Swissness-Act Switzerland: How worthwhile is “Made in Switzerland”?
Since the time the new law for the protection of the Swiss trade mark (Swissness law) has come into effect, Swiss industry has also started wondering how this law is going to affect them. Which machine can still be called "swiss made"? An analysis of this situation.
Products and services from Switzerland have a good reputation among consumers as they are always associated with quality, reliability and exclusivity. "Swiss made" is therefore used by companies as a marketing tool. The Swissness law, that is effective from 1 January 2017, is intended to prevent this abusive use of "swiss made" mark. This bill regulates the use of the labels "Switzerland", "swiss made", "Made in Switzerland", the Swiss emblem and the crossbow logo. This measure is to ensure the security of Switzerland’s credibility in the long run.
What is “swiss made”?
At least 60 percent of the production costs have to be incurred in Switzerland, in order for industrial goods to be allowed to use the label "swiss made". All manufacturing costs as well as now even the cost of research and development, quality assurance and certification can be included in the calculation. Additionally, at least one substantial step in manufacturing has to be done in Switzerland. Now, many industrial companies are questioning the importance of the Swiss trade mark for their products. Prof. Ralph Lehmann and Kathrin Dinner of the Chur University of Applied Sciences (HTW) have verified the value of the "Switzerland" brand for the industry. The study is based on the survey done with the members of Swissmem industry association.
How worthwhile is “swiss made”
"It has been shown, that internationally active SMEs use the "swiss made" label for their products , which in turn results in more willingness of end consumers to pay more (B2C)", Lehmann states in the summary of study. This readiness is however lower for business-to-business customers. No more than 15 percent of respondents can demand ten or more percent based on Swissness label.
The University of St. Gallen comes to a similar conclusion in its study "Swissness Worldwide 2016". In the B2C sector, buyers of luxury watches are ready to pay a premium of more than 100 percent for "swiss made" sign. For cheese and cosmetics it is more than 50 percent and customers are even willing to pay seven percent more for skiing vacations. The Swissness premium is the lowest for airlines, information and communication technology and mechanical engineering (B2B).
Evaluating expenses and income
And yet, the label of origin "Switzerland" is increasingly used for marketing purposes. The Institute for Intellectual Property (IGE) has concluded in its study that the new registrations of brands with co-brand Switzerland rose from 1331 to 5688 - a leap of around 427 per cent between April 2000 and April 2010.According to the study, MEM currently plans to continue to use the Swiss brand as a drawing card. Currently 46 percent already use or want to use Swissness in the future (see graphic). It is to be seen, whether this trend will change after this new legal regulation. The fact remains that the use of "swiss made" is an entrepreneurial decision. The benefits must outperform the costs. On average, the MEM industry expects a Swissness price premium of 5 to 10 percent. "Especially for smaller SMEs in mechanical engineering benefits of Swissness do not make sense considering the implementation costs," says Lehmann.
Protecting the brand “swiss made”
The Swiss Federal Institute of Intellectual Property (IGE) is promoting the enforcement of this bill not only within the country, but also abroad. The IGE has been monitoring the register of brands in Argentina, China including Hong Kong and India for the past four years. According to Felix Addor, director of the IGE, more than 630 objections have been submitted since then. From July, the brand registries in the USA, Great Britain, Germany and France as well as the European Intellectual Property Office in the Spanish province of Alicante will also be supervised. However, not all of the IGE's objections are accepted by the respective countries. Some applications are also rejected. "In borderline cases, we from IGE side, hold the decision of the respective brand register," says Jürg Herren, Deputy Head of Legal & International Affairs at IGE.