Switzerland is located at the crossroads of several European trade routes, thus relying heavily on external exchange. Today it is one of the largest commodity trading centers in the world. And its well-established prosperity is dependent on its external trade due to lack of mineral resources and the small size of its domestic market. This also has stimulated Swiss manufacturers to move outward. They need international markets to be able to profit from their investments in production, research, and development. Considered to be one of the most "internationalized" economies, Switzerland is part of the most developed countries in the world. Imports raw materials and semi-finished products and exports manufactured products with a high degree of processing. The country is accustomed to importing raw materials and semi-finished products and exporting manufactured products with a high degree of processing.
Many Swiss companies practice a so-called "niche strategy" that focuses on a limited range of highly specialized products. This strategy has proved to be successful, so modest companies have come to dominate the world market in their activity field. The chemical industry is an eloquent example in this regard, niche products representing approx. 90% of marketed products. One of the advantages of this strategy is that it stimulates the diversification of production. Thus, the chemical industry offers over 30,000 different products. Swiss products are sold at high prices on foreign markets, as consumers are willing to pay for quality and innovation.
In certain sectors, over 90% of goods and services are exported. The most well-known are the watch industry products, chocolate, and cheese. However, mechanical, electrotechnical, and chemical industries have over 50% of Swiss exports. Switzerland is one of the main exporters of products such as textile machines, paper industry machines, printing machines and materials, high-precision machine tools, lifts and escalators, railroad rack construction, etc. But many of the components of these products are manufactured abroad. Switzerland excels also in exports of services, particularly counseling management, insurance, and tourism.
Key centers for trading and shipping include the canton of Zug and the city of Geneva. The logistics sector and the most modern merchant navy in the world are concentrated in Basel. In Switzerland, they are among the biggest global players, such as Nestlé, the largest food company in the world. Although approximately 97% of employees work outside of Switzerland, the company's base is Vevey, located on Lake Geneva. Other multinational companies, such as Kraft, have chosen Switzerland as the place for their European headquarters.
Free Trade Agreements
With the economy significantly dependent on external processes, in the context of increased pressures of globalization, Switzerland has a modern approach to specific issues related to international relations. The external economic policy is thus oriented on three axes. Agreements with the European Union, free trade agreements concluded within the EFTA or bilaterally and the progressive liberalization of international trade, through the continuous improvement within the WTO (World Trade Organization).
Although Switzerland is not part of the European Union, it is its main trading partner. The concern to mitigate the negative economic consequences due to non-participation in the European single market resulted in the signing in 1999 of a first package of seven bilateral agreements with the EU (called "Bilateral Agreements I") in areas of common interest: free movement of persons, air transport, land transport, agriculture, technical barriers to international trade, public procurement, research and development.
A second series of eight bilateral agreements ("Bilateral Agreements II") was concluded in 2004 and refers to Switzerland's cooperation with the EU in new areas of common interest: agricultural products, environment, statistics, taxation, anti-fraud, pensions, training, cooperation in the fields of justice, police, asylum and migration.
The European Free Trade Agreement (EFTA) does not play a decisive role in a global context, but the importance of the regional level is not negligible for Switzerland, the economic weight that it has in the association can determine significantly its policy.
From an institutional perspective, the Swiss Economic and Trade Policy, both domestically and externally, is developed and implemented by the Federal Department of Economics through the State Secretariat for Economic Affairs - SECO. Externally, the main mission of SECO is to initiate, negotiate and conclude agreements on economic and trade cooperation in order to open new markets for goods, services and investment Swiss. This center has a constant concern over the private sector in developing countries, emerging markets and transition economies, with the main objectives of developing trade, increasing the capital invested and transferring know-how to these markets.
Switzerland’s top 10 exports
Exported goods and services in Switzerland account for 65.1% of total Swiss production, estimates the Central Intelligence Agency’s World Factbook. Below, you can find an analysis focused only on exported products.
Looking from the continental perspective, 45.9% of the valuable goods are delivered to European countries and 35.1% are sold to Asian importers. The total exports to North America hold 14.9%. Latin America recorded the lowest percentage (1.8%), with the exception of Mexico, Africa (1.2%) and Oceania (1%) led by Australia.
The total amount obtained from exports in 2018 was 310.7 billion dollars, which means about 37,500 dollars for every resident, reporting to only 8.3 million population in Switzerland. Also, compared to last year, the unemployment rate in Switzerland decreased to 2.7%, from 3.3%.
Based on the World’s Top Exports rankings, you can find below the top 10 categories of exported products which correspond to the highest dollar values for Swiss global shipments in 2018. The percentage of total Swiss exports is also shown. It seems that gold is the Swiss number one product that was exported, at the more granular four-digit Harmonized Tariff System code level.
- Precious metals and gems with an amount of 81.5 billion dollars, representing 26.2% of total exports
- Pharmaceuticals, 75.2 billion dollars value, with a percentage of 24.2%
- Machinery including computers, exports worth 24.9 billion dollars, 8% of total Swiss exports
- Clocks and Watches, including parts, amounted to 21.6 billion dollars, representing 7% of the total exports
- Exports of organic chemicals, worth 20.8 billion dollars (6.7%)
- Optical, technical, medical equipment, amounting 17.3 billion dollars (5.6%)
- Electrical machinery, equipment, totaling 12.8 billion dollars (4.1%)
- Plastics and plastic articles, 5.6 billion dollars (1.8%)
- Perfumes and cosmetics exports, 3.7 billion dollars (1.2%)
- Iron or steel items, 3.1 billion dollars (1%)
In 2018, Switzerland's top 10 exports represented 85.8% of the total value of its global deliveries.
In terms of improving exports, the biggest increases were registered for perfumes and cosmetics, 13.5% over the previous year. The beauty field, especially make-up and cosmetics, has led to this upward trend. The second biggest increase in terms of improving exports is represented by plastic and items made from plastic, by a rate of 9%. The following categories of goods are optical, medical and technical equipment (up 7.9%), then watches and clocks, including parts (up 6.9%).
If you want to know the legal frames in conducting trading activities in Switzerland, our Swiss consultants can provide you with complete information regarding the most suitable business structure for your needs.