws, a broad talent pool combined with a straight forward immigration policy is expected by foreign investors. Switzerland offers that and much more.
Locations that analyse global trends, anticipate the needs of their clients, compare their offering with key competitors and do not stop to develop their location promotion driven by their clients’ feedback will stay competitive.
Which trends do you observe currently, likely to impact the ability of countries or regions in Europe to attract talent or investors?
Attracting talents first and companies will follow or attracting foreign companies first and talent will follow is a chicken and egg situation: What comes first?
Some business regions in Europe started to run campaigns targeting talents by offering a high quality of life and jobs, even with some incentives to attract them. Once foreign talents did successfully locate, those regions have a better argument to attract foreign investors. Top talents can globally choose for which company they would like to work.
Countries need to make sure that their immigration process is lean, harmonised and as digital as possible. Also here, some European actors have put in place special tech permits and fast tracks to address this need. Driven by a more digital world, locations need to even more precisely describe how they add value to globally active companies.
Apart from the difficulties which we are experiencing due to the coronavirus pandemic, in terms of being able to attract talent and investors: has the current situation also benefited Switzerland in some ways – for example in that it forced innovative solutions, or produced new (digital..) business opportunities?
In times of crisis and uncertainty, investors need a more stable, predictable and resilient location to invest. Switzerland is this location, having a long tradition of stability. It has one of the lowest debt/GDP ratios in Europe, is proud of its social peace and has a long successful immigration model. On top of our multiparty political system and direct democracy assure balanced law-making which takes time, but after many different thoughts and ideas that all parties have been taken into consideration, the results are accepted by everyone once it comes to a vote.
At an organisational level, we continued our marketing activities, reshaped our key messages to be more targeted to how Switzerland can add value to globally active companies. The main technological fields that we focus on to position Switzerland as a leading location (AI, Personalized Health, Robotics, Advanced Manufacturing and Blockchain) have become even more relevant during the pandemic. In eleven countries, we were measuring positive click-through rates and gained insights about customer behaviour and needs.
Securing stakeholder buy-in is often a challenge for organisations charged with promoting a country or region to potential investors and talent. How do you approach this at Switzerland Global Enterprise?
We closely cooperate with different stakeholders on a national, regional and cantonal level. On the national level, we have found great ways to team up and find more synergies to jointly promote our country. Every stakeholder has its particular strength. To manage the best possible setup, we are continuously optimising the alignment of all stakeholders along the customer journey. To achieve that, we meet in different strategic and operational groups a few times per year.
We recently published a white paper on the climate emergency and its implications for place branding. In it, leading place brand specialists to highlight the urgent need for place branders to account for climate mitigation and resilience in economic development and place positioning strategies. To your mind, how important is a location’s climate resilience nowadays, for its ability to attract investors and talent?
The competition for innovative companies is evolving over the decades. While initially, the competition was about corporate and individual taxes, it is today about future technologies and having the institutions and talents to implement those technologies into the products and services of tomorrow.
Switzerland, in addition to the prior mentioned advantages, is offering a very resilient location and has already, decades ago, introduced various environmental protection and clean energy measures. As a result, today many Swiss swim in the clean waters of the river Rhine, where large life science companies also have had their manufacturing plants along the river. The air in Switzerland is pure, its rivers and lakes are clean in a way that one can drink out of them without any health consequences.
So yes, it is important to find the right balance of being an industrialised country and protecting the climate and environment at the same time.
Which countries around the world do you consider great examples in terms of their approach to promoting or positioning their location? And which place branding campaigns or strategies have inspired you recently?
I like the approach of younger IPAs, like Invest Chile. A place branding strategy that inspired me was the GREAT Britain Campaign or Finland’s Polar Bear Pitching, an initiative where startups were pitching to investors standing in a hole in the ice.
Thank you, Patrik.
Connect with Patrik Wermelinger on LinkedIn or follow him on Twitter. Learn all about doing business in Switzerland and how Switzerland Global Enterprise helps investors and businesses reap the most out of their investment here.
Our interview with Patrik Wermelinger of Switzerland Global Enterprise is part of our series of (paid) features introducing cities, countries and regions as potential places for talent and investors to consider as a location to live and invest in. If you’d like us to introduce your business location to our readers, please get in touch.
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