Swiss synergy(2)

Strong bonds

Minsch from the Swiss Business Federation plays down the impact which the bilateral agreement will have on the Beijing-Brussels trade relationship.

"Some sectors in the European Union have not benefited from the Chinese presence. And also politically, some of the nations are opposed to the idea of market economy status for China," says Minsch.

"The chances of a Brussels-Beijing FTA looks extremely bleak."

Marie-Gabrielle Ineichen-Fleisch, state secretary for economic affairs of Switzerland, says the FTA talks have brought the two economies closer. She says China is the third largest trading partner for Switzerland, after the EU and the US.

Ineichen-Fleisch says the two sides are talking about an FTA, as the World Trade Organization did not lead to the envisaged trade liberalization, and the Doha talks ran into more rough weather.

There have also been no real breakthroughs in terms of market access.

Although Switzerland is a small market, it is important for China. "From here, you can quickly go to the EU countries. It helps Chinese companies to build footholds in Europe," Ineichen-Fleisch says.

Minsch says though Switzerland is a small country with 8 million residents, it is an ideal testing ground for Chinese investors, who have eyes on Europe.

Switzerland has four languages, which does not appear to be an advantage in the first instance. But Chinese investors can easily employ people who speak German, French, Italian and English.

"This is an added advantage as you can focus on the whole of Europe," Minsch says. "In Germany, it is difficult to find such employees."

Both Ineichen-Fleisch and Minsch feel that Switzerland offers political stability, a highly educated population, and a stable tax environment, all of which makes it a cost-efficient investment destination.

Ineichen-Fleisch says the FTA will also bring Swiss companies better opportunities in the Chinese market.

Many Swiss companies, especially in sectors such as pharmaceuticals, watches and luxury goods, are already doing well in the Chinese market, and having lower duties and tariffs will further improve their fortunes.

The small and medium-sized Swiss companies in most of these sectors are highly competitive and have high-priced products. Due to the strong Swiss franc, they need better access to export markets for making profits.

Esther Nageli, a lawyer based in Zurich, spent three years studying in Hong Kong and Shanghai in the 1990s. She says a free trade agreement will bring more opportunities for her and her clients.

She says historically, Switzerland has always had close relations with China. "We need to move faster in concluding an agreement," Nageli says, adding that the FTA will benefit multinationals and small, medium-sized companies with better market access.

"There is a growing and expanding group of middle-class people in China and I think Switzerland will benefit from their purchasing power," Nageli says.

She says the middle class will buy more food such as meat products, dried beef, chocolate and wine from Switzerland, especially as more Chinese tourists visiting the country.

Switzerland is part of the Schengen visa system that allows visitors to travel in 26 European countries on the visa, and is set to gain from a new wave of individual Chinese tourists.

"Even far up in the mountains, there is only cow and a church. But we see Chinese in the early morning climbing up the mountain, just to see the church," Nageli says.

"However, at the end of the day, these stories are important to foster trust and exchanges between the two countries."