Asian markets hold promise for Swiss exporters

In the face of slumping exports, trade groups are encouraging Swiss companies to diversify their business partnerships by expanding beyond traditional markets in the European Union - with Asian opportunities looking increasingly promising.

Total Swiss exports in October were down 16 per cent in real terms when compared with last year, with European sales continuing to be vulnerable to the economic slowdown.

The European Union still accounts for around 66 per cent of Swiss exports, according to OSEC, the national exporters association, which is encouraging companies to look elsewhere for sales.

OSEC spokesman Patrick Djizmedjian told Swisster that too often Swiss companies tend to seek opportunities close to Switzerland in areas they already know well.

Companies frequently prefer the “norms” of traditional trading partners while neglecting opportunities in other parts of the world, such as Asia, he said.

Swiss-based multinationals already have offices all over Asia, and some small and medium-sized companies have developed strong trade links with China.

But officials believe much more could be done to win business in Asian markets, and some Swiss firms have recently begun seizing opportunities.

For example, Integral Drive Systems AG, based in Technopark Zurich, opened a new office in China this year and predicts growth in sales of electrical energy systems in Asia, while the European market is over-supplied.

Schmid Rhyner, a varnishes and adhesives company based south of Zurich, is also seeking to profit from Chinese demand.

“It will be more important in the future - it’s a growing market,” a spokesperson told Swisster.

Saint Gallen-based engineering consulting firm Jansen AG was one of the companies hired to build the National Stadium in Beijing and the Pudong Exhibition Center in Shanghai.

“China is very important for Swiss companies because it is a very big market,” Djizmedjian said.

The watch industry is one sector in particular that stands to profit from Asian demand, he said. “The Chinese, they like Swiss watches; they like Swiss brands.”

OSEC said other countries in southeast Asia “are interesting markets for Switzerland, because these markets have a population of nearly 500 million and experts expect an economic increase there in the near future.”

The Swiss Center Shanghai (SCS) is a trade organization with offices in Switzerland and China that aims to foster trade between the two countries.

Nicolas Musy, managing director of the center, told Swisster that “to compensate the lack of exports to traditional markets, they [Swiss companies] are investing in China.”

An SCS study published last month said that while Swiss exports to the EU this year have plummeted, Switzerland managed a positive trade balance of 90 million francs with China.

Only four other countries, all located in Asia, can boast of such a positive trade balance.

Swiss exports to China soared by 19.4 per cent year-on-year, while those to the EU declined by 13.7 per cent.

Since then, SCS says more companies have shown an interest in its organisation, which currently helps more than 50 Swiss companies, with annual sales of between 40 and 400 million francs, to do business in China.

Chinese demand for infrastructure services is fuelled by a considerable 2008 government stimulus package, worth 595 billion Swiss francs, and recovery operations following the horrific May 2008 earthquake in Sichuan province.

A Credit Suisse study on Chinese market prospects in July described China as a ‘land of opportunity’.

This month, the bank led an 11-day trip for 14 clients to China and Vietnam to meet potential trading partners, including in the pharma sector.

Hans Baumgartner, head of small and medium (SME) business at Credit Suisse, went on the trip, telling Swisster that “in the long run, the Chinese market offers great opportunities for Swiss exporters.”

But bankers point out that exports to Asia currently have a limited effect on Switzerland’s overall economic performance.

Baumgartner said that “for a fast economic recovery in Switzerland the improvement in the German market (20 per cent of Swiss export volume) is crucial.”

Alessandro Bee, economist at Bank Sarasin, told Swisster that “Asian demand is a key driver, but we think that export demand in the US and in Euroland will pick up in the next quarters, so Switzerland does not have to wait until 2011 to benefit from its traditional markets.”