Banking on a range of alternative economic strategies
Famed for banks, the Swiss economy now offers a world of opportunity for small and medium-sized enterprises

The Swiss enjoy a reputation as a sensible and quietly prosperous people, thanks in large part to keeping out of Europe’s conflicts for more than 500 years. But the defining characteristic of this island of stability is the flexibility of its economy.

Slightly bigger than Wales, largely mountainous, with a population of seven million and few natural resources, Switzerland’s economy is in a constant state of adaptation to external factors, while looking ahead to emerging markets and trends. It has skillfully sold itself abroad, acquiring its enviably high standards of living, education and health care largely through international trade and banking, and by a thriving tourist sector.

The Swiss economy, which grew by 2.7 per cent in 2006, and by around 2.4 per cent in 2007, is not built on mass production or large industries. Instead, more than 99 per cent of the country’s 300,000 companies are SMEs—small and medium-sized enterprises. Many of these businesses have followed a niche strategy of concentrating on a small range of high-quality products. As a result, such enterprises have often been able to corner the world market in their own speciality.

Switzerland’s international reputation for the high quality of its exports, based on mechanical and engineering products, micro-technology, high technology, biotechnology, pharmaceuticals, banking and insurance, is built on heavy investment in research and development. Swiss products command high prices in world markets because consumers are ready to pay for high quality. But with such a strategy, Swiss companies dare not rest on their laurels. In Switzerland, a higher percentage of people work in research and development than in other industrialized countries, with R&D accounting for 2.7 per cent of GDP.

Swiss exporters can count on the federal government to help find new markets, as economic affairs councillor Doris Leuthard explains. “In a global world we have to get better access worldwide: we aim for open markets and we fight trade barriers,” she says. In 2007, she visited India and Japan, Indonesia, and the Gulf States in the continual quest to open up new international markets.
Aside from the adaptability of its industries, the stability of the economy is built on the gold-backed Swiss franc. Then there is Switzerland’s consensus-based democracy, which means taking the wishes of all parties whose interests would be affected by a change in legislation into account by submitting new laws to the popular vote if required.