China’s investors are looking for investment opportunities worldwide. According to Osec, Swiss Office for commercial expansion and business promotion, the number of Chinese companies investing in Swiss companies or setting up a new business increased steadily during the last years. It is expected that more and more investments will take place in the future.

Selling points and, frequently, additional factors for investment are the local specifics and the business environment. It may be worthwhile keeping yourself up to date so you can effectively play the ‘local’ card.

A Swiss entrepreneur will have many good stories to tell about the local market, which will be the main criteria for an investment, and will discuss these in addition to all the usual factors that make a company unique. The following gives a short overview of some of these ‘local stories’.

Employee matters

An investor will find a well-educated and multilingual workforce in Switzerland, which is known for providing high quality, reliability, a strong work ethic and the longest annual working hours in Europe. In any given industry, businesses have a choice of well-qualified academic professionals as well as practically trained employees. The workforce is very international and the liberal labour law gives employers significant flexibility. In particular, employment agreements may, without giving a reason, be terminated by complying with the contract or (if there is no contractual agreement between employee and employer) the statutory notice period. Depending on the duration of employment, the statutory notice period is between one and three months.

Tax issues

In cases where new jobs will be created, the investing company may obtain specific support from tax and development authorities. The support available includes assistance or subsidy with land or premises, waiving of work permit requirements, tax holidays of up to ten years and training subsidies.

Swiss tax laws offer various corporate structures for optimising the taxation of an international group of companies. The effective income tax rate for holding companies amounts to 7.83 per cent. Other attractive tax regimes for intellectual property (IP) companies, financing and international trading activities are available, and these offer effective tax rates between 8 and 11 per cent.

Operating companies in other sectors pay income tax at an overall effective tax rate of 12.6 to 24 per cent. With a so-called principal structure/model (where the company is engaged in commercial activities primarily outside Switzerland and the Swiss principal handles only centralised functions such as management, finance, IT, human resources, research and development, etc) the total tax burden can be reduced to 5 to 10 per cent. Tax competition among the cantons also means that some cantonal tax regimes are very interesting for natural persons.

Located in the centre of Europe

By doing business in Switzerland, foreign investors are right next door to three of the four largest European markets – Germany, France and Italy. Switzerland’s geography (it takes three to four hours to get to Paris, Frankfurt and Milan by train) is the basis for its highly internationally interconnected economy and gives it the role of an important transit state within Europe. Although Switzerland is not a member of the European Union, bilateral agreements enable cross-border operations to function well. This provides access to a European market with nearly 500 million customers.

Further benefits

Switzerland’s political system is very stable and predictable, which is a strong argument for investors being in a new country. Moreover, the federal structure of Switzerland’s governmental bodies ensures high efficiency. Chinese investors would be close to research centres and universities. Switzerland invests almost 3 per cent of its GDP in research and development. It also hosts some of the leading universities in technology matters: the Federal Institutes of Technology, ETHZ in Zurich and EPFL in Lausanne. The ETHZ is the highest-ranked university in Europe outside the UK. Not surprisingly, Switzerland is, according to international surveys and rankings, one of the most innovative countries and has the most patents per 100,000 inhabitants worldwide.

Key executives relocating to Switzerland will enjoy a very safe country with an excellent healthcare system, high-quality housing and very good quality of life. The Mercer Survey (Mercer 2011, Quality of Living Survey), for example, found that the Swiss cities of Zurich, Geneva and Berne are among the top ten cities worldwide regarding quality of life. Many multinationals, such as Acer, eBbay, Kraft Foods, McDonalds’s, Nissan, Parker Hannifin, Procter & Gamble or Suntech Power, have therefore chosen to move their European headquarters to Switzerland. Switzerland ranks first in the Global Competitiveness Index 2010–2011 (issued by the World Economic Forum). All in all, Swiss companies are likely to demonstrate a very business-friendly approach towards Chinese investors and offer a very beneficial environment.