Market opportunities in Switzerland Switzerland: Cooperations with Switzerland continues to be attractive

Editor: Stéphane Itasse

The world has changed radically for a few buyers and distributers: Since 15th January, the Swiss National Bank has again released the exchange rate of Francs. What does this mean for the co-operation of German and Swiss companies, explains Oliver Müller, director of Swissmechanic organisation.

What perspectives do the Swiss companies have in the current situation and how does it affect the cooperation with German partners?
What perspectives do the Swiss companies have in the current situation and how does it affect the cooperation with German partners?
(Photo: Swissmechanic)

The interview was conducted by Heinrich Morgenroth, Business Development Associate with Ahteneum Partners GmbH at 10119 Berlin,

What do you think about the integration of Swiss and German MEM industry?

Basically, a deep, historical connection of both industries is evident. As an organisation, we support, on one hand, the export orientation of our members. The small to medium enterprises export around 80% of their output in the EU region; by far, mostly to Germany. On the other side are the commodities that are imported in Switzerland from Germany and other European countries. Here, the integrations with German enterprises are very strong. Also because the major part of MEM industry is in German-speaking part. With its location in the middle of Europe, Switzerland naturally has a special position here; the small and medium scale enterprises are also great partners in international markets.

Which products are introduced for the Swiss manufacturing industry?

These are actually the basic materials of our industry production, from steel to semi-finished products. Switzerland is rather considered as a country poor in natural resources. Besides, the companies of direct neighbour countries are part of the production chain, with whom close collaborations are formed. Thus, for the production of parts for polymer processing machine, we send semi-finished products for heat treatment in Ruhr region in order to later finish them in Switzerland. Furthermore, the components of mass productions from Germany are high in demand, such as motors, gears and control equipment.

What do the buyers of Swiss small and medium scale enterprises generally emphasize?

They are driven by the same motives as the German buyers. Quality, on-time delivery and flexibility are certainly important. As Switzerland is a dear country as far as manufacturing is concerned, the focus is mainly on Extremely high-quality part components. In case of exchangeable components, price then becomes an important factor if functionality is not very significant for the entire product. So there are no specific Swiss characteristics in purchasing. We play in a very similar league.

Let’s compare SBB with German railways...

... As you know that the Swiss is world champion in precision and reliability. Thus, we cause unrest in the world. However, we are at par with Germany in the field of mechanical engineering.

So, the relationship between Swiss and German MEM industry is a relationship on par?

Exactly. Besides, there are close relationships, in which Swiss companies are suppliers of special solution. For the manufacturing of Swiss special machines for the production streets of automobile industry in Germany, the companies again use German components. As part of the production chain, it is particularly important for our companies that the functionality and quality of components is proper, which makes us a buyer of German products.

In which price and quality segment does the Swiss manufacturing industry predominantly purchase?

As we generally build challenging machines, the components are also challenging and accordingly high-priced. Unfortunately that has evolved into a standard and Swiss premium price-reflector.

There are differentiations made in the price formation of Swiss market as compared to other markets?

That is presently one of our greatest problems. Switzerland is also historically considered as a market where companies are believed to realise high prices. Therefore, Swiss companies often pay considerably more for the same products in Switzerland than in the neighbouring countries. There are concrete cases where the Swiss market is sealed off by exclusive contracts and also no other channels are provided. This is the case in all segments. This also functions to some extent as long as the Swiss companies could forward it smoothly in the form of added value.

What has changed with the release of Franc exchange rate?

In the course of release of Franc exchange rate, we have reached a point where it does not function like this. Swiss companies had to compensate for a price increase of 15% within shortest time period. If then the import goods are not released in Switzerland and additionally the premium price must be realised, the demand for German products also weakens in the medium term. This is evident, for instance, in the purchase of hydraulic components: A German company has exclusive contracts with a Swiss trading company. This results in a high price in Switzerland. A Swiss manufacturer produces the components and exports the end products again. We cannot afford the extra amount in purchase in the course of strong Francs and the companies avoid the normal trading channels because they demand very high prices.

What do you stand for in this tense situation?

For me, it is important to determine: The impression misleading that Switzerland is not capable of providing products at internationally rational conditions. We therefore strive that we can offer marketable and compatible prices and services.

What do you expect in the course of German MEM companies?

It is wrong to assume from the outset that Swiss products are expensive. We are very closely associated with the well-going German economy and there are adequate orders in the customer-supplier relationships. Here, it must be ensured that the prices remain compatible. Try to give the same conditions to us as the buyers in other countries because you can secure this market for the long-term with this. Forget the Swiss premium in Switzerland; if you carry it further, you choke off the industry in Switzerland as reliable trading partner.

If you are arguing from the point of view of German machine builder: What can they expect from close collaboration with Swiss MEM industry?

There are many small Swiss enterprises, which fulfil your high quality requirements. Therefore, I would like to bolster German companies: If you have a challenging task, keep in mind that, in Switzerland, there are perhaps people who have solutions. I can guarantee this from my own experience in sales of German machine builders.